By the end of 2022, Target expects to have lost some $600 million in profits, due to sticky-fingered thieves stealing goods from its retail stores. Walgreens has seen a more than 50 percent rise in retail theft since 2019. The National Retail Federation’s 2022 Retail Security Survey finds this “retail shrink” is now a nearly $100 billion problem.
You might imagine that much of this shoplifting comes from pinched consumers who, struggling in inflationary times, are literally taking things into their own hands. But no—these thefts are actually part of a large-scale criminal enterprise, according to retailers and experts, with crime rings that lift lots of merchandise, then sell the pilfered goods online. The proceeds are laundered by professional fencers.
Organized retail crime, as this shady business is known, is not just a threat to the businesses being stolen from—though Walmart’s CEO Doug McMillon, for one, says the company may close some retail stores as a result of it (and/or raise prices). Aggressive thieves have hurt, and even killed, store employees while committing their crimes.
There are other victims, too. Some organized retail crime gangs may engage in human trafficking, “where in many instances they’ll work with individuals bringing immigrants over the border, and in order to pay their fees to get across the border, they’ll utilize them as boosters to steal merchandise,” National Retail Federation vice president of asset protection and retail operations David Johnston explained. A New York City police captain raised the prospect that the criminal proceeds are being used to buy guns and fund further crime.
In response to this growing criminal industry, retailers are investing heavily in more anti-theft measures. These include tech solutions like AI-based video surveillance at checkout, putting attractive goods behind glass, and deploying security robots. One-third of the retailers surveyed by the NRF noted that they would be adding organized retail crime teams in place in their stores.
Companies are getting some help from the U.S. government too. Homeland Security Investigations (HSI) and the Association of Certified Anti-Money Laundering Specialists (ACAMS) put out a joint report to help retailers combat organized retail crime. The U.S. House of Representatives passed a bill, the INFORM Consumers Act, that would require online retailers to verify the identities of third-party sellers moving a lot of goods, and it introduced another bill to set up an organized retail crime center in the Department of Homeland Security. Neither bill has become law, but there’s always next session.
“This is not petty theft. It’s not somebody who can’t afford to eat tomorrow. These are gangs that actually go in and empty our stores of beauty products,” James Kehoe, the chief financial officer of Walgreens, explained during an earnings call. “As with all of our peers, it’s a real issue.”
Discussion Questions:
- What can stores do to combat organized retail crime?
- What should the government do to help protect stores and employees against organized retail crime?
- Is there anything consumers could, or should, do to help fix this problem?
Sources: Brian Sozzi, “Target: ‘Organized Retail Crime’ Has Driven $400 Million in Extra Profit Loss This Year,” Yahoo, November 16, 2022; “Target CFO Talks Earnings, Inflation, and Consumer Trends,” Yahoo, March 1, 2022; Avery Hartmans and Ben Tobin, “Organized Retail Crime Has Ballooned into a $100 Billion Problem—and Store Employees Are Dying over It,” Insider, December 18, 2022; “The State of National Retail Security and Organized Retail Crime,” cdn.nrf.com, September 14, 2022; “HSI, ACAMS Take Aim at Organized Retail Crime,” ice.gov, June 1, 2022; Gabrielle Bienasz, “Organized Retail Theft Could Lead to Stores Closing,” LA Times, December 7, 2022