The National Retail Federation’s latest “State of Retail & the Consumer” report forecasts that retail sales will reach nearly $5.3 trillion this year, a 3% increase over last year. The retail sector is responsible for 55 million full-time jobs and 20.4% of U.S. gross domestic product, the NRF reports.
But headlines about crime and store closures tell the other side of the story. How much larger would the U.S. retail economy be if it weren’t under attack from crooks, counterfeiters and organized crime?
“I am quite concerned with the prospects in the retail sector,” said Joel Griffith, an economist with The Heritage Foundation.
Dollar Tree plans to close 1,000 stores due in part to the effects of inflation and crime. Other retailers like Target and Walmart are ending self-service registers because of theft.
Griffith blamed the closure of a Walmart in the District of Columbia on rampant theft. Target also shut three stores in California’s Bay Area because of theft.
An NRF representative said that shrink accounted for $112.1 billion in losses, up from $93.9 billion in 2021.
Alysa Erichs of United to Safeguard America from Illegal Trade (USA-IT) said consumers should pay attention. “Those losses impact business models,” she said. “The business model then has to make up for that loss in some way, and it could be higher prices, it could be closing stores, it could be layoffs of employees.”
The problem of organized retail crime, mass shoplifting and smash-and-grab robbery is no secret to Americans who watch cable news. Just days ago, thieves smashed a glass display and pepper-sprayed a Neiman Marcus worker at a Florida mall, stealing tens of thousands of dollars in merchandise.
Meanwhile, counterfeit goods continue to flood the U.S. market, many made in China. And while retailers have long been forced to deal with fake goods, new technology has given counterfeiters a new tool to move their products.
“We are seeing an increase in the use of social media to attract media to ‘it’s cool to buy counterfeit’ sort of messaging and or recruiting folks to do the larger smash-and-grab-type operations,” Erichs said.
Griffith saw warning signs for the future of the retail industry.
“There are 540,000 current job openings listed … down by more than 50 percent over the last year and a half or so,” he said. “You have to go all the way back to the shutdown era — back in the middle part of 2020 — to find a month in which there were fewer job openings in the retail sector. These are some low numbers, and I am concerned that this could end up translating into some job losses.”
Despite the headwinds, the NRF remained optimistic.
“The retail industry continues to expand in every way possible, from the number of jobs it supports to the number of retail businesses and its total impact on GDP,” said NRF president and CEO Matthew Shay. “As the largest private-sector employer, American families and workers depend on a strong retail economy for continued growth and opportunity in communities large and small across the country.”
Chris Woodward writes about industry and technology for InsideSources.com.