Retailer Concerns About Organized Crime Escalate Amid Ongoing Losses

As retailers face ongoing margin pressures from a difficult economic environment, many are growing increasingly concerned about the losses they may be accruing from theft from organized crime gangs. 

A recent Alameda Police Department news release highlighted $75,000 in recovered retailer property as part of a “targeted retail theft operation” last month. 

One organized crime ring reportedly stole as much as $8 million in cosmetics over the course of a decade, reselling those items on Amazon, according to a CNBC report citing Amazon sales records shared with investigators. 

Legislators are getting involved. New York Gov. Kathy Hochul announced last week a $45 million plan to address organized retail theft. Similarly, California Gov. Gavin Newsom recently touted the positive early results of the state’s $267 million investment deployed to local law enforcement to combat the issue. 

Retailers are turning to new technologies to bolster their security against this kind of theft without accruing additional labor costs. For instance, Walmart-owned Sam’s Club is replacing the practice of verifying receipts as shoppers exit the store with artificial intelligence (AI)-powered technology that can visually scan customers’ carts. Many retailers are locking up more products.

Home Depot CEO Ted Decker recently spoke to the retailer’s significant investments in technology to combat organized retail crime, noting that, last year, the chain experienced more than 142,000 instances of shrinkage.

Notably, it seems that there may be a significant amount of misinformation surrounding the subject. In December, for instance, the NRF had to retract an estimate that organized retail crime accounted for $45 billion in losses every year, noting that it was based on inaccurate data. The trade group had based the estimates on comments from National Coalition of Law Enforcement and Retail president Ben Dugan, who in turn had been citing NRF data on overall shrink from 2016.

Indeed, the extent to which this kind of crime is an issue is contested. On an episode of the podcast “If Books Could Kill” that discussed organized retail crime, host Peter Shamshiri highlighted a section of the NRF’s report on the subject, which cites observations from a “former law enforcement official” that the “lack of quality data has stymied efforts to raise public awareness about the scale and consequences” of this kind of crime.

“The lack of quality data is why you don’t know the scale, the consequences of organized retail crime,” Shamshiri argued, attributing much of the concern around the issue to “media panic” based on unreliable data.

Media coverage of organized retail theft incidents might sensationalize the issue, leading to an exaggerated perception of its prevalence and impact. Additionally, there are concerns that an overemphasis on organized retail theft could lead to overly harsh policy responses that may disproportionately affect certain communities or individuals. 

Mounting concerns about the issue come as retailers face ongoing economic challenges. Dollar Tree is planning to close roughly 1,000 Family Dollar stores, even as it attempts to woo affluent shoppers. Macy’s recently announced the upcoming closure of 150 locations over the next couple of years. Signet Jewelers — owner of Kay Jewelers, Zales and Jared — is closing up to 150 American and British locations by the middle of the year. 

As the specter of organized retail theft large over the retail landscape, stakeholders are grappling with multifaceted challenges and responses. However, amid the flurry of statistics and policy proposals, the scarcity of accurate data muddles our understanding of the true scope and impact of organized retail crime.