Rise In Shoplifting Has Made Retail Private Security The New Cost Of Doing Business

With shoplifting and organized retail crime reportedly on the rise and credited for shuttering stores across the nation, retailers, politicians and property owners are funneling resources into private security and loss-prevention efforts.

Almost half of 177 retail brands surveyed in the National Retail Federation’s 2023 Retail Security Survey released last month said they have increased the use of third-party security personnel as a measure of prevention. Meanwhile, states like Texas, which has seen a near 27% rise in organized retail theft since the beginning of the pandemic, have put together task forces to get ahead of a trend Texas officials say is plaguing large cities across the nation. 

Texas Comptroller Glenn Hegar, who announced a task force in September, said it was in response to a growing threat of “mob attacks on retail outlets.” And though opinions vary on how seriously to take that threat, industry players say enhanced security measures have become a top consideration in leasing to and maintaining retail tenants.

“Retail shrinkage used to largely be attributed years ago to individual suspects, someone going in and stealing one time or from one store. And now it's really more about these organized rings,” said Holly Beilin, director of communications for national security firm Flock Safety. “They are doing this at multiple locations. They're very highly organized, they're selling all the stuff that they get online. So I think it is significantly more visible.”

Shrinkage refers to the measurement of losses calculated by a retailer during a specific period of time and includes theft as well as factors like damage and cashier error.

Concern has mounted as a growing list of retailers have closed down stores, including Walgreen's and Target, which announced in late September it would close nine stores due to shoplifting and organized retail crime.

Though landlords have pushed back on that reasoning, security has become a prominent issue for tenants, especially in places like Houston, which the NRF ranked third out of the top 10 American cities affected by organized retail crime in 2022.

“In Houston, many shopping center owners have hired security guards to patrol their parking lots, and retailers have hired security to guard their exits,” Lilly Golden, principal of Houston-based Evergreen Commercial Realty, told Bisnow. “Fortunately, these issues have not slowed the consistent demand for quality retail space in Houston.” 

The National Retail Federation's security survey found that 52% of respondents have increased their allocations to security technology and software solutions over the past year. Houston's Westchase District is one shopping zone that has reacted to the demand, stepping up its security over the past several years.

After the organization expanded its Westchase District Patrol in 2022, installing license plate-reading cameras and creating a dedicated dispatch line for property owners and businesses, crime within the 4.2-square-mile radius dropped 21% in a year, according to Houston Police Department data. Shoplifting was down 31.8% from October 2022 to March 2023 compared to the same six-month time frame a year earlier.

“If we didn't have this patrol, some of these retailers would have followed [Target and others] and probably ended up closing down because they used to have some shoplifting,” said Mark Hubenak, Westchase District’s vice president of public safety. “But now we respond to it so quickly, I don't think it's an issue anymore.”

The Westchase District Patrol has been active since 2004 but beginning in October 2022, the management district added an extra private patrol officer and K-9 partner from Houston’s S.E.A.L. Security to each of its shifts in addition to a new late-night shift. These private officers support Houston police officers already working for the Westchase District.

While Houston Police officers will still be the ones to make an arrest, the visible presence of patrol cars and response time of S.E.A.L. officers help prevent crime, Westchase District Vice President of Communications Sherry Fox said.

Retail stores have built relationships with the patrol officers to help cut down on shoplifting, Hubenak said.

“If a known shoplifter comes in, they'll call our dispatch number then and say, ‘Hey, a shoplifter just came in our store, come to our store now,’ and they'll get there before the shoplifter even leaves,” he said.

Ishnella Kaur Azad said this type of coordinated response is imperative to prevent shoplifting, especially in stores with self-checkouts. The co-founder of Houston-based 5Rivers CRE, Azad owns more than 4M SF of retail centers throughout the southern U.S.

“When the self-checkouts went in and you didn't have a correlated enough police or security presence, there was nobody to check when people were stealing or not stealing,” Azad said. “So therefore the shrinkage rate goes up.”

The NRF survey found that shrinkage accounted for $112.1B in losses for retailers last year, up from $93.9B in 2021. That represents only a slight increase from 1.4% shrinkage in 2022 to 1.6% today, leading some to claim the risk has been somewhat overblown.

NRF’s 2023 #NationalRetailSecuritySurvey found that retailers lost $112.1B to shrink in 2022, up from $93.9B in 2021. Read more: https://t.co/hcPht0S5qa pic.twitter.com/iIupu1r4xE

— National Retail Federation (@NRFnews) September 26, 2023

Azad said stores have requested rent decreases from her, citing shrinkage increases. After putting up cameras and finding out that the manager of one store was selling pallets of merchandise from the back door, Azad did not grant the request to lower the rent.

She is skeptical of Target’s reasoning, too, she said, adding to the roster of landlords to dispute Target CEO Brian Cornell's assertion it was forced to close stores due to a 120% spike in theft. Those landlords argue the retailer used crime to excuse an inability to successfully operate large-format stores in big cities.

“It’s just straight up bullshit,” Azad said of Target’s claims.

Even so, Azad recommends her tenants hire private security in their stores.

“When they didn’t, because they didn't believe me, they had more shrinkage. When they realized that it was hitting their bottom line, they finally said, ‘OK, we're going to stop being so cheap and we'll pony up for even an off-duty police officer,’” Azad said. “Shrinkage cut in half.”

What's more worrying is that Azad has had two security officers shot on her properties, she said. 

While theft has an impact on margins and profitability, Golden said the increasing level of violence associated with shoplifting is more troubling. An overwhelming number of retailers — 88% — in NRF’s study said shoplifters are more aggressive and violent than they were a year ago.

Forty-five percent of respondents in the survey reported reducing store operating hours in response to retail crime, social and/or physical disorder or violence. Thirty percent altered product selection and 28% closed a specific store.

Houston has seen some retail impact due to safety concerns, with two Houston post offices suspending retail operations last month. Multiple retailers, including H-E-B, eBay and Amazon, have joined the Texas comptroller’s task force to combat organized retail theft. 

As new technologies continue to emerge, retailers are piloting and testing various offerings to combat the shoplifting issue, Golden said.

“We've seen a pretty dramatic increase in demand for our license plate recognition cameras,” Beilin said. “The reason being is that not only has there been a rise in [organized retail crime], but unfortunately, it coincides with also a rise in violence in these instances.”

If organized retail crime rings are hitting multiple stores with license plate-reading cameras monitoring their perimeters, security could flag vehicles involved in crimes, she said. Once flagged, a security guard or police officer could be notified once a suspect enters the premises and prevent the people in the car from entering the store, stopping the crime before it happens, she said.

A shopping center being equipped with such equipment can help attract tenants, Beilin said.

“That will be a selling point,” she said.

The Westchase District sees its patrol as an asset for commercial real estate tenants, and it tries to ensure brokers know about the program, Fox said. Brokers have reported getting a lot of questions about public safety when leasing space, she said.

“To be able to tell the tenant ‘You’re in the Westchase District, you can call this dedicated dispatch number for any purpose and an officer will respond' is a big selling point in this day and age where everyone is concerned about crime everywhere.”