Retailers Put Theft In The Spotlight — But Does The Publicity Fit The Crime?
Tales in the U.S. and UK abound of an in-store retail crime wave of looting from coast to coast, with flash mobs sweeping through vulnerable stores, anti-social and increasingly violent behavior from organized criminals, and the city of San Francisco all but closing up shop.
The crime being highlighted by retailers isn't a symptom of desperation among the hardest hit by the economic downturn, people forced to steal essentials. Instead, retailers have blamed organized gangs and a breakdown in civil behavior for some of the financial problems they are facing.
A sense of lawlessness is the last thing that embattled landlords need, with fears that more retailers might opt to close the doors on what they view as high-risk locations.
However, things aren't quite what they seem. Shoplifting is clearly a problem for retailers, made more public by social media. Incidents of violence toward shop workers are shocking and not to be underplayed.
But some retail analysts and researchers have argued that local crime statistics conflict with this narrative and questioned whether this is less a worsening crime spree and more a case of “theftwash” to cover up performance issues.
The issue came to a head on Sept. 26, when retail industry body the National Retail Federation published a damning survey on retail crime; Target closed nine stores, citing shop theft; and a slew of Philadelphia stores, including Apple, Lululemon, Foot Locker and GameStop, were looted overnight.
The day's events threw into sharp relief problems that had been bubbling for some time. San Francisco has been at the epicenter, with a perfect storm of low return-to-office rates, a perception of worsening drug abuse and street crime, and the knock-on impact of declining civic dollars speeding the exit of a raft of retailers. When Nordstrom confirmed its exit from Westfield’s flagship mall in the city, the landlord followed suit and handed back the keys to the center to its lender.
It isn't the only example. A Victoria’s Secret in Wichita, Kansas, reportedly lost $30K a month to theft. Nike has permanently closed its Portland, Oregon, factory store after local news station KGW-TV reported thieves were “stealing armloads of Nike merchandise and walking out the front door with no fear of being stopped.” And social media is awash with mob lootings.
However, across the country, the increase in the rate of theft at stores doesn't “correspond to the increase in company commentary and actions,” according to a report by retail analyst William Blair & Co.
“Companies are also likely using the opportunity to draw attention away” from lower profit margins because of deeper discounting and poor inventory planning, William Blair retail analysts Dylan Carden and Phillip Blee said in the report.
The analysts said overall shrink — the catch-all industry term for merchandise losses from external and internal theft, damage and supply chain losses — makes up just 1.5% to 2% of retailers’ sales, a figure that has remained steady for years.
And while reported shoplifting incidents across U.S. cities did rebound in the first half of 2023 compared with pre-pandemic levels, that was driven largely by New York City, according to analysis from the Council on Criminal Justice, which describes itself as a diverse, nonpartisan panel of expert producers and consumers of criminal justice statistics.
Statistics vs. Retail Crime Claims
Examining trends in 24 cities using data from local law enforcement agencies and the U.S. Justice Department’s National Incident-Based Reporting System, the CCJ found that shoplifting reports were 16% higher (about 8,450 more incidents) during the first half of 2023 compared with the first half of 2019. However, with New York excluded, the number of incidents was 7% lower (about 2,550 fewer).
New York and Los Angeles' respective 64% and 61% jumps represented the largest growth in reported shoplifting from midyear 2019 to midyear 2023. St. Petersburg, Florida, and St. Paul, Minnesota, had the largest decreases at 78% and 65%, respectively. Store assaults were 7% lower in the first half of 2023 than in the first half of 2022, although they were 8% higher for the same period compared with 2019.
“It’s critical that we distinguish quantity from quality,” CCJ President and CEO Adam Gelb said. “The overall data doesn’t indicate a great shift in the average shoplifting event, but the brazen ransacking incidents, coordinated on social media and captured on video, clearly suggest that there is a sense of lawlessness afoot, that anything goes.”
In its recent report, the NRF estimated a 20% surge in total retail shrink last year, representing about $18B worth of goods. But inventory shrink as a percentage of sales averaged 1.6%, only slightly above a five-year average of 1.5%.
Yet mentions citing “organized retail crime” on earnings calls increased 43% from January through August from a year ago, according to the U.S. Chamber of Commerce, while Target blamed the closure of nine stores in major cities specifically on “theft and organized retail crime threatening the safety of our team and guests and contributing to unsustainable business performance.”
David Blumenfeld, whose company owns one of those locations, a shopping center in Harlem, New York, told Bloomberg that the closure was a “business decision to move to small-format stores” and claimed that Target had already signed a lease to open a store less than half the size only a mile and a half away.
Separately, an analysis by journalist Judd Legum for Popular Information shows that the stores Target is closing in New York and San Francisco had lower reported theft rates compared to other nearby locations.
“We believe companies like Target could indeed be using the current narrative around shrink to take broader action in lagging parts of their business,” the William Blair analysts wrote. “We have to acknowledge potentially ulterior, more opportunistic motives.”
A Target spokesperson said in a statement at the time that organized retail crime had increased 50% in its stores since 2021 and that theft incidents involving violence or threats had grown, but the retailer didn't respond to a request for comment from Bisnow.
For their part, retailers are pointing the finger at repeat offenders and organized retail crime, and 88% of retailers in NRF’s survey reported that shoplifters are more aggressive and violent compared with a year ago, including 49% who had observed “much more” violent and aggressive behavior.
That has brought a mixture of responses. In June, Lululemon CEO Calvin McDonald doubled down on his controversial decision to fire two employees at the athleisure retailer who tried to intervene during a theft in late April at its store in Peachtree Corners, Georgia.
Video footage showed two men wearing hooded sweatshirts and face masks rush in and grab armloads of merchandise before rushing out, with the employees pursuing them.
“In this particular case, we have a zero-tolerance policy that we train our educators on around engaging during a theft,” McDonald told CNBC in an interview. “Why? Because we put the safety of our team and of our guests front and center. It’s only merchandise.”
Such strategies, which are increasingly common among retail chains, have divided opinion. Intended to ensure the safety of staff by avoiding confrontations, they have also increased the sense that shoplifters face few consequences or risks, exacerbated by the perception of apathetic police responses on both sides of the Atlantic.
In the U.S., there has been a growing clamor for specific legislation to deal with organized retail crime. Shopping center body ICSC actively supports ongoing policy efforts, including the Combating Organized Retail Crime Act of 2023, sponsored by Sen. Chuck Grassley.
“Organised retail crime not only harms communities and retail centers but also threatens the safety of consumers and retail workers alike,” the ICSC told Bisnow. “Landlords have made significant investments in resources to prevent rampant theft while also maintaining a high-quality experience for shoppers. Unfortunately, this is a multi-faceted issue that involves all levels of government and law enforcement as well as retailers and landlords working together.”
Meanwhile, in the UK in late August, Secretary of State for the Home Department Suella Braverman called it unacceptable that crimes such as shoplifting were treated as “less important.”
British police forces have pledged to improve investigations, and in London, the Metropolitan Police Authority has announced plans to use facial recognition technology to identify prolific retail offenders. Retail crime is responsible for the loss of an estimated £1.9B in revenue in the UK each year, according to the Met.
Statistics shared by the Met with Bisnow show that crimes in the London borough of Westminster, home to the city’s famous West End shopping district, rose from 281 in September 2022 to 399 in September 2023.
Commissioner Sir Mark Rowley met with retail leaders to discuss the issues. At the end of September, the Met asked 12 leading London retailers to send closed circuit television images of their top 30 prolific offenders and used facial recognition technology against its custody image database, and “within a matter of days,” 149 suspects had been identified, police said.
“We’re pushing the boundaries and using innovation and technology to rapidly identify criminals,” Rowley said in a statement. “The results we’ve seen so far are game-changing.”
