Retail stores already under siege from pandemic restrictions and supply chain hiccups are increasingly facing another threat to their bottom lines: organized theft.
The problem was on vivid display over the weekend when dozens of looters stormed into a Nordstrom department store outside San Francisco wearing masks and wielding crowbars. As many as 80 suspects snatched armloads of products and sped away in more than 20 waiting cars on Saturday. Police have so far arrested just three suspects in connection with the raid.
Thieves smashed the windows and looted the high-end goods of a San Francisco Louis Vuitton store over the weekend as well, creating chaos in a popular area of the city.
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The scenes are increasingly familiar in San Francisco and beyond, with shoplifters taking advantage of more lenient prosecutors, overstretched police forces, and local laws to clear shelves of goods they then attempt to sell, often online.
In a survey of retailers published in August, the National Retail Federation, which describes itself as the largest retail trade association in the world, found that store owners have reported a significant increase in organized retail crime.
Nearly 70% said they had seen organized retail crime increase over the past year, according to the survey, citing “COVID-19, policing, changes to sentencing guidelines and the growth of online marketplaces for the increase in ORC activity.”
Some stores have responded to the spike in professional shoplifting by simply shutting their doors.
In San Francisco, where the problem has received outsize attention, Walgreens announced last month that it would close five locations as a direct result of organized retail crime.
But aggressive shoplifting is not limited to San Francisco, where California state law classifies theft of goods valued under $950 as a misdemeanor that may not warrant the attention of law enforcement.
The problem has spread to stores across the country, draining money from business owners whose margins are often already thin.
Brad Scholz, president and CEO of the Wisconsin Grocers Association, said grocery store owners are often forced to pass the cost of goods lost through theft on to customers.
“Your prices are going to go up,” Scholz told the Washington Examiner. “When it’s a function of retail theft, that’s just money right out of the bottom line.”
“It comes down to recovering the cost from their customers,” Scholz added. “Nobody likes to talk about that.”
Customers are already paying more at the grocery store and at virtually every other kind of retail front due to skyrocketing inflation. The consumer price index, a measure of inflation, rose 6.2% last month, representing the largest inflationary spike in three decades.
Organized retail theft now costs store owners $700,000 for every $1 billion in sales, the NRF said last week.
Retail experts have pointed to shifts in consumer behavior as one of the factors driving the shoplifting epidemic.
With more people than ever shopping for more of their purchases online, thieves have an easier time offloading the everyday goods they swipe from shelves.
According to the NRF, the goods most commonly targeted by gangs engaging in organized retail theft include “designer clothing, laundry detergent, designer handbags, allergy medicine, razors, high-end liquor and pain relievers.”
Ben Dugan, director of organized retail crime and corporate investigations at CVS Health, testified before the Senate Judiciary Committee earlier this month that the relative anonymity offered by online marketplaces to sellers can allow organized crime rings to sell products to buyers who often don’t know that they’re purchasing stolen goods.
Dugan said a CVS location now reports organized theft activity every three minutes, noting that the chain has experienced a 300% increase in organized shoplifting since the start of the pandemic.
The increase in many categories of crime, not just shoplifting, has also contributed to the issue by sometimes diverting the attention of police toward more pressing needs.
“You cannot blame law enforcement here,” Scholz said. “When you stack up retail theft against major crimes, the local squad has got 15 other things they’re doing, and we have to understand.”
“I think we’ve changed our attitude toward law enforcement, knowing that [they have] so many challenges that they have to deal with, in some places where they cut funding,” he said. “The fewer police you have on the streets … who is going to protect store owners?”
Police in many cities are already reducing services in key areas in response to staffing shortages, funding cuts, and the increased burden created by rising crime.
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In Austin, Texas, for example, residents were encouraged starting in October to avoid calling 911 for criminal activity unless they are in immediate physical danger.
In part due to staffing shortages and in part due to concerns about racial disparities, police in Portland unveiled a policy this summer of no longer pulling cars over for minor traffic violations.
Retailers have recently advocated for harsher penalties for organized retail crime, which in some places is considered a misdemeanor if the value of stolen goods remains below a certain level.
