Year in Review: Retail Crime Ratchets Up

From chaotic smash-and-grabs to carefully orchestrated flash mobs, heists and fencing operations, the issue of organized retail crime was among the U.S. retail sector’s most talked about challenges in 2023. With shoplifting incidents accounting for tens of millions of dollars in shrink, retailers, legislators and law enforcement sprung into action this year to staunch the bleeding.

Some of the nation’s largest and most populous cities have been hit the hardest by organized retail crime, according to the National Retail Federation’s (NRF) 2023 annual security report. Los Angeles topped the list for the fifth year running, followed by cities like Oakland and San Francisco, Houston, New York City, Seattle, Atlanta, Sacramento, Chicago, Denver, Miami and Albuquerque.

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Organized retail crime spiked in Southern California during the summer, with a Nike store in East L.A repeatedly targeted and stripped of sneakers and other merchandise by local crime rings. A Nordstrom store at the Topanga Westfield Mall saw $356,000-worth of products lifted by a targeted flash mob in August, and an Yves Saint Laurent was robbed of $300,000 in luxury goods around the same time.

As such incidents snowballed, California Governor Gavin Newsom issued an emergency directive to the California Highway Patrol (CHP) to triple the resources allocated to fighting organized retail crime in L.A., and Mayor Karen Bass established the city’s first Organized Retail Crime Task Force (ORCTF) in August. Weeks later, Newsom announced California’s largest-ever single investment to aid statewide organized retail crime-fighting units—$267 million in funding to be disseminated to 55 local law enforcement agencies, from the Bay Area to San Diego.

L.A. ORCTF has recovered over $139,000 in stolen merchandise to date, Deputy Chief Kris Pitcher of the L.A. Police Department (LAPD) told Sourcing Journal this week. Its partners at CHP reported reclaiming over $700,000 in boosted goods and the L.A. Sheriff’s Department repossessed nearly $429,000 in pilfered products. L.A. ORCTF has arrested 125 criminals in conjunction with organized retail crimes, executed 92 search warrants, and aided in 49 district attorney and attorney general court filings and the recovery of 14 firearms.

California legislators and law enforcement officers like Pitcher largely blame Proposition 47, a ballot measure passed by voters in 2014, for the rising levels of organized retail crime. The law, which raised the felony threshold for retail theft from $400 to $950, has emboldened criminals, according to State Assemblymember Al Muratsuchi, who represents the 66th district located in the South Bay of L.A. County. Earlier this year, Muratsuchi introduced Assembly Bill 1708, which would ramp up penalties for repeat offenders. He’s introduced at least five bills with similar intentions in recent sessions, all of which have failed to gain traction.

Across the state, store closures took shape as a result of organized retail crime. San Francisco saw the Westfield-owned San Francisco Centre, a 20-year fixture in the city’s downtown Union Square neighborhood, shutter with the property’s owners citing “challenging operating conditions” as their reason for abandoning the location in August. Nordstrom, the mall’s last-standing anchor store, cited “deviant shopper behavior” as its reason for closing its final two locations in the San Francisco market.

Target announced the closure of nine retail stores in Berkeley and Oakland, Calif., along with locations in New York City, Seattle, Portland, Ore., as a result of untenable levels of theft in September, saying it had exhausted strategies like locking up highly targeted merchandise and partnering with the U.S. Department of Homeland Security’s Homeland Security Investigations (HSI) division to digitally track organized retail crime groups. “Despite our efforts, unfortunately, we continue to face fundamental challenges to operating these stores safely and successfully,” it said. The big box retailer estimated that retail shrink could account for $500 million in earnings losses this year.

But some are skeptical of the role that retailers have played in combatting retail crime. Sacramento County Sheriff Jim Cooper said Target interfered when his department tried to stop shoplifting at one of its Northern California stores, as it was wary of the “optics” of confronting criminals. Cooper said Target even urged its employees not to call law enforcement when known thieves continued to hit up the same location for fear that an altercation could become social media fodder.

Dealing with deviant customers like shoplifters takes a toll on store associates, a Florida Atlantic University (FAU), Louisiana State University, Ohio University and Salisbury University study found in April. In fact, more than half of the 26 retail workers surveyed said they wanted to leave their jobs because of the behaviors they’d experienced—and the often confusing policies put in place by retailers to deal with retail crime.

Just 54 percent of retailers are increasing employee training related to workplace violence, despite the fact that 67 percent of retailers have seen more aggression from criminals in 2023, according to NRF’s security survey. More than two-fifths have taken a “hands off” approach when it comes to confronting shoplifters.

But conflicting protocol across the retail space has exasperated workers—even leading them to strike on one of the year’s most pivotal shopping holidays. More than 400 sales associates at three Washington state Macy’s locations refused to work on Black Friday, rallying behind several colleagues who said they faced retaliation from management for calling police when shoplifters targeted their stores. “We are asking Macy’s to provide a clear and consistent policy for how we are supposed to handle safety threats, and to stop retaliating against workers for calling security when there is a threat,” one worker said.

Legislators, too, have taken a varied approach to combatting the issue. In New York, Governor Kathy Hochul struck down legislation that would establish the New York State Organized Retail Crime Task Force, saying it would cost the state $35 million that was not in its budget. Melissa O’Connor, president and CEO of the Retail Council of New York State, said local retailers were “extremely disappointed” by the outcome, having lost $4.4 billion to retail theft in 2022 alone.

New York City Mayor Eric Adams has been much more aggressive on the issue, given the city’s escalating issues with organized retail crime. This fall, Adams launched a city-wide task force supported by New York Attorney General Letitia James and all five city district attorneys, the New York City Police Department (NYPD), the Mayor’s Office of Criminal Justice (MOCJ) and the New York City Department of Small Business Services (SBS), among others.

The lawmaker last year commissioned a retail theft report featuring insights from retail and law enforcement showing that retail crime had increased by a whopping 77 percent across the city’s five boroughs over the course of five years. “New York City’s retailers are the heart and soul of our city, and retail theft hurts everyone, from our mom-and-pop shops to large department stores—and especially consumers,” he said in November. “I am proud to convene this group of experts and practitioners as we continue to take a 360-degree approach to combatting retail theft and curbing this serious issue that plagues cities across the country.”

The issue has also captured the attention of legislators on The Hill. More than 73 brands signed a letter addressed to House and Senate leaders in support of the Combating Organized Retail Crime Act of 2023, a bipartisan bill introduced in February that would establish a national coordination center combining resources from state, federal and local law enforcement agencies, along with the retail community, to combat retail theft and organized crimes like smash-and-grabs. Cosponsored by 41 Congressional Democrats and 37 Republicans, the proposed law has gained strong bipartisan support.

While lawmakers and law enforcement in major cities continue to sound the alarm about organized retail crime, skeptics are emerging.

The New York Times wrote in late November that claims of a “retail theft wave” have been “exaggerated,” pointing to Council on Criminal Justice data that shows most U.S. cities have seen reported incidences of retail crime decline, not increase, since before the Covid-19 pandemic. Notably, New York City has experienced the biggest jump in reported retail crimes in recent years, clocking a 63-percent increase in shoplifting between 2019 and 2023. The group’s data also showed reported retail thefts in L.A. rose by 61 percent during the same time period.

Analysts at investment bank and financial services firm William Blair, who monitor the performance of companies like Target, BJ’s Wholesale Club, Burlington, Costco, Five Below, Nordstrom, O’Reilly Automotive, TJX Companies and Ulta Beauty, also posited that some retailers may be using retail crime and shoplifting as a red herring for their own lackluster performance in the face of inflation, lower consumer demand and a highly promotional retail environment. Retailers like Target that have chosen to close stores “could be using shrink to mask other issues,” including mismanagement, the group said.