0.2%. That is the difference of 2021’s retail shrink of 1.4% and 2022’s 1.6%. When written as a percentage, it doesn’t look like much. But those in retail know better. That 0.2% increase means a loss of an additional $18.2 billion ($112.1 billion total). Shrink is going to happen no matter what—accidents, product expirations, delivery issues, etc. But that’s not what is driving the $18.2 billion loss. Retailers know how to handle and mitigate those types of shrink as much as it is possible to do so. The increase of shrink is due to a dramatic rise in retail crimes—theft, employee theft, and organized retail crime. With this uptick also comes a severe increase in violence. According to the National Retail Federation (NRF), 67% of the retailers polled in 2022 reported an increase in violence associated with theft and other retail crimes.
But why is crime increasing and why does it matter?
Part of the increase in crimes can be attributed to the economy—as money gets tighter, people get desperate. But ORC gangs function differently. They aren’t just stealing to survive. They are stealing to make money.
Two things make it possible to steal and make money: First is the rise of the online marketplace and second is the lack of accountability. Online marketplaces like Amazon, Facebook Marketplace, eBay, and others are convenient for both the sellers and buyers. ORC gangs use it to their advantage. They’ll steal items that are in demand (everything from baby formula to laundry soap) and sell it to consumers at a discounted price.
The lack of accountability makes it so the gangs can’t be stopped. Laws that lessen punishments and increase dollar amounts for felony charges make it hard for law enforcement and prosecutors to take the thieves out of play. And the thieves know it.
Each state has a different threshold for a theft to become a felony instead of a misdemeanor. For example, if a state has a threshold of $950 for a theft to be charged as a felony, local opportunistic thieves will make sure they steal just under that amount. Professional thieves, those jumping across jurisdictions into different counties and states, are less likely to notice the felony limit. Regardless, district attorneys often don’t have the time or ability to prosecute every misdemeanor—there are simply too many of them. Also, the penalty for a misdemeanor can be so minor that it’s not worth the time and money for the district attorney to prosecute. For example, in California a thief charged with a misdemeanor can be fined $1,000 and spend six months to a year in prison. It’s a slap on the wrist for the bad actor and a lot of time and effort for district attorneys and law enforcement.
But if that thief were to be guilty of a felony, they can receive a much harsher penalty of a $10,000 fine and three years in prison. The bad news is that the thieves know the limits and are using them to their advantage. The threat of punishment doesn’t deter them because the punishment is often minimal or nonexistent.
Also, because ORC incidents are increasingly violent, retail brands are training their employees to not intervene. No amount of product or money is worth someone’s life. But this puts the burden of catching the thieves solely on law enforcement. That in itself isn’t the issue, but the fact that the laws aren’t backing up the officers is. They can catch the bad actors multiple times but are forced to let the thieves go because the district attorney will not charge them.
Why It Matters?
A common misconception is that retail crime is just the retailers’ problem, that they make more than enough so why should it matter to other businesses, the cities, or even consumers? This way of thinking fails to see the bigger picture. They think because it is called retail crime that it only affects retail, not them or their community. And if it doesn’t hurt them, then why should it matter?
This tunnel vision is dangerous for communities. Stores are a vital part of the community ecosystem and if they are attacked, the community is too.
First is the threat of violence. Remember, 67% of retailers reported an increase in violence. But who is that violence toward? It isn’t directed at the name, building, and brand of the retailer—it’s not a smear campaign. No, it is the in-store employees, the customers, and local law enforcement who bear the brunt of the violence. Who wants to go to work at a store when there is a high chance they will be attacked while working? No one does. The same goes for customers—they aren’t going to shop where they are in danger.
Violence is one of the biggest factors that cause retailers to shut their doors. In a statement announcing the closure of nine Target locations, the company stated: “In this case, we cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance. We know that our stores serve an important role in their communities, but we can only be successful if the working and shopping environment is safe for all.”
Second is the local economy. Money doesn’t just appear out of thin air and each business affects the tax base, consumer spending, available jobs, city planning and spending, and more. If retailers are forced to close a store, that immediately hurts the community. One effect is people will lose their jobs. New York City Mayor Eric Adams put it this way when he said: “But what we can’t do is allow repeated offenders to make a mockery of our criminal justice system, and repeatedly, we are losing chain stores that are closing down. People who are being employed in those stores are losing their jobs. They’re adding to our unemployment.”
If a store closes, customers will have to go further to buy goods (and this will cost them more in gas and in travel time), and the city will lose the tax income from that business. It strains everyone’s pocketbook. And the effects keep trickling down. For example, if the city doesn’t have resources from taxes, it can’t allocate funds toward other community-driven programs (think law enforcement).
Another example is higher prices of goods for consumers. Retailers are businesses and have to make money to keep going. They cannot absorb the cost of every theft. In fact, retailers’ margins are some of the lowest of any industry, typically between 1% and 5%. With more thefts, they are forced to raise prices for honest customers to help cover the cost of the stolen goods. Also, if more retailers go out of business, there will be even higher prices because there will be no competition. All of this hurts the consumer as well as the retailer.
Third is the effect on law enforcement. Retail crime is increasing, and at the same time the ability to enforce laws is decreasing. The amount of strain it is putting on law enforcement is extreme. In today’s climate, more officers are retiring and fewer are joining because the potential of violence is high and the social stigma around law enforcement is extreme. With the increase in crime, it’s a recipe for disaster. Law enforcement just doesn’t have the manpower to respond to retail crimes at every store, every day. And when they do arrest the bad actors, current laws make it hard for them to file charges against them.
How to Fight the Trend
The parallel increase of shrink and retail crime is forcing retailers to take dramatic action, including increased security measures, reduced hours and product selection, and even closing stores. They aren’t just sitting back and turning the other cheek—they can’t afford to.
But if retail crime affects more than just retailers, the solution has to come from more than just the retailers. Efforts to work with local law enforcement and city officials are a must.
During a recent study with the Loss Prevention Research Council (LPRC), LiveView Technologies (LVT), retailers, and the cities of Opelika, Alabama, and Paducah, Kentucky, mobile surveillance units were deployed to see if they could help increase community safety and security. The study, also known as the ACCESS (Alliance of Companies and Communities to Enhance Safety and Security) Taskforce, used more than 40 mobile units for six months. Crimes were measured before and after deployment. The security units contributed to:
- 40% decrease in shoplifting
- 43% decrease in trespassing
- 54% drop in burglaries
Obviously, this had an immediate impact on the retailers in both cities. But even though the units were only deployed to retail locations, both cities had a wider impact including:
- 15% decrease in property crimes
- 10% drop in crime rates
Retailers want to stop the $112 billion hemorrhage so the decrease in shoplifting, trespassing, and burglaries is significant. But the more important numbers are those that showed a decrease for the entire community. These numbers represent the power of treating the actual problem, the disease, in the community instead of just the symptoms.
ACCESS showed one way to fight the growing trend. Others might include greater collaboration within the community, increased security efforts, and better laws that can hold thieves accountable. But the goal of the ACCESS Taskforce and any other efforts to reduce retail crime is to increase safety and security for the community, not just the retailer or business. It’s about people—the employees, customers, police officers—and helping the community.
