Organized journalistic crime
On July 19, the Washington Post Editorial Board published an impassioned column calling for an aggressive national response to organized retail crime (ORC). The Editorial Board described ORC as "the term security specialists use to distinguish planned, large-scale stealing to supply the black market from individual cases of the 'five-fingered discount.'" It stressed that evidence that ORC was a growing problem "comes not only from viral videos depicting masked people smashing display cases and dumping the contents into large bags" but also "data."
Specifically, the Editorial Board claimed, "ORC accounted for half of the $94.5 billion in losses due to theft that companies reported in 2021." The Editorial Board argued that the data revealed how much "damage has been done to the economy and to the public’s basic feeling of safety in retail spaces." The Editorial Board said the scope of the problem justified the creation of "a federal ORC coordination center, staffed by officials from federal law enforcement agencies and housed in the Department of Homeland Security."
There is just one problem: The "data" cited by the Washington Post Editorial Board is a complete fabrication.
First, retailers did not report $94.5 billion in losses "due to theft" in 2021. A survey by the National Retail Federation (NRF) reported that "shrink" — an industry term for missing inventory — amounted to $94.5 billion in 2021. More than one-quarter of all shrink comes from internal control failures. This includes losses due to damaged or spoiled merchandise.
Another 28.5% of shrink comes from employee theft. External theft, according to the NRF, accounts for just 37% of all shrink. So how does ORC, a subcategory of external theft, account for more than half of all shrink?
The answer is it doesn't. And it's not even close.
The Washington Post Editorial Board cited an April 2023 report published by the NRF and K2 Security, a risk management firm. The report included the following claim:
Total annual retail shrink — the reduction in physical inventory caused by theft or various other causes — was $94.5 billion in 2021, nearly half of which was attributable to ORC, according to NRF survey data and research by the National Coalition of Law Enforcement [and Retail].
The citation for the "research" by the National Coalition of Law Enforcement and Retail (CLEAR) was actually 2021 Congressional testimony by Brendan Dugan, then-President of CLEAR. Dugan testified that "CLEAR estimates that organized retail crime accounts for $45 billion in annual losses for retailers." But in a recent interview with RetailDive, Dugan admitted that CLEAR did not conduct any research on ORC. Instead, Dugan was referring to the NRF's estimate for total shrink from 2016.
So, there is absolutely no basis for the claim that ORC was responsible for $45 billion in losses in 2021. It's a figure of shrink from all sources from five years earlier.
That is why, on December 4, the NRF formally withdrew its claim that ORC was responsible for half of all shrink in 2021. It issued a revised version of its April report that omits the false information. “The lack of conclusive data to capture the scale of retail theft is a problem that virtually everyone involved readily acknowledges,” a spokesperson for the NRF said. Of course, the issue was not just a lack of "conclusive data" but the NRF's publication of false data. The group invented the idea that CLEAR conducted "research" and then used it to push a self-serving narrative in the national media.
As recently as 2020, the NRF provided its own estimates about the scope of organized retail crime. The NRF estimated organized retail theft "costs retailers an average of $719,548 per $1 billion dollars in sales." That means about 0.07% of sales, or 5% of total retail shrink, is attributable to organized retail crime. If that figure has held, it suggests that ORC is responsible for about $4.7 billion in losses, not $47 billion. For context, total retail sales in the United States were about $6.5 trillion in 2021.
The NRF previously told Popular Information that it stopped providing estimates of ORC because it believed that the numbers being reported by retailers were too low. "One of the reasons for moving away from reporting dollar figures is that the reported dollar value of [organized retail crime] probably represents the tip of the iceberg and may greatly understate the problem," an NRF spokesperson said.
The inaccurate claim about the scope of ORC was also included in a news article published by the Washington Post on September 2, 2023. But, despite repeatedly publishing the false claim, the Washington Post did not publish its own story on the NRF's retraction. Instead, it posted an Associated Press article on its website. News of the retraction was not printed in the physical paper.
A week after the NRF's retraction, the Washington Post Editorial Board has not corrected its column. Popular Information contacted the Editorial Board for comment on Sunday morning. A member of the Editorial Board responded that the issue "bears looking into" but said it was infeasible to respond before publication.
"A lie can travel halfway around the world while the truth is still putting on its shoes"
The false claim about the scope of ORC did not only appear in the Washington Post. It was published in numerous national media outlets:
CNN: "The NRF said total annual shrink reached $94.5 billion in 2021, up from $90.8 billion from 2020. Nearly half was attributed to large-scale theft of products."
Fortune: "[O]rganized retail theft was responsible for nearly half of the record $94.5 billion in retailer “shrink” that year."
NY Post: "[O]rganized retail crime…according to a National Retail Federation study… accounts for roughly half of the $94.5 billion lost that year to “shrinkage,” or product loss from something other than sales."
These stories have not been updated or corrected.
Other outlets routinely go beyond the NRF's false claims and conflate ORC with total shrink. Business Insider published an article in December 2022 with this headline: "It's organized retail crime, and it's a nearly $100 billion problem for the industry."
Politicians can be just as sloppy. In an October 16, 2023 press release, San Diego District Attorney Summer Stephan said, "organized retail theft reached $94.5 billion in 2021.” Senator Chuck Grassley (R-IA) issued a press release on October 23, 2023, claiming that "organized retail theft…cost nationwide retailers an estimated $112.1 billion in 2022."
Why the truth matters
The grossly distorted data about ORC is being used to drive policy decisions. Grassley, along with Senator Catherine Cortez Masto (D-NV), have used the faulty statistics to promote the Combating Organized Retail Crime Act. The bill seeks to create an “Organized Retail Crime Coordination Center” under the Department of Homeland Security. The center, the bill says, will oversee “federal law enforcement efforts related to organized retail crime” and align these activities with state and local investigations. Its director would be appointed by the head of ICE. This is the policy advocated by the Washington Post Editorial Board.
In California, Governor Gavin Newsom (D) announced in September the state would spend hundreds of millions of dollars to combat ORC. "Enough with these brazen smash-and-grabs," Newsom said. "With an unprecedented $267 million investment, Californians will soon see more takedowns, more police, more arrests, and more felony prosecutions. When shameless criminals walk out of stores with stolen goods, they’ll walk straight into jail cells."
Former President Donald Trump, unsurprisingly, has taken things even further. "We will immediately stop all of the pillaging and theft. Very simply: If you rob a store, you can fully expect to be shot as you are leaving that store," Trump said in October.
UPDATE (12/11, 3:50 PM): The Washington Post sent the following response:
Thank you for contacting me Sunday morning, Dec. 10, with a request for a response to the NRF’s retraction. Now that we’ve had sufficient time, we’re happy to respond to this development, which escaped my attention while I was away on a recent medical leave.
While the situation does call for an update (forthcoming soon) to the July 19 editorial in question, it seems a bit strong to describe it as “organized journalistic crime,” as your Monday headline did. Basically, we relied on the NRF data in good faith, not knowing it was erroneous – any implication in your article to the contrary notwithstanding. We also probably should not have treated “shrink” as shorthand for losses that are all rather than mostly theft -- so point taken on that, too.
Otherwise, we stand by the editorial, including the policy recommendations, which were moderate and urged not harsher punishment but better law-enforcement information sharing and data collection. That seems even wiser now.
Deputy opinion editor
The claim has been removed from the Washington Post’s July 19 editorial.