The state of loss prevention in retail

Understaffing a store isn’t headline-worthy. Yet, at many retailers, such inefficiencies forfeit more inventory than the smash-and-grab robberies that go viral or make the news.

Organized retail crime continues to hold the attention of policymakers and retail industry groups. But some loss prevention experts say the impact of external theft on inventory loss or shrink is overstated, while the causes of nearly two-thirds of shrink are going largely unappreciated and, therefore, unaddressed.

Inventory loss is out of the spotlight to a great extent, in part because many, if not most, retailers that had been complaining about shrink levels have reported improvements. After about 30 years, the National Retail Federation in 2024 said it would no longer report on shrink trends in the industry. 

Still, laxity related to labor, pricing, promotions, stock management and other store operations leads to shrink and costs retailers billions, according to a study from Coresight Research. The percentage of gross sales lost to in-store inefficiencies stands at 5.5% on average, up from 4.5% the year prior. Overcoming those inefficiencies could save U.S. retailers in the home improvement, drugstore, grocery, mass merchant and warehouse club sectors as much as $162.7 billion, up 27% year over year, per Coresight.

Tackling this requires a hard look at store operations and, for most retailers, a more holistic approach to loss prevention, experts say.

“When I started, I was a bad-guy catcher. I wanted to catch bad guys, I was good at catching bad guys. I loved the adrenaline, I loved the cat and mouse. That's all I wanted to do,” said Johnny Custer, senior director of retail risk solutions at ThinkLP. “I’ve evolved from that. There are some very progressive retailers where the relationship between operations and LP is seamless, where loss prevention is a specialized extension of the operations team. That's ultimately where we all need to be. But they are few and far between.”

Margin protection

That evolution requires retailers to view their loss prevention teams as not just crime fighters but as protectors of profits and margin more broadly.

“Loss prevention is perceived as a cost center. A necessary cost center, a part of doing business,” Custer said by video conference. “My goal is to change that perspective so that people understand that we're not a cost center, we can actually be a profit driver.”

Errors in merchandising, pricing and other functions add up quickly, according to Brad Bogolea, CEO and co-founder at Simbe Robotics, which sponsored Coresight’s research.

More than 80% of the 394 retail business decision-makers that Coresight surveyed said they’re losing at least 5% of their operating margin to in-store inefficiencies; last year just 70% reported that. In 2025 mistakes related to promotions have been the biggest challenge, with nearly 40% ranking it in their top five, while nearly that many cited pricing errors. Losses from out-of-stocks also stood out, with 57% reporting the issue.

“Even small lapses — a product on the wrong shelf, an incorrect label — can cascade into major losses,” Bogolea said. “These issues erode margins and create friction for shoppers. In contrast, retailers that solve for visibility are seeing a step-change in performance across supply chain, e-commerce fulfillment and store operations.”

Unpacking where margins are being squeezed by operational failures requires data, something Custer learned when he was working in loss prevention for someone who was a data analyst.

“He expanded my mind and asked me to look into point-of-sale. And then, not only point-of-sale, but center of store, all of the sales-floor data, then the back of the store — all the inbound, outbound flow data,” he said. “To look for similar patterns of behavior that occur within each, because loss can happen anywhere in the building. I did it reluctantly, but I became a believer the moment the financial results came out.”

Tech to the rescue

Getting that data — and the visibility into store operations that it provides — is enabled by technologies that find mistakes, flag needs and detect patterns.

Retailers are increasingly turning to them. In the U.S., retailers’ plans for investment in store intelligence technologies for the next year have skyrocketed over 150%, Coresight found. More than a third of retailers say they’ll be investing at least $500,000 in that time; on average each company is dedicating more than $415,000.

Some 60% of retailers have turned to AI to assist in loss prevention, with another 30% planning to do so in the next year, according to a February study from vision AI firm Everseen. 

Tech is helping break down the divisions between the loss prevention and operating teams, according to loss prevention consultant Brand Elverston, who works with major retailers and brands.

“The silos of risk mitigation, store operations and supply chain are all but going, and that's been fueled largely by countless use cases of technologies that are out in the space today,” he said. “I can do your in-stock. I can tell you if it came in off the truck. I can tell you how many people are in the store. I can tell you, if somebody stole something, what door they went out of.”

Some tech designed to detect crime or criminal intent has gained broader uses, as at Verensics, an employee questionnaire-based platform. Some retailer clients are now sharing information gleaned from employee questionnaires so that teams in store ops, human resources, loss prevention and elsewhere can connect various dots, according to Verensics CEO-founder Russ Law. Similarly ThinkLP platforms leverage point-of-sales data, human resources data, inventory data and more.

“The data is geared towards crime, obviously, but it's being used more and more for operational integrity issues,” Verensics’ Law said by video conference. “Maybe the inventory isn't being done right because nobody knows exactly what they're supposed to be doing. Or maybe there's a manager who's not getting the point across the way they're supposed to. It’s identifying places where there are training opportunities, or where there are opportunities to tighten up processes, as well as identifying bad actors.” 

The human touch

As much as technology has revolutionized store operations, though, retailers risk undermining their systems if stores are inadequately staffed. 

Store-level thefts, always a problem in retail, got a boost around the time of the Great Recession. ThinkLP’s Custer attributes that to job cuts, especially around 2008 or so, that went too far and haven’t been restored in the years since.

“Retailers cut a lot of non-essential personnel, and one of the first groups of people they cut were the perpetual inventory, day-to-day count keepers, the folks that scan the store and keep count,” Custer said. “That has had a ripple effect across so many profitability areas — from clearance markdowns to in-stock position to day-to-day customer service. I can point to that one mistake and say that if that wouldn't have happened, we'd be in a much different situation right now.”

Similarly, during the COVID-19 pandemic, retailers eliminated many of the non-essential employees who weren’t coming into work, and shrink ballooned, according to Elverston.

“The worse the backroom looks, the higher the shrink. It's just the way it is,” he said by video conference. “If you're not managing inventory, you've increased your risk of shrink.”

Shrink — a mismatch between inventory a retailer has on hand and what records say it should have — continues to confound the industry. But several companies in recent weeks reported that shrink is less of a problem, dropping, in at least two cases, to a low not seen since the pandemic.

“It's becoming a nonevent,” loss prevention consultant Brand Elverston, who works with major retailers and brands, said by phone. “I don't feel comfortable saying it's prepandemic levels. What I'm saying is it's down significantly from its apex during COVID and is more manageable.”

Executives at Kroger, Target, Dollar General and TJX told investors that lower shrink was boosting margins and profits. At Target and TJX, the decline has been especially dramatic, down to pre-pandemic levels, according to the chief financial officers at both companies.

This is a sharp turnabout from a couple of years ago, when retail executives at these retailers and others lamented high levels of inventory loss, often to theft, contradicting surveys from loss prevention executives that found shrink levels had been more or less flat for years.

The issue only got more opaque in 2023 when the National Retail Federation retracted a key statistic from a special report on retail crime, after a Retail Dive investigation found an error that vastly inflated the problem. The following year, the group canceled its annual shrink report, which it had published for more than three decades.

Using various benchmarks and its own data, loss prevention platform Appriss Retail calculates that the industry lost $90 billion to shrink last year; the firm is working on a comprehensive survey of the problem. These days many analysts, including some loss prevention experts, believe the causes of shrink are multilayered rather than strictly crime-related.

The lack of clarity around shrink now extends to why or how things have improved because retailers aren't providing any details. Most of the retailers contacted for this story didn’t immediately respond to requests for more information about how they mitigated their risk; TJX declined to comment. On earnings calls, most alluded to operational improvements. Target CFO Jim Lee is the only executive so far to call out “industry and community efforts to combat retail theft across the country.” 

David Johnston, NRF vice president of asset protection and retail operations, credited a “balanced approach” of operational adjustments plus antitheft measures.

“Retailers reporting lower inventory shrink is an encouraging sign that reflects stronger focus on operational drivers of loss within their control such as process accuracy, inventory integrity and in-store execution,” he said in an emailed statement. “These efforts are improving overall results while retailers continue to address losses driven by external factors like shoplifting and fraud.”

Some of the operational advancement is thanks to better staffing, after a period of “rapid hiring to reopen stores” during the pandemic, according to Appriss Chief Revenue Officer Pedro Ramos.

There are still plenty of forces making shrink hard to pin down, though.

The move to change prices fast and often is poised to make it harder to analyze shrink, as seen with swiftly changing tariffs, according to Elverston. It’s especially difficult for retailers using the retail inventory method because, with every price change, that accounting system introduces errors in counting inventory on the books versus on the shelf, he said. Target, Dollar General and Walmart are among the retailers still using RIM.

Returns last year represented $706 billion of total sales, with up to 50 cents of each dollar lost in value in the process, “just to frictional costs, handling costs,” Ramos said. At least 20% of shrink is attributed to false refunds, and that continues to grow, he said by video conference.

While crime is a factor in returns-related shrink, as it is in stores, it is “an outdated angle on loss prevention,” according to an Appriss report. The only way to combat the problem is for retailers to take a holistic view of their operations, according to Ramos.

“There’s been a ton of money spent on fighting shrink,” he said. “Everybody tries to look at the world as good and bad. The world isn't good and bad. The world is this murky, complex thing with an infinite number of variables in it.”

Sponsored content

By Checkpoint Systems

Retailers today operate in an increasingly complex environment where theft, operational inefficiencies, and customer expectations converge. In this context, implementing the right anti-theft device strategy is no longer optional, it’s a critical component of modern retail operations.

From traditional security tags to advanced RFID-enabled systems, anti-theft technologies have evolved to not only protect merchandise but also provide real-time data and operational insights. This shift is redefining how retailers’ approach both loss prevention and store efficiency.

Why anti-theft devices are essential in modern retail?

The retail landscape has changed in recent years. The growth of self-checkout, the expansion of omnichannel models, and the need for faster in-store experiences have created new challenges in terms of security and control. In this environment, relying solely on traditional anti-theft systems is no longer enough. Retailers need solutions that can keep up with high transaction volumes while maintaining accuracy and minimizing friction for the customer.

This is where modern anti-theft devices come into play. Beyond simply triggering alarms, today’s technologies allow retailers to identify exactly which item is leaving the store, whether it has been paid for, and how it fits into overall inventory flows.

RFID technology plays a key role in this transformation. By enabling item-level visibility, it allows retailers to reduce shrinkage while simultaneously improving stock accuracy and operational efficiency. In other words, anti-theft systems are no longer isolated tools, they are part of a connected retail ecosystem.

What are anti-theft devices for retail?

Anti-theft devices are a combination of hardware, labels, and software solutions designed to protect products and detect unauthorized removal.

1. Security tags (hard tags & labels)

These are the most recognizable anti-theft devices:

• Hard tags attached to garments or high-value items
• Adhesive labels integrated into packaging

They trigger alarms when passing through EAS gates if not deactivated.

2. RFID inlays and smart labels

RFID inlays take security to the next level:

• Embedded microchips + antennas
• Unique ID for each item
• Enable tracking, authentication, and theft detection

RFID allows retailers to:

• Know exactly which item is leaving the store
• Combine security with inventory management

Checkpoint Systems provides integrated solutions combining labels, hardware, and software across the entire retail journey.

3. Detection systems and antennas

Installed at store exits, these systems:

• Detect active tags or RFID signals
• Trigger alarms in case of theft
• Can integrate with analytics platforms

Advanced systems can even distinguish between:

• Paid vs unpaid items
• Authorized vs unauthorized movements

4. RFID readers at point of sale (POS)

A key innovation in modern anti-theft strategies is the use of RFID readers at checkout, such as the new all-in-one RFID reader solutions. The latest generation of readers:

• Enable ultra-fast bulk reading of multiple items
• Reduce checkout errors and missed scans
• Validate transactions in real time
• Help detect unpaid items automatically

Next-generation devices like Readfinity™ Core by Checkpoint Systems, presented at Euroshop 2026, combine advanced RFID reading capabilities with embedded processing power to enable real-time item identification, transaction validation, and inventory visibility across multiple retail touchpoints. Designed as a highly flexible platform, Readfinity™ Core can be seamlessly integrated into traditional checkouts, self-checkouts, self-service kiosks, click-and-collect stations, and other in-store applications, adapting to the specific operational needs of each retailer. By consolidating RFID intelligence into a single device, it helps streamline store processes, reduce hardware complexity, support loss prevention strategies, and deliver a more connected and efficient shopping experience.

How to choose the right anti-theft device?

Selecting the right anti-theft device is not just a technical decision, it’s a strategic one. It requires understanding the specific needs of the store, the type of products being sold, and the level of integration required across systems.

For example, a fashion retailer may benefit from a combination of RFID labels and reusable hard tags, while a grocery or FMCG environment might prioritize embedded RFID labels that do not interfere with packaging or customer experience.

Store format also plays a critical role. Large retail environments with high traffic and self-checkout zones often require more advanced solutions, including RFID-enabled POS systems and integrated analytics platforms. Smaller stores, on the other hand, may focus on simpler but still effective tagging systems.

Another key factor is integration. Modern retail operations depend on connected systems, where anti-theft devices are linked to inventory management, POS platforms, and data analytics tools. Solutions that offer flexible integration allow retailers to scale more easily and adapt to future needs.

Ultimately, the decision should align with broader business goals. Retailers that adopt RFID-based anti-theft devices are not only investing in security, but also in visibility, automation, and better decision-making. This holistic approach enables them to reduce shrinkage while improving efficiency and delivering a smoother customer experience.

In conclusion, the concept of an anti-theft device has evolved into a connected ecosystem where security, data, and operations work together. By combining RFID inlays, intelligent readers, and integrated software, retailers can not only protect their merchandise but also improve efficiency and gain valuable insights, making these solutions essential for building smarter and more agile retail operations.

 

Several major retailers in the U.S. use a century-old accounting practice known as “the retail inventory method,” which relies on retail prices to estimate inventory, even though it fails to take full advantage of modern technology and distorts business metrics and tactics.

“It also creates a lot of games,” said Paula Rosenblum, a retail analyst and co-founder of RSR Research, who has criticized the practice for years. “One of the reasons merchants don't want to give it up is that they get to play some serious games with it.”

Judging by explanations given by multiple companies in their annual reports, the retail inventory method, or RIM, is employed because of its “practicality” and widespread use in the industry. However, at least one retailer, Dillard’s, also pinpoints the very aspects that many experts see as problematic.

“Inherent in the retail inventory method calculation are certain significant management judgments including, among others, merchandise markon, markups and markdowns, which significantly impact the ending inventory valuation at cost as well as the resulting gross margins,” according to financial filings from the department store. 

What that means, experts warn, is that the retail inventory method interferes with sound merchandising and pricing decisions. RIM can even muddy the picture when it comes to inventory shrink.

However, there is a superior alternative, known as “cost accounting.” This method is more dependable because it makes the most of 21st-century data systems, and because, as its name implies, it’s based on what a retailer paid for inventory — which, unlike what inventory sells for, doesn’t waver.

Oliver Chen, managing director and senior equity research analyst at TD Cowen, for years has touted the value of replacing RIM with the cost method of accounting.

“These companies need to get faster, more agile, and they need merchants and inventory planning and everybody to be more connected,” he said by phone. “The retail inventory method is a more manual process, designed when we didn't have barcodes or computers.”

How it started, how it’s going

The retail inventory method is an accounting practice developed by Shakespeare scholar-turned-retail expert Malcolm McNair in the 1920s to enable a retailer to calculate the value of its inventory without having to manually count it — a godsend before the age of point-of-sale systems and computers. RIM provides an estimate of inventory based on retail prices, including permanent markups or markdowns. It was especially handy for larger businesses like department stores with lots of merchandise of various types.

By 1970 it was prevalent, and it remains in use despite the advent of digital technologies that provide speed, precision and granularity. Along with Dillard’s, Target, Walmart, Kohl’s, J.C. Penney and Dollar Tree are among retailers that still employ the retail inventory method, according to their most recent annual reports.

Nearly a third of companies on the National Retail Federation’s top 100 list still use RIM to some extent, with about a quarter only on RIM and the rest using a hybrid model (the byproduct of mergers and acquisitions and/or PE firms that have multiple brands), according to PwC. Abroad, far fewer retailers use RIM because it’s only accepted under International Financial Reporting Standards (akin to GAAP) under certain conditions, according to Suni Shamapande, partner at PwC U.S. In the U.S., both RIM and the cost method align with generally accepted accounting principles or GAAP.

But retailers in the U.S. are increasingly rethinking RIM because the cost method’s specificity provides a clearer picture of inventory and margins, with implications for a host of retail functions, Shamapande said by video conference.

“Today, retailers have perpetual inventory systems and computers that can do the calculations, which we didn’t have in 1920,” he said. “If you tried to do it at the item level way back when, that would have been too much for a bookkeeper, particularly in department stores. But today systems and computers are doing it for you, calculating real-time cost at the item level.”

Trading in RIM for a cost method is a daunting task, entailing an overhaul of accounting, inventory management and buying that affects operations and financial reports. Two major retailers that have done so say they are happy they did.

In February, Adrian Mitchell, Macy’s Inc.’s chief financial officer and chief operating officer, told analysts that Macy’s department stores had fully converted from RIM to cost accounting, saying, “I'm really excited about what it means” for buying, selling and other decisions. In March, Nordstrom Chief Financial Officer Cathy Smith similarly announced a transition to the cost method as of this fiscal year.

“This shift to operating in units and cost lays the foundation for us to deliver on our business priorities more effectively,” she said.

RIM versus cost

The breakdowns of these accounting methods are simplified for this article and charts are based on cost accounting using weighted average cost; variations like “first in, first out,” also known as FIFO, or “last in, first out,” also known as LIFO, among others, aren’t discussed.

RIM’s formula hinges on the cost complement — also known as the cost ratio or cost-to-retail ratio — which is equivalent to the cost of goods available divided by the retail price of goods available (multiplied by 100 to get a percentage).

The fluctuating nature of pricing puts the cost complement, and therefore RIM, on shaky ground, experts say.

“There's where the games are, because what's the retail price? What if you're having a promotion? And what if you put something on promotion for six months?” Rosenblum said by video conference. “You’re imputing this number, this cost complement number, not computing it. And there's so many reasons why it's messy.”

Cost accounting, by contrast, relies on the costs of goods, which remain the same, no matter if the retail price changes over a week, a month, a quarter or a year.

"In RIM accounting, if retailers conduct a permanent markdown, we have to update the cost-to-retail ratio, and, effectively, you would have reduced the cost of goods sold or COGS and the value of the inventory. You must reflect that in your financials immediately,” Shamapande said. “In cost accounting, it only affects margin and COGS when the item is sold, unless you mark it down below cost." 

Inventory planning and productivity

The main advantage of RIM is its relatively easy math, which provides a quick approximation of inventory without waiting for a physical count; even today, that is done only a few times each year. One major disadvantage is that it can send the wrong message: Retailers using RIM estimate their ending inventory based on price, so markdowns distort how much is really left.

This affects buying behavior that often isn’t conducive to business outcomes, according to several experts, including analysts and retail veterans.

Inventory planning will always be an art to some extent because buyers must sometimes bet on an item, color or design that has never been on the market before; because macro forces like the economy change; and because consumer behavior is generally fickle. If a retailer brings in too much, inventory bloats and leads to discounts. Bringing in too little means missed sales, so most buyers will order somewhat above their plan. In fashion and other sectors where changing tastes, styles and/or seasons affect demand, this is especially tricky. 

To manage this, buyers make periodic adjustments in their orders from vendors, depending on what sold versus what’s left. Using the cost method, the value of their inventory remains constant because it’s based on historical fact: what they paid for it. Using RIM, though, the value of inventory fluctuates with price. If an item doesn’t sell and is marked down, the lower price will drive down the value of the inventory that is left. Paradoxically, that’s a signal to buy again.

“In retail inventory method accounting, if you take a markdown, you devalue your inventory,” Kelly Pedersen, PwC global retail leader, said by video conference. “That means you have less inventory, and that means, based on your plan, you can receive more inventory.” 

By the same token, when buyers operate under RIM and want to finish out a quarter on a high note, with bigger margins, they might avoid markdowns until the quarter ends, experts said. Just as a markdown drives down the value of the inventory and signals a “buy,” avoiding a markdown keeps inventory up and precludes a buy, including orders of fresh merchandise. 

For TD Cowen’s Chen, this is the main reason why retailers should bite the bullet and switch to cost accounting. 

“Sometimes buyers, just because they're in a category, are incentivized to buy for their category,” he said. “You need a system and a structure to identify when it's not a good idea to buy tops or bottoms, and also have the computers to help inform you. That's the big thing this unlocks.”

Seeing a shrink

Although retailers have talked less about shrink, or lost inventory, in recent quarters, the industry has been preoccupied with it for the last few years. While a retailer is unlikely to adopt a new method of accounting just because of shrink, the inventory noise created by RIM does make it a factor when there’s confusion around missing inventory and its causes, according to PwC’s Shamapande.

RIM’s reliance on estimates based on selling-price changes is a problem here, Shamapande said. Plus, because those estimates are limited to the department or class level, there is a dearth of item-level accuracy, which makes it difficult to determine whether items are stolen, damaged, expired or missing for other reasons, he said.

A lack of inventory visibility has vexed the industry. Many retailers have blamed theft, while some loss-prevention experts believe that administrative mistakes are undercounted. In its most recent shrink report, the National Retail Federation estimates $112 billion worth of inventory was lost in 2022, with nearly two-thirds due to internal causes, including employee theft and process errors.

The intricacies, implications and expense of switching to cost accounting dissuade some retailers, according to Joe Schmitt, managing director at Berkeley Research Group. For any grappling with a major shrink problem, though, taking the leap is probably wise, he said by video conference.

“I think that's muddying the waters a bit from the perspective of retail accounting method clients that we have, is they just really don't know what's going on until it's too late,” he said. “A cost-accounting method would probably be better operationally to address that shrink issue. It would just depend on how much that's actually impacting a particular client, whether we would go down that path.”

Seeing a profit

The switch from RIM to cost accounting may whipsaw year-over-year comparisons that can temporarily skew financial reports.

This fiscal year at Macy’s, due to the conversion to cost accounting, neither gross margin nor inventory have been directly comparable to prior periods, contributing to a year-over-year gross margin beat in Q2 but a miss in Q3, executives said this month. For 2024, the shift to cost accounting will be responsible for most of an anticipated gross margin rate decline and will have inventory flat, rather than down by low single-digits, according to CFO Mitchell.

In addition, Nordstrom’s transition to the cost method of accounting pinched a little early in the year because it threw its markdown recognition out of whack, creating what CFO Smith said was “a slight headwind in our 2024 results.” Specifically, under the retail inventory method, Q1 2023 “benefited modestly” from the timing of markdown recognition in Q4 2022, she said.

As previously noted, inventory under cost accounting is the same regardless of markdowns. That means that weighing the cost of inventory against the various prices of an item — in other words, calculating margins — is simplified because, rather than RIM’s inconsistent, markdown-inflected estimates, the cost is always the cost.

This “unlocks gross margin return on inventory (GMROI) and gives merchants the tools to measure and buy against markdowns occurring in real-time versus overbuying and cushioning against markdown allowances,” Chen said in a client note last year.

Or as Nordstrom’s Smith said: “We will see profitability at the item level, guiding us in executing with intention and speed.”

This also allows for more effective pricing strategies, according to Shamapande.

"Generally, cost accounting provides a more finished view of margin at the item level, and not having to worry about the accounting implications of a markdown allows retailers to better price goods for their customers,” he said.

While Chen said he is pleased that Macy’s and Nordstrom have finally moved on from RIM, he laments that cost accounting is not more established in the industry, writing last year that it “should have been implemented once point-of-sale systems that identified SKUs were in-store, but better late than never.”

Retail crime, including shrink, has been a hot topic in the industry in recent years.

“Retail shrink is out of control and theft is eroding retailer sales and margin,” Michael Brown, a partner with global strategy and management consulting firm Kearney, said in an email to Retail Dive. “Consumers are unable to purchase items that are out of stock either as a result of theft or because they’re locked behind glass and are not easily accessed when stores are short staffed. Sales are also impacted when the cost of protecting goods and staffing cabinets is built into the cost of the protected products – this manifests itself as inflation.”

A majority of in-store shoppers — 60% — have encountered lock-up merchandise in stores on a regular basis, per a survey of more than 5,000 consumers conducted by data tech firm Numerator.

Twenty-seven percent of shoppers said they would choose another retailer or abandon their purchase entirely if they came across locked-up products, but 62% said they would typically wait for assistance from an employee. The survey also found that those unwilling to wait for assistance will spend 21% of their dollars online compared to 18% for those who waited.

Some 61% of shoppers reported seeing an increase in products locked up over the past year, with most of those being seen at drug stores and mass retailers.

A vast majority of consumers see products locked at mass retailers and drug stores, 68% and 62% respectively.  Grocery stores (31%), department stores (25%) and home improvement stores (23%) also see their share of lock-ups.

“When faced with a locked product, there's more than a 1 in 4 chance shoppers will leave that retailer without making a purchase,” Amanda Schoenbauer, a Numerator analyst, said in an email. “This rises even higher if you're talking about younger shoppers, people with children, or if the locked items are in everyday categories like health and beauty.”

Locking up merchandise should be a last resort to combat theft, according to Brown, who pointed to other approaches, including employing security cameras, extra staffing and security tags.

Consumers in urban areas and the Western U.S. are seeing a much higher percentage of locked-up merchandise than other parts of the country, per the survey. Over half of consumers in the Riverside-San Bernardino-Ontario metro area are reporting high levels of locked-up products, 51% in Las Vegas-Henderson-Paradise, and 45% in Los Angeles-Long Beach-Anaheim.

An anticrime bill targeting organized retail theft easily passed the U.S. House of Representatives in early 2026 in a bipartisan vote. The legislation now goes to the Senate.

The vote is a milestone for the National Retail Federation and Retail Industry Leaders Association, which have pushed for this legislation for years.

The bill targets “organized crime involving the illegal acquisition of retail goods and cargo for the purpose of selling those illegally obtained goods through physical and online retail marketplaces” and aims to address “the cross-jurisdictional, interstate, and international aspects of these crimes,” according to its text.

To combat theft and violence in stores and at cargo points, the bill would create an “Organized Retail and Supply Chain Crime Coordination Center” under the Department of Homeland Security for federal, state, local, territorial and tribal efforts. A director for the office would be appointed by U.S. Immigration and Customs Enforcement.

In separate statements, both the NRF and RILA urged passage of the bill in the Senate.

“NRF has been leading the fight on behalf of retailers for passage of this legislation through direct engagement with federal, state and municipal law enforcement, coordinating fly-ins for lobbying by home state retail asset protection professionals, providing expert testimony and conducting fact-based research,” NRF chief lobbyist David French said.

The group’s research and facts haven’t always been dependable, however. In 2023, the group retracted a key statistic in a special report on crime after Retail Dive found that its estimate of the impact of organized retail crime was off by an order of magnitude. The only statistic from NRF cited in the bill passed Tuesday is that, from 2019 to 2023, larceny incidents rose by 93%, with a 90% rise in average dollar loss; the financial impact is not mentioned.

In 2024, the NRF stopped conducting research into inventory loss after releasing reports annually for more than three decades. In recent quarters, many retailers that had flagged shrink and theft as a major problem said losses are down significantly, in some cases to pre-pandemic levels.

Some asset-protection experts see the improvement as the result of operational changes – like adding staff and preventing pricing and merchandising errors — more than of anticrime efforts.

Indeed, if the organized crime bill does eventually become law, retailers are unlikely to notice a difference in their inventory losses, or shrink, according to Brand Elverston, a loss prevention specialist who works with major retailers and brands. That’s in part because, despite the focus on ORC, retailers have “no idea the impact of ORC to their total shrink.”

More, the legislation addresses only one aspect of “a very distributed retail challenge,” he said by email.

“When the math is hammered out, ORC is estimated as a single-digit (if not fractional) percentage of the single-digit percentage of total sales lost to shrink. Perspective has to matter,” he said. “Not saying ORC isn't a problem – it is. And it was time for federal legislation to give law enforcement recourse. But, as a retailer – this is good, but likely won't appear on my P&L, where shrink is noticed.” 

REI is now not accepting returns from a “small subset” of its members who have repeatedly abused its return policies, the company confirmed to Retail Dive via email.

Members have up to one year to return most items, while nonmembers have 90 days. The company may accept a return without a receipt if it was purchased using a membership.

However, according to REI, a limited number of people have abused the company’s return policy. That group had an average return rate of 79%. They returned $2,400 worth of gear in the past year and $1,400 of that product was used, a spokesperson said. As a result, while those members may still shop at REI, the company said they will no longer be allowed to make any returns or exchanges.

“We’ve tried to curb this behavior by some members over the past several years with targeted warnings and probationary periods,” the company told Retail Dive in a statement. “Unfortunately, these tactics have not proven effective.” 

The outdoor retailer and cooperative said that while the people in question make up less than 0.02% of its 24 million members, they “have demonstrated a clear abuse of the return policy, as determined by an established pattern of transaction history and damage.”

On its website, the co-op says the exceptions, “ensure that every return or exchange is handled with fairness and protects the integrity of our membership and customers.” REI accepts returns of new items in stores or by mail with proof of purchase, regardless if they were purchased in store, online or by phone. 

While the business doesn’t announce quarterly results, the cooperative reported $3.76 billion in revenue in 2023, down 2.4% from the prior year. However, REI also incurred a $311 million net loss last year due to investments in hourly employee pay; its commitment to providing member rewards; and a $169 million noncash valuation against its deferred tax assets.

The company has 181 locations in the U.S. The retailer said it plans to go forward with plans to open six new stores in 2025. It also plans to invest in its existing store fleet to improve the customer shopping and employee workplace experience, REI said last month.

According to a report by the National Retail Federation, the industry lost a total of $101 billion as a result of return fraud or abuse in 2023. According to the report, which included survey data, the top three types of return fraud were returning used, nondefective items; returning stolen or shoplifted merchandise; and returning items bought with fake or stolen payment information.

CVS’ unlocking feature follows shopper frustration with retailers securing inventory in stores as a way to deter retail crime.

CVS Health introduced a mobile app that allows shoppers in a handful of stores to unlock secured display cabinets to access merchandise, the company announced. The feature is a test for now. 

With the app, which succeeds the retailer’s previous CVS Pharmacy app, shoppers can also access savings offers and pick up prescriptions in stores using personalized barcodes. Through partnerships with Everyday Health, Headspace and other companies, CVS app users will have access to a variety of health and wellness content.

The drugstore retailer also leaned into AI for the overhaul, integrating AI into its search functions to help shoppers locate products, services and information. It plans to add a conversational AI chatbot to answer questions about medication refills and order status later this year.

Some drugstores and mass-market retailers, as well as beauty retailer Ulta, have turned to locking products behind glass to prevent theft, and staffing issues further deter shoppers from buying the products they want, experts told Retail Dive. While 62% of consumers will wait for assistance from a store staffer if they find a product locked up, 27% of shoppers will abandon their purchase or choose a different retailer, according to a survey from the data technology company Numerator. 

CVS’ app also includes features to manage shoppers’ healthcare needs, including vaccine scheduling and prescription management. The retailer will continue enhancing its mobile app this year with additional features, including personalized recommendations and educational content for patients with chronic medical conditions and efforts to connect them to cost savings and copay assistance programs. 

“As a company, we are super focused on improving the health care experience,” Tilak Mandadi, executive vice president at CVS Health, said in a statement. “The CVS Health app will make it easier for our customers to access and manage their health and care, save time and money, and make informed decisions about their health.”

The app upgrade comes a few months after CVS announced plans to lay off 2,900 employees, about 1% of its workforce, on the back of a plan released to reduce expenses by $2 billion. Just weeks after the layoffs, CVS named David Joyner as its chief executive officer, replacing Karen Lynch. 

Alongside its cost-cutting efforts, CVS has also invested in its product assortment, welcoming several new brands. The drugstore chain recently introduced tween period care brand Pinkie across more than 3,300 locations. Days later, the skin care brand Curology announced its expansion into 3,800 CVS locations. 

After conducting annual research on shrink for more than three decades, the National Retail Federation won’t release a report on the issue this year.

“Over the last several years, as the nature of retail loss has evolved, it has become clear that a broad study about retail shrink is no longer sufficient for capturing the key challenges and needs of the industry,” Mary McGinty, NRF vice president of communications and public affairs, said by email. “We will be releasing a new report later this year that examines the landscape of retail theft and violence, which are key challenges for the industry.”

The latest available statistics on shrink in the industry can be found in last year’s National Retail Security Survey, as it’s formally known, McGinty said. That was the group’s 32nd report on shrink, reflecting numbers from 2022.

The decision came out of NRF’s ongoing practice of reevaluating “the methods and tools we use for capturing key trends that impact businesses and consumers to ensure that we are providing the most accurate and actionable information possible,” she said. “At times, this means that we make necessary changes to long-standing studies or benchmarks in order to ensure that they reflect the needs and drivers of the modern retail industry.”

Shrink has been in particular focus in recent years, however, with retailers including Target, Five Below, Dick’s Sporting Goods and Walgreens calling out the problem in earnings reports, though early this year some also reported improvements. The NRF has long found a surprising consistency with 2022’s levels of shrink and theft relatively flat to 2021, in a pattern seen across several years.

According to the most recent survey, 63% of lost inventory has internal causes, with 36% from external theft, including shoplifting, credit card fraud, organized retail crime, cargo theft and other retail crimes committed by nonemployees. Several retailers have kept the focus on crime, not just because of inventory losses but also out of concern for store workers and customers. In 2022, 65% of shrink was due to all sorts of theft, including all types of external theft as well as theft by employees, per NRF’s most recent report.

Numbers on retail crime have been difficult to come by, with confusion around statistics and terminology and a dearth of reliable data. Last year, after a Retail Dive analysis revealed an error in a special NRF crime report, the group retracted a key statistic.

In addition to releasing new statistics on retail crime later this year, the NRF is holding a “Fight Retail Crime Day” later this month, in order to pressure Congressional lawmakers to pass legislation that addresses the issue. Late last year, a member of a U.S. House of Representatives committee that took up the bill urged the group to provide better data.

Trevor Wagener, director of the research center and chief economist at the Computer & Communications Industry Association, said the information has been useful to many over the years, and not just retailers.

"The inventory shrink figures from the NRF's NRSS are valuable benchmarks for researchers, policymakers, and industry,” he said by email. “Hopefully they will be published again in the future."

But Brand Elverston, who has been working in retail asset protection for more than two decades, including at major retailers, said the reports have been of limited value over the years because much of their information was open to doubt. Although the surveys were anonymous, for example, some major retailers would skip questions about shrink levels because those numbers aren’t public information.

Moreover, when it comes to the reasons behind inventory loss, most retailers have even less visibility, he said.

“It's impossible for retailers to have sales data-like accuracy in the shrink arena, because by definition, it's ambiguous,” he said by phone. “It's estimations, depending on the sophistication of their system. And to say, over 30 years, 70 cents of every shrink dollar is theft — it became, in my mind, repetitious and a bit unrevealing. That's an inaccurate and a heavily biased assumption, because no retailer truly has item-level financial shrink to understand thoroughly what the sources and contributions are in each of those elements on the pie chart.”

PorchPals, an insurance product designed to cover the loss of stolen packages, has opened a wait list to subscribe, which is now available nationally.

The problem is large and growing alongside e-commerce itself, though assessments of it vary. More than 30% of those surveyed this year by Insurancequotes.com say a package was taken from their porch, doorstep or building lobby, up from 24% in 2023 and 26% in 2022.

According to Capital One research, in the U.S. last year, one of every 180 packages delivered was stolen, totaling 119 million. U.S. consumers lost $13.4 billion to package theft, with each package worth $112.30 on average, per that report. According to Security.org, which compiles research on a variety of home security issues, $12 billion worth of deliveries were swiped last year, with as many as 58 million U.S. households affected in the last 12 months.

PorchPals’ protection, which costs $15 per month or $120 total with an annual subscription, is linked to a customer’s debit or credit cards. The company touts the coverage as broad and efficient, noting that it applies to deliveries from a variety of retailers, that a claim can be filed in minutes and that reimbursement is sent within 72 hours of an approved claim.

“PorchPals is designed to make package protection seamless, affordable, and most importantly, reliable,” co-founder James Moore said in a statement. “With porch piracy on the rise, Americans need to feel confident that their purchases are safe — from the moment they click ‘buy’ to the moment they pick up their package.”

The company was co-founded by New York Giants football player Adoree Jackson and developed “by a team of seasoned enterprise, insurance, and consumer product experts,” per its press release. The company is also backed by insurers Newline Group, OdysseyRe and Lockton, a spokesperson said.

Consumers already have some recourse when it comes to stolen deliveries. Retailers will often refund customers who never received their package. Some rental and homeowner policies cover such thefts, though their deductibles may be higher than the value of the package’s contents, or expensive purchases could exceed limits, according to Western Coast Insurance Services. Coverage for this type of theft may be able to be added to a policy, Western Coast said. Some credit cards also already offer porch piracy protection, covering items that have been stolen before they are in your possession, according to credit reporting firm Experian. 

Those coverages sometimes require the victim to file a police report, while PorchPals does not, according to a company spokesperson.

There are some limits to the PorchPals coverage, though. Subscribers can only make up to three claims each year, totaling $2,000 or less. The company plans to increase that in the future, as it scales, but with additional guardrails to thwart fraudulent claims, a spokesperson said.

Trucking, railroad and shipper representatives raised the alarm about the rise of cargo theft affecting U.S. supply chains during a congressional hearing.

Leaders from BNSF, the Owner-Operator Independent Drivers Association, Tanager Logistics and Academy Sports and Outdoors urged lawmakers to step up enforcement during a Senate subcommittee hearing.

Broker fraud, shipment interception and other forms of cargo theft are costing supply chains up to $35 billion annually, multiple speakers said, citing data from the federal Homeland Security Investigations agency.

Those crimes are contributing to higher consumer costs — and threatening some carriers’ livelihoods.

“Since I began my testimony, a small business trucker has likely fallen prey to fraud that could jeopardize their entire business,” OOIDA EVP Lewie Pugh said. “That's how commonplace freight fraud is becoming in trucking.”

Much of the crime is committed by repeat offenders, and only one in 10 results in an arrest, Sen. Todd Young said, citing the American Trucking Associations.

Cargo theft rises and gets creative

The rise in cargo theft is hurting truckers, logistics companies, shippers and if it continues can also begin to hurt consumers’ pockets.

“In my 25 years in the supply chain, I've never seen cargo theft this prevalent,” Robert Howell, chief supply chain officer at Academy Sports and Outdoors, said during the hearing.

Howell said the types of thefts include load interception, identity theft, double brokering and cyber fraud. Crime in this area has advanced from stealing a truckload or duplicating a Department of Transportation motor carrier number to cyber theft of online credentials and systems.

“Recently, we had a shipment we call private label swimwear. It was intercepted on its way from Nevada to our Texas distribution center. As you can imagine, this is critical this time of year for the season. Unfortunately, we had to react when that load was stolen and repurpose and reposition product throughout our network,” Howell said.

The event resulted in additional costs to the company as well as shipment delays, and ultimately an impact to the consumer, Howell added. It also impacted third-party service providers, brokers and carriers.

Another logistics provider, Tanager Logistics and Double Diamond Transport, got its email spoofed and its identity stolen in a separate case, CEO Adam Blanchard testified.

“Posing as Tanager Logistics, the criminals brokered loads to unsuspecting motor carriers who delivered the cargo, while the scammers pocketed the money,” Blanchard said. “In just one example, they diverted a full truckload of energy drinks with a retail value well over six figures, over 1,000 miles from Texas to California.”

Emboldened by the lack of investigations and prosecutions, cargo thieves are growing the size and sophistication of their operations, Blanchard warned.

“At this very moment, two Tanager Logistics are listed on the FMCSA official website: my company and an imposter,” he said. “We provided this evidence to FMCSA, but they refused to take it down.”

Congress urged to take action

While stakeholders shared how cargo theft has impacted their individual company and industry, all of them advised congress on measures that need to be taken to start controlling the theft that is happening.

An estimated 65,000 thefts occurred in 2024, which was about a 40% increase over the prior year, Will Johnson, chief special agent at BNSF Railway Police Department said during the hearing, citing the Association of American Railroads.

The rise could be attributed to the lack of coordination and jurisdictional guidance.

“Cargo theft cases often cross multiple state lines, making jurisdictional coordination, prosecution and data collection extremely difficult,” Johnson said. A lack of a coordinated federal cargo theft enforcement effort also hinders effective prosecution, he added.

Johnson urged congress to consider multiple action items as a starting point to find effective solutions. Johnson’s suggestions include:

1. Support the establishment of a Federal Supply Chain Crime Coordination Center and Supply Chain Fraud and Theft Task Force to address cargo theft in all aspects of the supply chain.
2. Direct funding to dedicated federal prosecutors to tackle cargo theft cases.
3. Modernize the Federal Motor Carrier Safety Administration vetting process to include stronger authentication methods, real time carrier verification, and implement controls around the sale or transfer of DOT and MC numbers.
4. Increase criminal penalties for cargo theft cases.
5. Allow all victims aggregated harm to be considered in these offenses.
6. Encourage public private partnerships between corporate security teams, carrier monitoring services, load boards, insurers and law enforcement through data sharing initiatives.
7. Allow the prosecution venue to be established at the place of offense, and also at the victims U.S. corporate place of residence.
8. Ease the burden on crime victims by allowing CBP the authority to waive regulatory fines when cases are proven that theft had occurred.

Pugh, the OOIDA EVP, advised congress to pass the Household Goods Shipping Consumer Protection Act. This bill would provide FMCSA the necessary tools to protect consumers from fraud by scammers in the interstate transportation of household goods.

Pugh said the bill would also require brokers to register with a physical address, which is something carriers have done for years and it’s a minor change with a major impact on protecting motor carriers.

“Congress must also use its oversight to ensure existing programs can help prevent fraud are better prioritized. This includes improving FMCSA’s national consumer complaint database, or NCCDB, which OOIDA has advocated for for years,” he said.