Pandemic fueling surge in organized thefts at stores across U.S.

Pandemic fueling surge in organized thefts at stores across U.S.

by Bloomberg Stocks
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Major retailers across the U.S. are facing a rash of organized shoplifting, with an estimated 80 thieves this month ransacking a Nordstrom store in California and more than a dozen people swiping merchandise from a Louis Vuitton store in suburban Chicago.

Multiple retailers and at least two states report an increase in mass thefts, while experts point to the COVID-19 pandemic as fueling the incidents. 

“Retailers have always had shoplifting, but the concern now is there seems to be a surge in organized, gang-related theft,” said Neil Saunders, an analyst and managing director at GlobalData Retail. “Shoplifting was very covert — you don’t see it — but this is very blatant.”

Electronics retailer Best Buy is hiring additional security personnel at some of its more vulnerable locations and also locking up valuable in-store merchandise to combat the rise in theft. 

A problem that “hurts and scares people””Across retail, we are definitely seeing more and more, particularly, organized retail crime and incidence of shrink in our locations,” Best Buy CEO Cori Sue Barry said during an earnings call on Tuesday. “This is a real issue that hurts and scares people.”

The problem is also hurting Best Buy’s bottom line and could make it harder for the retailer to hire and retain workers in an already tight labor market, Barry told CNBC’s “Squawk on the Street” this week. Some criminals are armed with guns and crowbars and can scare away customers and employees alike, she said. 

In the call, Barry also said such crimes are “traumatizing” to the company’s employees, calling the crime spree “unacceptable.”

Cleaned out
Loss-prevention expert Tony Sheppard said the orchestrated raids hurt retailers, customers and even the local community. “Retailers do all sorts of things to protect product, but even when merchandise is locked up it hurts sales because they don’t have the manpower to unlock things for customers,” said Sheppard, who heads loss prevention at ThinkLP, a software company that helps retailers report and prevent organized theft.

According to Sheppard, crime groups often take a store’s entire supply of a given product, like allergy medication Zyrtec or the cold treatment Mucinex, and swipe the same item from neighboring stores, leaving customers to do without. Consumers may have to wait a week or more for a new shipment to arrive, with delays exacerbated by the ongoing supply-chain slowdown retailers are grappling with. 

“They take everything that these locations have, and they will hit all the stores that sell the product in the vicinity too,” Sheppard added. “Then, when a consumer comes in to buy a legitimate item, it’s not in stock and the retailer loses a sale.” 

Online shopping leads to in-store theftOrganized retail crime was on the rise before 2020, but the jump in online shopping during the pandemic has emboldened criminals, who typically take to the internet and its online marketplaces to resell stolen merchandise for a profit. 

Such thefts have risen nearly 60% since 2015 and costs stores an average of $700,000 for every $1 billion in sales, according to a 2020 National Retail Federation survey of 61 retailers. 

“At the end of the day, it is all about supply and demand,” Sheppard told CBS MoneyWatch. “We saw this rush to online marketplaces among customers who had never shopped online, and that is where you find the bulk of your stolen goods.” 

In other words, organized shoplifting has risen in tandem with the rise in online shopping, as thieves respond to increased demand for everyday items online. 

A security guard stands outside the Nordstrom store at The Grove retail and entertainment complex in Los Angeles, Tuesday, Nov. 23, 2021. Los Angeles police say a group of thieves smashed windows at the department store at the luxury mall late Monday, the latest incident in a trend of smash-and-grab crimes is part of a national trend.

Eugene Garcia / AP

“The pandemic created a larger demand for the stolen goods marketplace for more criminals to make huge profits. It’s lucrative because the customer base is everyone,” Sheppard added. 

Thieves tend to swipe those items that are most in demand by consumers and can range from cold and allergy medication and other toiletries to jeans and portable electronic devices. 

“It’s things that are typically smaller and that can be resold at a decent value,” Sheppard said. 

Sharp increase in organized retail crimeOrganized retail crime “has increased dramatically over the last two years,” the Illinois Attorney General’s Office stated in September. In one recent incident in the state, more than a dozen people stormed a Louis Vuitton store in Oak Brook, Illinois, and stole about $120,000 worth of merchandise. 

The November 17 robbery involved 14 suspects wearing masks and sweatshirts who escaped in three separate vehicles, one of which has been recovered, according to the local police.  

The problem has only increased during the COVID-19 pandemic, according to Illinois Attorney General Kwame Raoul. He cited CVS as estimating a 30% increase in thefts and Lowe’s Home Improvement as closing 25 organized retail crime cases amounting to $1.3 million in losses last year, compared to 20 cases and $388,000 in losses in 2019.

Recent days have also seen smash-and-grab thieves hitting a mall in Hayward, California, where witnesses describe as many as 50 people wielding hammers and breaking glass cases inside a jewelry store. Separately, a group of suspects stole merchandise from a Lululemon store in San Jose on Sunday night, marking a third straight day where large groups stole from retailers in the Bay area. 

The brazen acts came after police in Walnut Creek, California, issued a warning on social media that thieves might strike again, after about 80 people swarmed a Nordstrom store Saturday night, then fled with stolen goods in waiting vehicles. Five Nordstrom workers sustained minor injuries, the retailer said.

“There’s absolutely a very similar MO with what you’re seeing in other cities and what we’re seeing here,” Barry Donelan, president of the Oakland Police Officers’ Association, told CBS San Franciso’s Justin Andrews about the string of retail robberies in the Bay Area. “We just have significantly more violence associated with it.”

Stores shut downCalifornia Governor Gavin Newsom on Monday ordered the state’s highway patrol to heighten its presence in highly trafficked shopping areas in response to increased organized retail theft activities across the state. 

“Businesses and customers should feel safe while doing their holiday shopping,” stated Newsom, who is also proposing an increase in the state’s 2022-23 budget to fight retail theft.

Walgreens said last month it would shut down five stores in San Francisco due to increased thefts. 

The National Association for Shoplifting Prevention (NASP) predicted the pandemic would lead to a spike in retail theft and organized crime as stores started reopening, citing similar surges after the September 11 attacks and the 2008 financial crisis.

“We believe the existential threat we’re now facing with COVID-19 will be both financially and emotionally traumatic, and could lead to even greater increases,” NASP Executive Director Caroline Kochman stated in a May 2020 report. “Times of hardship make it easier for [organized retail crime] teams to recruit regular people and employees.” 

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