Retail theft is soaring across the U.S., with large chains like Best Buy (BBY) and Walgreens (WBA) beset by increasingly brazen and widespread instances of shoplifting that’s hurting their bottom lines.
In recent weeks, reports of “smash and grab” robberies in major cities — featuring crowds of thieves making it off with electronics, clothing and footwear, have flooded social media. Security experts cite a litany of reasons including fallout from the COVID-19 pandemic, overwhelmed law enforcement, and deteriorating public safety. In San Francisco in particular, certain types of theft have been all but decriminalized, with officials facing accusations of being too lax on crime.
The Coalition of Law Enforcement and Retail, a trade association, estimates organized retail crime leads to about $45 billion in losses for retailers each year. More than $500 billion in illicit stolen and counterfeit goods are getting sold on third party platforms like Amazon (AMZN).
“What we’re experiencing is kind of a perfect storm,” Ben Dugan, the coalition’s president, told Yahoo Finance Live this week. The coalition is pushing for federal legislation to regulate online marketplaces, “so people can not hide between the shadows of the internet and operate anonymously,” Dugan said.
He also cited the impact of organized crime networks that are using petty thieves to boost their activities.
“They’re actually being recruited by criminal organizations that are getting involved in what’s called ‘organized retail crime’,[which] has been on the rise since 2017, with the expansion of most of the online marketplaces,” Dugan added.
“Unfortunately, I don’t think some of these young folks understand how much trouble they’re really getting into, they’re really getting involved with criminal organizations that recruit them and convince them that there aren’t going to be any consequences,” Dugan said.
L.A, San Francisco in the spotlight
A flurry of smash-and grab robberies have plagued California in recent weeks, with most of the incidents happening in stores near San Francisco and Los Angeles. In Lakewood, a group of thieves, 8-9 young men, stole an estimated $400 worth of tools including sledgehammers and crowbars that could be used for future crimes, according to the Los Angeles County Sheriff’s Department.
In October, Walgreens sparked a firestorm by announcing it would shutter several locations in San Francisco because of a surge in what it called “organized retail theft.” And shares of Best Buy have been under pressure after the company announced a tepid sales forecast this holiday season.
In a conference call last week, the company stunned investors by pointing to organized thefts as partly responsible for a drop in the company’s gross profit margin in the third quarter.
“We are seeing more and more particularly organized retail crime,” Chief Executive Officer Corie Barry said on a call with analysts. “You can see that pressure in our financials, and more importantly, frankly, you can see that pressure with our associates. It’s traumatizing.”
And tragically, the wave of violence has led to at least one fatality. Over the weekend, Kevin Nishita, a retired police officer, was shot and killed while protecting a San Francisco Bay Area TV news crew covering the rash of organized retail crime in the region.
Dugan explained that in most cases, criminal organizations provide their recruits with rental cars, escape routes and burglary tools or allow them to use their own weapons.
“They plan these events with these young folks, with the understanding that there’s a high propensity for violence and they have no regard for human life or for the consequences,” Dugan said.
Police in Los Angeles have arrested four people in connection with the flash mob burglary at Home Depot (HD) in Lakewood,CA. However, oftentimes thieves face few consequences.
Theft and petty theft charging rates have dropped in the Bay Area, according to data analysis found by the San Francisco Chronicle. The crime wave has put intense political pressure on District Attorney Chesa Boudin, a progressive ex-public defender who is now facing a recall effort.
Boudin indicated that the drop in charging rates is due to the reduced operation of the city’s court system caused by pandemic restrictions. However, theft charges increased between 2020 and 2021 as the city reopened.
He also announced nine people have been charged with felonies in a series of shoplifting incidents that included a mass smash-and-grab at Union Square’s luxury stores recently. A group of at least 40 people were allegedly involved in those incidents.
There’s a lot of different victims in this crime, it’s not just the stores. People are getting physically assaulted. It’s a tremendous burden on employees that are traumatized by this event.Ben Dugan, Coalition for Law Enforcement and Retail
Meanwhile, more than two-thirds of retailers said the pandemic increased overall risk for their organization, according to data from the National Retail Federation’s 2021 Security Survey, with 57% reported a rise in organized retail crime.
The problem underscores a conundrum for store employees, who may be faced with the choice of trying to deter thieves at the risk of their personal safety. But experts warn that employees should “not engage” with shoplifters.
“There’s nothing in the store worth anybody getting hurt for,” Dugan told Yahoo Finance.
“There’s a lot of different victims in this crime, it’s not just the stores. People are getting physically assaulted. It’s a tremendous burden on employees that are traumatized by this event,” he added.
This week, Governor Newsom has directed the California Highway Patrol to increase their presence near freeways adjacent to busy California shopping centers and make stops at the malls.
The CHP’s Organized Retail Crime Task Force plans to also help local law enforcement investigate retail crimes, and recover stolen merchandise. Since 2019, the task force has made 240 arrests and recovered $18.9 million in stolen goods.
Some retailers have stepped up their security measures in response to the spree of smash and grab robberies. Along Rodeo Drive in Beverly Hills, California, a pair of private security companies patrolled the ritzy shopping district in response to attempted smash-and-grab robberies at Louis Vuitton and Saks Fifth Avenue stores last weekend.
“Retailers are investing millions of dollars this holiday season in reaction to a lot of these recent thefts and upgrading their security, adding a lot of physical security technology, resources, manpower and off-duty police,” Dugan said.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv
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