The words "shrink" and "retail theft" have been thrown around a lot recently.
If you believe certain media outlets and some CEOs, shoplifting, which is only part of shrink, has been a growing epidemic. If you look at actual numbers, the reality isn't quite that.
Related: Walmart suddenly closing more stores in 2024
Shrink has been rising, according to data from the National Retail Federation.
Shrink in fiscal year 2022 accounted for $112.1 billion in losses, up from $93.9 billion in 2021, according to the 2023 National Retail Security Survey. As a percentage of total retail sales in 2022, the average shrink rate in FY 2022 increased to 1.6% from 1.4% the previous year.
That's actually down from 1.62% in 2019. Shrink accounts for multiple kinds of product loss, but traditionally about 65%, almost two-thirds, comes from internal and external theft, according to the NRF.
Retailers have been taking a number of different steps to cut down on the shoplifting portion of theft. Walmart and Target have either limited or removed self-checkout at many of their stores, while chains have also tested artificial intelligence solutions and old-school methods like checking receipts as people leave their stores.
TJX Cos. (TJX) , the parent of Marshalls, TJ Maxx and HomeGoods, has made preventing shrink a priority and is testing a new method to prevent it.
Image source: Getty Images
TJX targets shoplifters and cutting shrink
TJX Chief Financial Officer John Klinger made clear that the company has been working to cut down on shrink in its stores. He talked about it during the company's fourth-quarter-earnings call.
"Shrink was an area that we were laser-focused on as an organization all year long. I want to recognize and thank all the associates who worked extremely hard on our initiatives throughout the year," he said.
Those efforts are clearly working.
"Fourth-quarter adjusted pretax profit margin of 10.9% was up [1.7 percentage point] versus last year. Our adjusted pretax profit margin came in well above our plan primarily due to a higher merchandise margin. This includes a larger-than-expected benefit from shrink and freight, lower markdowns, and better mark-ups," he added.
Klinger did not share any specifics about its efforts to stop shrink as it's probably not a good policy to tell thieves the steps you are taking to stop them. He did, however, share some broader comments.
"Importantly, we managed our in-store initiatives while delivering a very strong top line and providing a pleasant shopping experience for our customers. We remain focused on shrink and continue to look for ways to improve this area going forward," he added.
Sign up for the Come Cruise With Me newsletter to save money on your next (or your first) cruise.
TJ Maxx stores test a new theft-prevention tool
In TJX's most recent earnings call Klinger did talk about one specific antitheft measure.
"So, one of the things that we've added, we started to do last year, late towards the year, were body cameras on our associates. And when somebody comes in, it's sort of — it's almost like a deescalation where people are less likely to do something when they're being videotaped. So, we definitely feel that that's playing a role," he shared.
The chain is using body cameras similar to the ones worn by police. Not every employee is outfitted with one.
More Retail:
- Ulta CEO sounds the alarm on a growing problem
- Lululemon releases a first-of-its-kind product
- Target store introduces a new 'over 18' policy
- Amazon launches genius new subscription product
Klinger also made clear that the company was constantly reevaluating its theft-prevention efforts.
"As far as shrink goes, we're still highly focused on shrink. As I said in my comments, we're planning shrink to be flat year-over-year. But we still have a high focus on making sure that we balance protecting the goods with making sure that the customers can shop easily and get — and be able to buy the goods while also maintaining safety in our stores," he added.
Related: Struggling discount retailer faces bankruptcy, store closures
TJX has not shared how many of its stores are testing body cameras or whether they are being used at all three brands.
