Mayhem on Main Street: Retail theft has serious side effects for wider community
Sarah Bedford
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A nationwide retail theft epidemic cost the United States close to $100 billion in 2021. Stores are being forced to raise prices or shut up shop, insurers are refusing to help, and smaller mom and pop stores are being left behind. In this series, Mayhem on Main Street, the Washington Examiner will investigate the causes behind the scourge of shoplifting, the role of the cartels, the cost to stores big and small, and the complicity of lax prosecutors. Part 5 will focus on the side effects of retail theft to communities. To read parts 1, 2, 3 and 4, click here, here, here and here.
Organized retail theft has not only cut into the profit margins of big brands — it’s seriously affecting the experience of shopping and the broader community in a number of indirect ways.
Headline-grabbing videos of masked people sweeping products off of shelves and into trash bags, then easily walking out the front doors of stores, have illustrated the immediate financial loss retailers are experiencing at the hands of increasingly sophisticated organized retail theft rings.
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But the ripple effects of such theft often stretch far beyond slimmer profit margins and frightened sales associates.
DOMINO EFFECT OF CLOSURES
Big-box stores have, for the past several years, started shuttering locations in high-crime areas due to organized retail theft, which can make continuing operations at some stores simply untenable.
Sometimes, the closure of flagship storefronts can seal the fate of the smaller businesses that surround them.
In San Francisco’s Union Square, for example, the departure of a few well-known retailers from the area led to a mass exodus that has resulted in the closure of nearly half of the complex’s stores since 2019.
Crime is partly to blame. Last month, in the nearby San Francisco Centre mall, Nordstrom closed its flagship location in the city, joining other retailers that have fled the effects of theft and overall crime levels and leaving a gaping hole in the already-struggling mall.
When major retailers leave shopping complexes due to retail theft, crime, and the drop in foot traffic that accompanies those dynamics, fewer shoppers may return to the area, worsening conditions for the stores left behind.
Trickles of retailers leaving cities with the most severe crime problems, such as Chicago and Portland, Oregon, have turned into floods.
ONLINE SHOPPING ACCELERATED
More and more people were turning to online shopping even before the pandemic turbocharged the e-commerce trend.
Now, organized retail theft has helped keep some shoppers out of the brick-and-mortar stores to which they might otherwise return.
Some of the indirect effects of retail theft are to blame. To combat such inventory loss, stores have stepped up anti-theft measures, such as locking up commonplace items, requiring customers to wait until a sales associate can retrieve the products for them, that have driven more shoppers online.
“Shoppers are now seeing everyday items like toothpaste and dish soap behind lock and key. Retailers know it is an inconvenience for customers,” the National Retail Foundation said in a statement to Congress this year. “The anti-theft security measures can lead to lost sales from customers who must wait for an employee to unlock a cabinet so they can access a product.”
Inventory “shrink,” the industry’s term for theft, has caused stores to keep fewer items in stock in some higher-crime areas, especially items that organized theft rings target most frequently. That means shoppers may not find what they’re looking for on the shelves, forcing them to order online.
STAFF SHORTAGES
Increased retail theft has driven some workers from the industry, creating a spiral that worsens the crime problem.
Surveys show retail workers report feeling less satisfied and safe on the job as crime becomes a more regular occurrence in many of their workplaces.
The problem worsened during the pandemic. From 2018 to 2020, assaults at grocery stores rose 63% and assaults at convenience stores rose 75%, according to the New York Times.
In some of the largest retail stores, however, company policy prevents frustrated employees from taking any action. High-profile incidents of workers facing termination over their efforts to stop a theft in progress have helped drive morale even lower.
While corporate policy at many big-box stores prevents retail workers from intervening in a theft, at least one state is working on legislation to make such interventions illegal.
California legislators are working on a bill that would prevent retail employees from stopping robberies at their workplaces.
The staff shortage in retail is worse than that in just about any other industry, trailing only food service, according to the U.S. Chamber of Congress.
Retail theft is far from the only factor driving the shortage. Long hours and pay that’s lagged behind inflation have helped keep stores understaffed since the pandemic.
But beyond the hit to morale, the crime problem has contributed to retail worker shortages in indirect ways.
Companies that have seen their revenue eroded by organized retail crime may have less to invest in raising wages to retain employees or training to onboard new ones, for example.
HIGHER PRICES & LOCALIZED SHORTAGES
Consumers are likely to pay higher prices for some goods — not just because of inflation but because of the effects of retail theft, according to the National Retail Federation.
Retailers are losing as much as $100 billion per year to retail theft, and some of that loss gets passed on to shoppers in the form of higher prices for the goods that remain.
Localized shortages can also complicate shopping in areas hit significantly by organized retail theft.
Because organized theft rings know which products can fetch them the highest profits in online resale markets, and because the rings sometimes steal from multiple stores at the same time or on the same day, some areas can experience temporary shortages that drive consumers into e-commerce shopping.
Retailers have caught on to the methods as well.
Target, for example, has simply stopped stocking some of the items most frequently stolen from some locations in areas hardest hit by organized retail theft.
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Brian Cornell, CEO at Target, said in an earnings call this year that the impact of organized retail theft can be far-reaching.
“When products are stolen, simply put, they’re no longer available for guests who depend on them,” Cornell said. “And left unchecked, theft and organized retail crime [begin] to degrade the communities we call home.”