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Organized retail crime has ballooned into a $100 billion problem — and store employees are dying over it

Anti-theft measures in place at a CVS Pharmacy in Queens, New York.Anti-theft measures in place at a CVS Pharmacy in Queens, New York.

Lindsey Nicholson/Universal Images Group via Getty Images

  • Organized retail crime increased by 26.5% in 2021, according to the National Retail Federation.
  • Retailers like Target, Walmart, and Walgreens said organized retail crime highly threatens business.
  • These crimes have become increasingly violent, the National Retail Federation found.

Target is expecting to lose $600 million in profits because of it. Walgreens reported a 52% increase in it since 2019. And everyone from retailers to the federal government and law enforcement is trying to stop it. 

It’s organized retail crime, and it’s a nearly $100 billion problem for the industry. 

These crimes aren’t as simple as a lone shoplifter pocketing a product. Instead, criminal organizations stealing large quantities of goods and reselling them for profit perpetrate them. 

“This is not petty theft. It’s not somebody who can’t afford to eat tomorrow. These are gangs that actually go in and empty our stores of beauty products,” James Kehoe, the chief financial officer of Walgreens, said during the company’s first-quarter earnings call in January. “As with all of our peers, it’s a real issue.”

And the issue is growing. A 2022 study the National Retail Federation conducted found that organized retail crime at retailers surged by 26.5% in 2021 compared to the year prior. Organized retail crime mainly drove inventory shrink — what happens when a store has fewer products on its shelves than recorded in its inventory — and resulted in $94.5 billion in losses for retailers last year, the NRF found. 

Retailers like Target, Walmart, Home Depot, Walgreens, and more have called out retail theft as a threat to their businesses. Eight out of 10 retailers in the study said these crimes have become violent and Walmart even said stores may have to close if the thefts don’t subside. 

Shelves sit nearly empty at a pharmacy in New York City.Shelves sit nearly empty at a pharmacy in New York City.

Spencer Platt/Getty Images

What is organized retail crime?

Organized retail crime is not the $10,000 jewelry heist you see in the movies, Jake Stauch, the director of product for the security company Verkada, said.

Rather, he told Insider a group of individuals that “specialize in a certain category,” like thermal coats, steal the goods in subsequent thefts or “smash-and-grab” jobs where they break into the retailer and resell the goods through new distribution channels, such as online marketplaces, or sell the goods back to local retailers.

The criminal organizations can range from local and state levels to multi-state and even international rings, according to David Johnston, NRF’s vice president of asset protection and retail operations.

“These are highly organized, structured criminal networks, often involved in other crimes,” Johnston said. “Human trafficking is one, where in many instances they’ll work with individuals bringing immigrants over the border, and in order to pay their fees to get across the border, they’ll utilize them as boosters to steal merchandise.”

These crimes have endangered retail employees, security experts said.

Earlier this month, an 83-year-old worker at a Home Depot store in North Carolina died after a theft suspect shoved him to the ground in October. A Los Angeles Rite Aid employee was killed while attempting to stop a shoplifter from leaving the store last year. And innocent shoppers can be injured during these crimes, too. A West Virginia woman was awarded nearly $17 million in damages from Walmart after she was injured in 2015 when a man being pursued for shoplifting at the retailer stumbled into her.

“This is a real issue that hurts and scares real people,” Corie Barry, the CEO of Best Buy, said during the company’s third-quarter earnings call in November. “We are doing a number of things to protect our people and our customers, but you can see that pressure in our financials. And more importantly, frankly, you can see that pressure with our associates. This is traumatizing for our associates and is unacceptable.” 

Where do the products end up? 

Some of the more than $200,000 in stolen retail the San Francisco Police Department seized in July from a man who was reselling them online.Some of the more than $200,000 in stolen retail the San Francisco Police Department seized in July from a man who was reselling them online.

San Francisco Police Department via AP

Many times, the stolen products almost immediately end up online, disguised amid the millions of legitimate third-party sellers. The rise of e-commerce has, in large part, fueled organized retail crime. It’s a lot easier to sell online than to “fence” stolen goods at brick-and-mortar pawn shops and flea markets, Scott Glenn, Home Depot’s vice president of asset protection, told Insider last year.

“Years ago, there was eBay, and that was it,” Glenn said. “Now there are probably 80 different large-scale online resellers out there, and not all of them have the same level of control and vetting.”

According to the Retail Industry Leaders Association, an industry trade group, the proceeds from these online sales have been linked to other criminal enterprises like drugs and human trafficking. 

“This money is used to buy weapons, this money is used to do the same thing that narcotics money is used to do,” Tarik Sheppard, an NYPD captain and the president of the Metro Organized Retail Crime Alliance, told NBC Nightly News.

What are stores doing to stop organized retail crime? 

Tide laundry-detergent bottles with a security-locking system to prevent theft at a CVS Pharmacy, Queens, New York.Tide laundry-detergent bottles with a security-locking system to prevent theft at a CVS Pharmacy, Queens, New York.

Lindsey Nicholson/UCG/Universal Images Group via Getty Images

Retailers are taking action at a store level to deter thefts.

CVS has been adding time-delay safes to its brick-and-mortar locations, and Rite Aid execs recently warned that they’re “looking at literally putting everything behind showcases” to deter thieves. Home Depot introduced power tools that won’t work if thieves steal them, while Big Lots said during an earnings call in March that it would increase its use of carts with wheel locks to prevent people from pushing cartloads of goods out the door. 

But for typical shoppers — meaning those who plan to pay for what’s in their carts — these measures are irritating at best, and retailers recognize that. John Mulligan, the chief operating officer at Target, said during the company’s November earnings call that these types of anti-theft measures are “obviously not something we like to do” because it makes it “far less convenient for guests as they shop our stores.”

Retailers have also argued that these store-level technologies don’t go far enough to deter theft. They’re pushing for a federal crackdown on trafficked goods online in the hopes that it would deter these thefts in the first place. Dozens of retailers and industry groups — including Amazon, Home Depot, Lowe’s, Target, Walmart, and Walgreens — wrote a letter to congressional leaders in October urging them to pass legislation that would require online marketplaces to verify the identity of third-party sellers that sell high volumes of goods. 

That bill, the INFORM Consumers Act, passed in the US House of Representatives last month and is currently waiting on a vote in the US Senate. Another bill introduced in the House in October aims to set up an organized-retail-crime center within the Department of Homeland Security to facilitate training and the sharing of information nationwide. 

In the meantime, cities and states across the country are forming organized-retail-crime associations, which unite retailers, local law enforcement, and prosecutors to help crack down on these thefts and prosecute the perpetrators. 

Retail theft is “not a victimless crime,” Johnston said. “It’s not impacting just those that are making millions and billions. Organized retail theft impacts everyone, and when national retailers discuss price hikes or store closures due to it, that starts to trickle down to the community.”

Got a tip? Ben Tobin can be reached by email at btobin@insider.com, via the encrypted app Signal, or by text at (703) 498-9171.

Read the original article on Business Insider