Retail Inflation Is Worse Than You Think

By Craig Erwin, Ph.D.

Inflation is really starting to bite. Amazon has begun requiring sellers to pay a 5% fuel and inflation surcharge for its fulfillment services. Although rising inflation is being driven in large part by a booming post-pandemic economic recovery and supply chain disruptions (largely thanks to Covid-19 and the war in Ukraine), there is a contributor that many of us overlook. Many retailers are raising prices to cover the cost of losses and increased security due to increased crime. From shoplifting, to flash mobs, to smash and grab robberies, to armed robberies, retail theft is a serious threat for both mom-and-pop retailers and large retailers alike.

When the last decade ended, online shopping had been gaining in popularity for years, thanks to its speed and convenience, but the pandemic gave it a boost. However, even as online shopping venues heisted shoppers from bricks and mortar retailers, retail theft became increasingly more common and costly.

Although the average value of stolen merchandise per incident is about $310, it increased 13% from 2019 to 2020. Some smash-and-grab robberies can result in the loss of tens of thousands of dollars-worth of merchandise, in addition to thousands of dollars of damage to stores. In addition to the crippling losses, retailers might have to cough up more money to install security systems, which could cost tens of thousands of dollars, much more for large retailers. Although large retailers may be better able to absorb these losses and costs, they can be devastating for mom-and-pop retailers. Either way, the losses force retailers of all sizes to raise prices.

Online shopping makes it easier than ever to sell stolen goods, providing encouragement to would-be thieves. Where 20 years ago thieves might have worried about being caught selling stolen merchandise, as online shopping becomes more popular, it is more and more difficult for law enforcement to identify stolen goods and thieves. Who would have thought that online shopping would result in more crime at bricks and mortar retailers and that we’d be stuck with the bill?

How much do you shop online? Have you noticed prices rising faster online or at bricks and mortar stores? How are you coping with inflation?

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