An epidemic of theft, fraud and robberies are forcing the shuttering of retail stores across many cities. Walmart is closing stores in Chicago and New York City. Target shut down nine stores in four cities, including Portland and Seattle. Big box chains are abandoning downtown San Francisco.
A CVS Pharmacy, located in Washington, D.C., has been ransacked so many times by mobs of teenagers that the firm announced it is abandoning the store next month. A spokesman said groups of as many 45 teenagers regularly clean out the store, leaving rows of empty shelves.
The crime wave is a burgeoning threat to the $1.3 trillion retail industry, according to a report by the National Retail Federation (NRF). Longstanding risks such as robbery and in-store theft are not the only problems. The industry also has been battered by return fraud, gift card fraud and payment fraud.
Petty theft and shoplifting are overshadowed by the emergence of gangs of organized criminals operating in major cities. Teams of thieves smash stolen cars into stores and haul away hundreds of goods. The criminals resell the merchandise on the black market to make a profit.
NRF research found 70% of retailers reported an increase in organized crime incidents over the last five years. The data shows 38% of organized crime occurred in-store, while 45% transpires en route from the distribution center to the retailer's store.
The survey of retailers found that 48% of stores reduced operating hours because of crime. Another 29.7% trimmed product selection and 28.1% reported closing specific store locations. Scores of Mom and Pop stores have been the hardest hit by criminal activity.
"Retailers are seeing unprecedented levels of theft coupled with rampant crime in their stores, and the situation is only becoming more dire," said NRF, VP David Johnson. "Far beyond the financial impact of these crimes, the violence and concerns for employee and customer safety are our priority."
Leaders from the retail industry testified before a Congressional Committee in December, detailing the scope of the problem. Increased violence involving theft is causing injury to employees and consumers, the death of some retail associates and a fear of working or shopping in high-crime locations, they said.
The NRF is lobbying Congress to pass a Combating Organized Retail Crime Act, to crack down on organized retail crime. The bipartisan legislation, if approved, would create an intra-agency group within Homeland Security to coordinate with other federal law enforcement agencies to rein in crime.
Financial losses are soaring for retailers. Retailers were hit with $112.1 billion in retail theft in 2022, the latest annual data available. Shoplifting losses grew 19.4% over 2021. Retailers lost an additional $84.9 billion in fraudulent sales returns, which represent a mushrooming concern for the industry.
In the absence of 2023 numbers, William Blair Investment Banking analyzed NRF data and estimated that retailers absorbed $142 billion in inventory shrinkage and theft losses, a jump of 25% from 2022. Shrinkage is a retail industry term for the difference between inventory and actual physical goods.
Large organizations of professional shoplifters are taking advantage of soft-on-crime policies in big cities to steal store goods and resell the merchandise openly on the streets, sometimes not far from the scene of the crime. The lucrative nature of the theft is encouraging more individuals to turn to crime.
In California, home to the largest increase in organized theft, the state passed a law that stipulates stealing merchandise worth $950 or less is a misdemeanor. It often means that law enforcement likely won't bother to investigate and prosecutors will let offenders off, even if police arrest someone.
Transnational criminal organizations crossing the southern border are contributing to the rising tide of theft in both urban and rural areas, Texas Rep. August Pfluger told a Congressional hearing. Lenient crime legislation, no cash bail laws, reduced police presence and weak-kneed district attorneys are all to blame for the explosion of retail theft.
Many legacy news outlets and social justice advocates blame retailers, accusing them of manipulating theft data to camouflage a decline in profits. Since most retailers are regulated by the Securities & Exchange Commission, auditors would have ferreted out these irregularities.
There are liberals in Congress, such as Alexandria Ocasio-Cortez, who has repeatedly claimed that the spike in retail theft is evidence that desperate families are shoplifting food because of rampant hunger. The data undermines her attempt to raise sympathy for thieves.
Retail industry statistics show that among the most stolen items are athletic clothes, mobile devices, denim, cosmetics, handbags, jackets, sneakers, mechanic tools, beauty aids, alcohol, candy, gum and energy drinks. Hunger may be a real issue in New York, but these items won't feed a family.
The real victims are consumers--you and me--who end up paying for the thievery. Retailers losses are passed on to consumers in the form of higher prices. Without a sea change, stores will be forced to hire more armed guards and lock up merchandise to protect inventory, souring the shopping experience.
It's time to quit coddling criminals and declare war on organized theft. Since 2022, nine states have passed laws to impose harsher penalties for organized retail crime. Inexplicably, states hardest hit, such as California and New York as well as the District of Columbia, continue their ineffective approaches.
Communities need to demand more police presence, stronger prosecutors and tougher laws. Hard working Americans should not have to pay for the criminal spree sweeping the retail industry.
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