How money moves in our town
When something walks out the door
A $20 item slips into a pocket. To the shop, it’s more than one $20 item.
1. Puzzle: How many sales to make up for it?
A shop doesn't keep the whole price of a sale. Most of it pays for the item itself, the rent and the paychecks. What's left is the net margin, the profit kept from each dollar of sales.
The math: sales needed to earn back $20 = $20 ÷ (net margin).
| Net margin (PRETEND) | Sales needed to earn back one $20 item |
|---|---|
| 2% | $1,000 |
| 5% | $400 |
| 10% | $200 |
For comparison, a real range from big companies. NYU Stern's Aswath Damodaran publishes margins for publicly traded U.S. companies ("Margins by Sector (US)," data as of January 2026, https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html). Net margins:
| Sector | Net margin | Firms |
|---|---|---|
| Retail (Grocery and Food) | 1.32% | 15 |
| Retail (Special Lines) | 5.19% | 94 |
| Retail (General) | 5.61% | 23 |
| Retail (Building Supply) | 7.84% | 14 |
At those margins, earning back $20 would take about $1,515, $385, $357 and $255 in sales (calculated).
Caveats:
- These are big publicly traded companies, not small shops on a square. We found no published net-margin figure for small independent stores.
- The puzzle is simplified. What the shop actually lost is what it paid for the item, plus the sale it won't make.
2. The ripple rings
(Same rings as The full picture.)
- The owner. The money spent on the item is gone. There's also time: noticing it, counting stock again, maybe a police report. And there's the worry of wondering whether it will happen again.
- The workers. Their pay for that week was set before the item disappeared (see Where does your paycheck come from?). If losses pile up, a small shop has fewer places to make up the difference, and hours are one of them.
- The customers. Shops that lose a lot may raise prices, lock items behind glass or the counter, or cut back on what they carry.
- The town. A stolen item is a sale that never happened, so no sales tax is collected on it.
- Labeled example: a $20 sale would have carried $0.50 in county local option tax at 2.5%, and half of that, 25¢, goes toward schools (TCA 67-6-712; see By the numbers).
- Stolen, it carries $0.
- At the far edge: when losses add up over time on top of everything else, a shop can close. We don't know of a count of shops that closed for this reason.
3. What the national numbers say
- National Retail Federation, National Retail Security Survey 2023 (the latest edition, covering fiscal year 2022). It surveys loss-prevention staff at retail companies, mostly large ones.
- "the average shrink rate in FY 2022 increased to 1.6%, up from 1.4% in FY 2021."
- "External theft, including ORC-related events, accounted for an average of 36% of total loss."
- "Internal (employee) theft reported in at 29% ... Process, control failures and errors fell at 27%."
- Shrink means all inventory loss: theft, damage and errors. ORC is organized retail crime.
- Report: https://nrf.com/media-center/press-releases/shrink-accounted-over-112-billion-industry-losses-2022-according-nrf (full PDF: https://info.apprissretail.com/hubfs/Resource-Center/2023.038-national-retail-security-survey-report-2023.pdf)
- NRF stopped publishing this annual shrink report after the 2023 edition (Retail Dive, https://www.retaildive.com/news/no-nrf-annual-retail-shrink-report-2024/729009/).
- Small businesses specifically: NFIB, Small Business Problems & Priorities (2024), a mail survey of 2,873 NFIB member owners rating 75 possible problems.
- "Crime, including Identity Theft, Shoplifting, etc." ranked 55th of 75 overall (62nd in 2020), and 10.1% of owners rated it "critical."
- Among retail respondents (n=453), it ranked 47th, and 9.3% rated it critical.
- https://www.nfib.com/wp-content/uploads/2024/10/2024-Small-Business-Problems-Priorities.pdf
- Local: we have no published Fayetteville or Lincoln County figures on shoplifting, and this piece doesn't use any. We don't discuss specific incidents or people.
4. What do you notice?
- Why do you think some things are kept behind the counter or in a locked case?
- Who pays when something walks out the door?
- Walk into two shops. Do you see cameras, mirrors or a bell on the door? Why might a small shop have fewer of these than a big store?
- If a shop lost one $20 item a day, how many extra sales would it need each day at the pretend 5% margin?
5. What would you do?
A scenario for talking about at home or in class. There's no scripted answer.
You're in a shop on the square with a friend. You see your friend slip a small thing into their pocket. Nobody else noticed.
- What are you thinking in that moment?
- What could you do right then? What about later?
- Does it matter whether you know the owner? Why or why not?
- What might your friend be thinking?
- If you were the owner, what would you want to happen next?