You may have noticed the laundry and cleaning aisles at your grocery store are nearly empty. Or maybe you’ve had to start presenting your receipt when exiting the market.
Retailers are blaming worsening theft and violence for lost profits and shuttering stores. Target last week became the latest large retailer to announce store closures, citing crime as its driving factor. Meanwhile, Home Depot, Lowe’s, Dollar Tree, Dick’s Sporting Goods and Ulta have all raised concerns about disappearing inventory - known as “shrink” - in their last round of earnings calls. And a recent report by the National Retail Federation found that “retail crime, violence and theft continue to impact the retail industry at unprecedented levels.”
Even former president Donald Trump weighed, taking a decidedly draconian stance in a speech last week before California Republicans. “We will immediately stop all of the pillaging and theft,” Trump said. “Very simply: If you rob a store, you can fully expect to be shot as you are leaving that store.”
Are we in the midst of shoplifting crisis? Here’s what you need to know.
What is organized retail crime?
The most prolific shoplifters are likely organized, according to the National Retail Federation, part of a coordinated effort to steal items and then illegally resell them online through such sites as Amazon, eBay, OfferUp, Facebook Marketplace and Walmart Marketplace.
(Amazon founder Jeff Bezos owns The Washington Post, and the newspaper’s interim CEO, Patty Stonesifer, sits on Amazon’s board.)
How pronounced is organized retail crime?
It’s hard to quantify organized retail crime because companies categorize shoplifting losses as shrink, a term that also applies to employee theft, inventory miscounts and processing errors.
The closest tracking comes from NRF; according to its last annual survey, involving 177 retail brands, shrink was responsible for $112.1 billion in losses in 2022. That’s a 19.4 percent spike from the $93.9 billion reported in 2021. More than half of those losses were attributed to employee theft and operational and processing errors, which climbed 29 and 27 percent, respectively.
Nor is there much evidence that organized retail crime is having a significantly greater impact on retailers than in years past. External theft accounted for 36 percent, on average, of all theft last year, according to the survey, a slight decline from 2021.
Some industry analysts are skeptical of retailers’ assertions that shrink is taking an outsize toll on profitability at a time when consumers already were pulling back on discretionary spending and trading down for cheaper alternatives to offset inflation.
“As shrink includes many things including internal theft and items a retailer has lost, it is difficult to understand the true scale and impact of crime,” said Neil Saunders, the managing director of the analytics company GlobalData. “This gives rise to a view that some retailers are hiding poor performance behind the excuse of crime.”
Early this year, Walgreens executives walked back claims made in 2021 that organized retail crime was the reason for closing five stores in San Francisco. James Kehoe, the company’s chief financial officer, told investors that “maybe we cried too much last year.”
But it is clear that in-store violence has increased and is “becoming more dire,” David Johnston, the retail federation’s vice president for asset protection and retail operations, said in a news release Tuesday. “Far beyond the financial impact of these crimes, the violence and concerns over safety continue to be the priority for all retailers, regardless of size or category.”
In recent months, stores across the country have been targeted by flash-mob robberies, after-hours break-ins and thefts mid-supply chain. Brian Cornell, Target’s chief executive, said on a second-quarter earnings call last month that stores saw a “120 percent increase in theft incidents involving violence or threats of violence” during the first five months of the year.
What are retailers doing to combat crime?
National and regional retailers have taken several approaches to combat theft. Target is hiring more security, using third-party services and locking up highly sought merchandise like Tide pods and razors. It’s also doing more employee training on de-escalation techniques and other protective measures. The retailer also says it’s upgrading its technology to better detect and track cybercrimes.
Yet Target still plans to close nine stores - in the San Francisco Bay Area, Portland, Ore., Seattle and New York City - by the end of October.
In Washington, D.C., Giant Food is removing all national labels from its beauty and health aisles and implementing receipt checks at the door. The regional grocery chain has hired more security guards, closed secondary entrances and limited the number of items permitted through self-checkout areas.
Richard Dreiling, the chief executive of Dollar Tree, said the discount chain is taking “a very defensive approach to shrink.” The retailer recorded a 30 percent decline in gross profit margin last quarter, largely because of shrink. Now more items will be locked up, moved behind counters or simply discontinued.
In downtown Chicago, Walgreens introduced a new anti-theft store with just two aisles of “low-value” products such as Band-Aids, snacks and batteries, while the rest are kept behind a counter and must be ordered digitally.
Where do police and policymakers fit in?
Several major retailers and industry groups such as Walmart and Target worked together to win passage of the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act that took effect in June. The legislation, known as the Inform Consumers Act, requires online marketplaces to report and verify information about high-volume third-party sellers.
Companies are also calling on local governments to enforce stricter penalties for low-level offenses like shoplifting. Organized crime groups are familiar with local ordinances, stopping short of stealing items reaching a certain value threshold that could lead to prosecution. Since last year, nine states have passed laws for stricter penalties, CNBC reported.
Why else are retailers closing stores?
Industry experts say companies don’t decide to shut down stores on a single issue. Other considerations might include decreased foot traffic, or inflation-related issues such as higher labor and real estate costs. Combined, these forces are leading some of the nation’s largest companies to take a hard look at underperforming markets particularly in large urban areas.
Walmart, Whole Foods, Nike, Kroger, Nordstrom, Old Navy and Target have announced exits from major urban areas. In addition to D.C., other cities seeing news of stores pulling out include San Francisco, Portland, Philadelphia, Chicago, Atlanta and Seattle.