Post-pandemic blues are causing more people to forget the eighth commandment: “Though shalt not steal.”

Although shoplifting has been around forever, retailers say thieves are pillaging their stores at alarming rates.

Best Buy sounded the alarm on the issue back in 2021. Walgreens said it was experiencing the same problem. Walmart also acknowledged that retail crime is on the rise.

It’s one thing to complain about theft. It’s another thing to blame it for declining corporate earnings.

That’s exactly what some of the world’s largest retailers just did.

“The country has a retail theft problem,” according to Home Depot CFO Richard McPhail. He said theft was a big reason why the company’s profitability declined by 8 basis points year-over-year in the second quarter.

Target said retail theft at its stores will reduce profitability by $500 million this year. It’s a “worsening trend that emerged last year,” said Target CEO Brian Cornell.

Dick’s Sporting Goods reported a 23% drop in profits during its most recent quarter—something it blamed almost entirely on theft.

Videos of masked thieves rummaging through stores are common on social media. So are complaints that a lack of enforcement is making the problem worse.

But these are just anecdotes.

A closer look at the numbers reveals that retailers are hemorrhaging merchandise—but theft is only one part of the problem. Compared with actual sales, theft is barely recognizable from an accounting standpoint.

What’s causing ‘retail shrink’? Nobody really knows

As it turns out, retailers don’t have a foolproof way to measure how shoplifting impacts their bottom line.

In the retail world, large-scale theft is classified as “shrink”—a term that describes any loss of inventory from causes other than sales.

The problem is that shrink can be caused by anything—theft, fraud, damage, lost or missing goods, poor inventory management, or process control issues.

Not all theft is external, either. Employee theft and vendor fraud also account for shrink.

According to a survey from the National Retail Federation (NRF), 28.5% of shrink is caused by internal theft. Process or control failures account for another 25.7%.

External theft was the biggest cause—37% according to the survey—but it’s hardly the only reason why unsold inventory goes missing.

Shrink is an “issue where you’ve got a problem, but there’s no way to know exactly where the losses are coming from,” says retired sociology professor Richard Hollinger.

NRF estimated that annual shrink reached $94.5 billion in 2021, an increase of 4% from 2020. But it jumped 53% compared to 2019. The industry group partly blamed the pandemic for the steep rise.

But when you dive deeper into NRF’s numbers, you see that average shrink as a percentage of sales actually fell to 1.4% in 2021 from 1.6% the year before.

In other words, the value of shrink is rising, but actual sales are rising faster. Shrink’s actual effect on the bottom line barely moves the needle.

The real reason stores are blaming shoplifters

Shoplifting incidents have become low-hanging fruit for retailers to attack.

TikTok and YouTube are filled with violent smash-and-grab videos showing looters stealing electronics, hygiene products, and even over-the-counter drugs.

The apparent rise in shoplifting incidents after Covid shined the spotlight on worker safety, inadequate response from law enforcement, and store closures in crime-ridden cities.

These are all legitimate concerns, but they barely affect corporate bottom lines.

By focusing on theft, retailers can downplay that their business models are under attack. By Amazon specifically.

Traditional stores are struggling with supply chain bottlenecks, higher labor and transportation costs, and other expenses that have eaten into their profitability. Covid magnified these issues.

Sprinkle on a generational surge in consumer and factory-gate inflation, and you have a recipe for declining profitability.

“In an environment where you’re looking for any improvement, shrink becomes an area to attack because of all the other costs rising,” said Ray Wimer, a business professor at Syracuse University.

Some retailers conceded they may have been overzealous in how they interpreted shrink. Walgreens CFO James Kehoe admitted that “Maybe we cried too much last year” about shoplifting.

Traditional retailers should really be crying about Amazon.

The online retailer’s net sales grew by 11% last quarter to $134.4 billion. Operating income more than doubled to $7.7 billion. Cash flow surged by 74% to $61.8 billion.