The Rise of Retail Theft Has Businesses On-Edge Across the Country
Retailers have always been prone to shoplifting, but recent spikes in coordinated and organized robberies are putting the industry on-edge. And many retailers, including the industry’s top executives, feel that changes need to be made to strengthen both local and federal felony-theft laws.
In New York, the controversy over retail theft’s underlying cause blooms from the state’s bail laws, prevailing online marketplaces where organized retail crews sell stolen goods, and a spike in shootings that have distressed the local police force.
And although New York remains one of the safest cities in the United States, complaints of retail theft rose roughly 16% from 2019 to 2021, as per the New York Police Department. Arrest rates from complaints have also dropped 20% over those two years, from 48.5% in 2019 to 28% last year.
Safety concerns could influence the willingness of employees to go to work across the city, which could spell trouble for an industry already struggling to keep its stores staffed.
Sadly, New York isn’t the only city grappling with an uptick in retail-related crime—retail theft is up everywhere and retailers across the country are being left to fend for themselves.
At the Bay Area Nordstrom, local police state as many as 80 thieves coordinated a robbery in the store last November. Just a month later, a Nordstrom in Los Angeles was caught in the crossfire when thieves assaulted workers with bear spray.
And at a Louis Vuitton boutique in an Illinois mall, about a dozen robbers overwhelmed employees and ran off with $120,00 at the height of the holiday shopping season. From electronics to designer handbags and clothing, secondary marketplaces like eBay and Facebook Marketplace make it easy for these stolen goods to re-enter the legitimate supply chain.
“These are people who make a living stealing and reselling,” said Cory Lowe, an expert on retail crime and research scientist at the Loss Prevention Research Council. “This is not a one-time opportunistic or need-based robbery.”
According to Lowe, what’s happening in New York and around the country is unique compared to the theft of the last few decades. “Smash-and-grab,” or more aggressive, dangerous, and frequent group-led robberies are most comparable to crime in New York during the 1970s, but Lowe suggested that even this comparison is a stretch.
What’s happening in New York?
In Manhattan, the neighborhoods with retailers challenged by theft the most include those that relied on commuters prior to the pandemic and have the largest concentration of drug treatment centers.
Joseph Lorenzo, the owner of Macson Shoes in Washington Heights, told the New York Times last month that shoplifting took an unpredicted turn last year. More people, he said, are walking into his store who appear to be mentally unstable or on drugs.
“The fear and unpredictability of these guys turning violent is what scares us the most,” Lorenzo said.
For many store owners in Lorenzo’s position, the risk of injury and the modest price of goods in their brick-and-mortars make it not worth going after shoplifters. Coincidentally, the New York Police Department maintains that one reason arrest rates have dropped is that stores don’t hire security guards willing to detain robbers.
Moreover, the outcome of a robbery can leave a financial burden on store owners, even if the dollar amount stolen wasn’t much. Last November, a man showed up twice in three days at the Blue Marble Ice Cream shop on the Upper West Side claiming to have a gun and demanding money.
Only having lost $32 from the register, the shop was forced to close for the rest of the day as police looked for fingerprints and conducted an investigation. Further repercussions stressed employees when the suspect, who’d been arrested after the first incident, was released without bail and came back to the shop.
“You don’t know how a situation will escalate,” said Larock, who worked at Blue Marble during the incident but quit because she felt targeted.
Another Blue Marble employee, Angel Valdez, felt the same anxieties as Larock but was unable to quit because of financial pressures.
“I don’t have the luxury to leave this job even though every single day, I’m afraid of what’s going to happen,” he told the Times.
Solving the financial burdens of theft
Unfortunately, the cost of theft doesn’t stop there, as breaking even in the wake of the pandemic is significantly harder when shoplifting rates increase by just a couple of percentage points.
“For every $330 worth of products stolen, a retailer has to sell an incremental $300,000 worth of goods to break even,” said Burt Flickinger, managing director of retail consultancy Strategic Resource Group. “We’ve talked to retailers across America who say shoplifting is now 2% to 3% of their total sales. That’s up from 0.7 to 1% pre-pandemic.
And according to the NRF, organized retail crime costs retailers roughly $700,000 per $1 billion in sales. This, compounded by a record 57% of retailers surveyed by the NRF indicating a rise in retail crime during the pandemic doesn’t leave small business owners with much confidence going forward.
There are, however, local and federal actions being taken against theft across the country. For example, California’s Governor Gavin Newsome recently proposed $255 million in additional law enforcement funding towards retail theft and the INFORM Consumers Act reached bipartisan support in Congress, which would require online marketplaces to verify state-issued IDs for sellers.
According to Amanda Mull of The Atlantic, large brick-and-mortars stand to benefit from these measures more than their smaller competitors.
These measures will “encourage people to see even the pettiest property crime as a mortal sin, allocate public funding to help companies shore up their inventory issues, and weaken the competitive advantage of large-scale online-shopping platforms,” she said.
Nevertheless, the solutions that go into place in New York will look different from those in California or Illinois and some business owners will be at the mercy of their own security measures.
Best Buy has already implemented a number of tactics including locking up products and hiring additional security to minimize theft and protect employees. Home Depot has launched a new line of power tools that require activation at the checkout counter, and Walgreens has gone as far as closing stores in San Francisco neighborhoods where shoplifting persists.
Unless sweeping changes are made, it’s hard to imagine theft and robbery rates significantly dropping by the end of the year. Business owners, their employees, and shoppers deserve to feel safe both inside and outside brick-and-mortars, but as it looks, things will get worse before they get better.