Protecting America’s Retailers from Theft

Introduction

The retailers at the heart of the American economy are struggling under a spike in retail theft. Criminals are targeting large and small retailers alike with increased sophistication, in some cases using blow torches to break through plexiglass or storming shops in large groups.

From small mom-and-pop shops to large brand-name retailers, managers are reevaluating whether operating in these conditions is feasible. One store owner, Evette Ingram from Los Angeles, California, said she planned to shut down her beauty supply shop after thieves stole $25,000 worth of merchandise (Chow, V. & Wolf; C., 2023). Target recently announced it would close nine stores due to the economic and safety risks theft posed to their San Francisco, New York City, Portland, and Seattle shops (Castenada, C., 2023).

Given the retail industry’s status as the Nation’s largest private sector employer—providing 32 million American jobs and $1 trillion in direct labor income—any increase in closures will be devastating for American workers (National Retail Federation, 2020a). Even when stores do not close, lower sales can lead to increased prices, further squeezing consumers during a period of unprecedented inflation. Increased crime can also erode Americans’ sense of safety, leading to less walk-in traffic for small businesses and a decline in community trust. This issue brief outlines the data showing a recent rise in retail theft, examines the causes and effects of theft, and provides America First solutions to this crisis.

The Problem: Widespread Retail Theft

While it is notoriously difficult for retail stores to pinpoint the exact amount of merchandise stolen each year, an overwhelming body of related research suggests that retail theft is increasing.

In 2022, retailers reported $112 billion in “shrink,” which includes several types of inventory loss, including damage, theft, and inventory calculation errors. These losses have increased from $37.1 billion in 2010 to $93.9 billion in 2021 (National Retail Federation, 2023). Even when adjusted for inflation, shrink has increased by more than 120 percent since 2010. It increased by more than 10 percent between 2021 and 2022. While shrink encompasses a host of issues, an estimated 65 percent of it comes from internal (employees) and external (shoplifters) theft (National Retail Federation, 2023).

Retail workers and managers, too, are feeling the effects of increased theft in their stores. An April 2023 survey of retail workers found that 50 percent of them had witnessed a theft or attempted theft over the previous six months (Axonify, 2023a). An October 2023 survey of frontline retail managers found that 70 percent say that they or their staff have witnessed an increase in theft within the last year (Axonify, 2023b). This same survey found that 49 percent of frontline managers say that they or their staff have seen an increase in theft and customer violence in the past 30 days alone.

Outside of data from the retail industry itself, crime statistics suggest an increase in theft. Commercial burglary, which is when a person enters a premise with the intent to steal more than $950 worth of merchandise, increased in 14 of California’s largest 15 counties from 2019 to 2022 (Lofstrom, M., & Martin, B., 2023). Overall, commercial burglary incidents in California have increased by 15.7 percent since 2019, including a 5.8 percent increase in 2022. Fresno, Los Angeles, and San Francisco saw commercial burglary increase by 38 percent, 29 percent, and 26 percent, respectively, from 2019 to 2022. Kern County had the highest rate of commercial burglary over the same period. Commercial robberies, which involve the use of force or fear to steal from a commercial establishment such as a gas station or department store, went up 13.3 percent from 2019 to 2022, including a 9.1 percent uptick in 2022 alone. In Los Angeles and San Diego, commercial robberies increased 13 percent and 19 percent, respectively, between 2019 and 2022. Sacramento saw an astonishing 29 percent increase in commercial robberies over the same period (Lofstrom, M., & Martin, B., 2023).

In New York City, shoplifting complaints by residents have surged 45 percent over the past year, setting a new record in the Big Apple, according to a New York Post analysis of New York Police Department (NYPD) data (McCarthy, C., Schnitzer, K., Hogan, B., & and Fitz-Gibbon, J., 2023). According to the same data, since the mid-2000s, these retail theft complaints have increased by an astonishing 275 percent in New York City, and although retail establishments got a brief reprieve due to the pandemic, complaints of retail theft increased to 63,699 incidents in 2022 from 37,838 incidents in 2019.

Chicago has seen theft rise by 42 percent and robberies by 37 percent over the past four years (Chicago Police Department, 2023). Nationally, shoplifting as a share of retail sales dollars has increased by 19.4 percent over the past year, according to research by Capital One. The same research projects that losses due to retail theft could reach $140 billion by 2025 (Capital One Shopping, 2023).

Organized retail crime (ORC) increased by an astonishing 26.5 percent in 2022 (National Retail Federation, 2023). ORC is defined as theft that results from an organized group of criminals that plan operations to steal from retailers. This consists of both smash-and-grab style burglaries (external theft), as seen in Louis Vuitton stores in San Francisco, and employees stealing inventory (internal theft), often with the help of outside groups, according to local reporting (NBC Bay Area, 2022). Overall, 44.5 percent of retailers say their loss prevention budgets increased in 2022 (National Retail Federation, 2022). Maricopa County, Arizona, had reported 324 cases of ORC by early December 2023—already exceeding 2022’s total of 301 cases, before the winter holiday season was in full swing (Lum, J., 2023).

While some ORC occurs publicly, just over half occurs as cargo theft (Capital One Shopping, 2023). Cargo theft can occur as products are en route to a retail establishment, or once they have arrived at the store but have not yet been placed on shelves. Cargo theft acts as a major threat to small and large retailers alike, as many of them also own their distribution networks, take ownership of products before they reach their stores, or, at best, will have to suffer the consequences of higher prices for goods once the theft is calculated into the cost of doing business.

ORC has been increasing for several years. In 2015, ORC cost retailers $454,000 per $1 billion in sales, and by 2020, that number had reached $719,548 (National Retail Federation, 2020b). Just over 78 percent of retailers say ORC is more of a priority today than it was a year ago (National Retail Federation, 2023).

Taken together, data from the retail industry, anecdotes and reports from retail employees, and crime statistics from across the U.S. suggest that theft is an increasing problem for retail establishments.

The Causes: Weak Prosecutors, Inflation, Technology, and Police Mistrust

The rise in retail theft has many possible causes. Rogue prosecutors and the laws that enable them, an affordability crisis due to inflation, technological change, and a distrust of law enforcement all contribute to the increase over the last few years.

In some large cities, liberal prosecutors have used their prosecutorial discretion to decline charging shoplifters and ORC participants, including in New York, Chicago, and Los Angeles. Prominent prosecutors engaging in this practice include Kim Foxx in Chicago, Larry Krasner in Philadelphia, and George Gascón in Los Angeles. Former prosecutors Chesa Boudin in San Francisco and Rachael Rollins in Boston also exemplified this trend until the former was recalled and the latter resigned in disgrace (Kashinsky, L., Gerstein, J., & Cheney, K., 2023). Each one argued that most misdemeanors should not be prosecuted and cash bail eliminated (Smith., Z. & Stimson., C 2022).

Given the documented increase in theft reports in many of these same cities, this policy is, at the very least, not improving crime rates (Thayer, 2023). Police are discouraged from arresting criminals when they know prosecutors often will only charge repeat shoplifting offenders with a misdemeanor at best—meaning criminals can quickly get back on the street with a citation (Thompson, D., 2021; Smith., Z & Stimson., C, 2022). Of 8,730 retail theft crimes committed in Chicago in 2022, only 1,450 led to arrests – a mere 16.6 percent (The Wall Street Journal Editorial Board, 2023). This is compared to Chicago’s 42.5 percent arrest rate for retail crime in 2019. In New York City, the rate of arrest per shoplifting incident was 34 percent in 2022, compared to 60 percent in 2017 (Meko, H., 2023). Shoplifters, who are aware of the weak prosecutors and laws, have been known to ask officers when caught if they can “just get a ticket,” according to the chief of police in Valencia, California (CBS News Sacramento, 2019).

Weak prosecutors complement weak laws that do not dissuade criminals from committing retail theft. In 2014, California voters passed Proposition 47, which reclassified theft under $950 as a misdemeanor rather than a felony. The old cap for a felony charge was $450. Higher thresholds allow shoplifters to steal more items with lower penalties, likely incentivizing increases in theft that match the increase in the felony threshold amount. Criminals have even been reported to use calculators to ensure they do not breach the $950 felony threshold while they are robbing a store (Levine, M., Romero, L., & Reshef, E., 2023). This is particularly pertinent because many ORC operations are managed by repeat offenders who want to ensure they will not land serious prison time if caught. In New York City, one-third of all retail thefts were committed by just 327 people, who were collectively arrested and rearrested 6,000 times (Meko, H., 2023). In Chicago, one-third of all shoplifting arrests involved just 195 people in 2022, according to an analysis of Chicago Police Department data (CWB Chicago, 2023).

Beyond rogue prosecutors and broken laws, inflation’s pernicious effects on Americans are likely playing a role in encouraging retail crime. Prices have risen almost 18 percent since President Biden took office nearly three years ago (Bureau of Labor Statistics, n.d.). This 40-year high inflation has placed an economic strain on every American. The cost of everyday household necessities like housing, groceries, and gasoline has increased by more than 20 percent. Criminologists and researchers are noticing that this inflation is pushing some Americans to steal out of desperation—some of them for the first time in their lives (Radkani et al., 2023; Kavilanz, 2023).

Nonetheless, stealing for profit is the primary driver of ORC. The advent of online shopping marketplaces, such as Facebook Marketplace and Amazon, has made it easier to resell stolen goods without repercussions. Although these online marketplaces often place restrictions on selling brand-name items, sellers are able to bypass this security measure by adding brand-name pictures to their postings, which can lure and fool potential buyers. Many consumers looking for good deals on clothing and other accessories unknowingly buy stolen merchandise. More than $500 billion in stolen merchandise is sold on these platforms globally, according to an analysis by the Prosecutors Alliance of California (Walsh, D., 2023).[1]

The rise in shoplifting and ORC has coincided with the rise of political attitudes in large cities that demonize the police. The American public’s trust in police has declined in recent years, along with trust in other institutions of civil society and government. According to Gallup, Americans’ confidence in the police hit a three-decade low in 2022 at 45 percent (Jones, J., 2022). This is the first time that confidence in the police has dipped below 50 percent (excluding polling done in the aftermath of George Floyd’s death in 2020). In addition, a Washington Post-ABC News poll found that only 39 percent of American adults and only 20 percent of Democrats, who disproportionally dominate large cities, were confident that the police are properly trained in the appropriate use of force—another new low (Berman, M., & Clement, S., 2023). When the public loses confidence in the police’s ability to function, they may feel more willing to engage in behavior they previously thought would be counteracted by the police.

The Impact: Economic Decline, Employee Harm, and Worse Consumer Experience

Retail theft has a devastating impact on small and large retailers and the communities they surround. Retail theft can cause businesses to reevaluate their economic viability. This is particularly true for small retailers, for which stolen goods can have a devastating impact on their bottom line. Tamara Young, the owner of Consign Couture in Portland, Oregon, exemplified this when she decided to shut down her small business after a string of 19 thefts. Speaking to a local Portland news channel, she said of the theft, “Why would I want to do this anymore? There is not a lot of joy in it when you have worked this hard for this long and there is this major, pervasive problem that I don’t know how to handle” (KGW 8 Portland, 2023). Increased theft causes prospective customers to shop in person less frequently. One poll found that 24 percent of adults who have noticed an increase in retail theft are shopping at stores less frequently, and this percentage jumps to 31 percent for those who live in cities (Shriber, S., 2023). Research from the University of Southern California has found that crime tends to increase in areas where foot traffic declines, creating a dangerous feedback loop (Chang, T. & Jacobson; M., 2017). For small businesses who rely on foot traffic, these declines can be a death sentence.

Small retailers that are not closing shops due to theft are often forced to raise prices to compensate for the losses. A U.S. Chamber of Commerce 2022 Q3 survey found that 46 percent of small businesses in the retail industry had raised prices over the past year to compensate for shoplifting (U.S. Chamber of Commerce, 2022). Although most large retailers are not going bankrupt due to rampant theft, according to Investor’s Business Daily, many are closing individual stores in hard-hit areas, and others are reducing their hours or facing a reduction in their profit margins (Miller, H., 2023). Given that there are 4.2 million retail establishments in America, this epidemic impacts every community across the Nation.

Retail employees often suffer the brunt of the physical and psychological impacts of retail theft. When criminals who work in an ORC syndicate invade stores, they often use weapons to threaten store employees. A 2023 survey of 1,000 retail employees found that 40 percent of them feel scared to go to work (Axonify, 2023a). The same survey found that 58 percent of retail employees say disputes with staff and other customers are increasing. More than 67 percent of retailers said they were seeing even more violence and aggression from ORC perpetrators than they did a year ago (National Retail Federation, 2023). In a different survey, nearly 76 percent of asset protection managers at leading retailers reported that shoplifters threatened to use a weapon against a retail employee in their store, and nearly 76 percent reported that an ORC participant assaulted an associate (Retail Industry Leaders Association, 2021). Testimonials from retail employees paint a particularly dire picture. One sales associate at a Sunglass Hut location described his and his coworkers’ roles as “selling sunglasses and fighting crime” (Walsh, D., 2023). Taken together, it is no surprise that 47 percent of frontline retail managers reported in an October 2023 survey that they have had workers quit due to concerns about safety (Axonify, 2023b). Macy’s employees in Seattle even started a brief strike over the matter, demanding that the store hire additional security guards (Kaste, M., 2023).

Communities are not spared from the scourge of retail theft either. Beyond economic losses and psychological trauma, retail theft has contributed to a decline in the consumer experience as stores take measures to combat the crime. The owners of Rothmans, a menswear shop in New York City that lost more than $20,000 worth of inventory after it was robbed twice by the same group, told the New York Post that they decided to keep the store’s front doors locked at all times, so customers can only enter the store if they knock (Balsamini, D., 2022). A Chicago Walgreens redesigned a store to be “anti-theft,” requiring consumers to use a kiosk to pay for a good before they can pick it up at the counter. Safeway has unveiled metal gates through which customers must exit in Vallejo, California, to deter criminals (Guzman, A., & Pennock, L., 2023).

Crime also appears to be a driving factor causing some grocery stores to shut their doors. In Chicago, six grocers on the south and west sides of the city have shut down in the past two years, at least in part due to high crime rates (The Wall Street Journal Editorial Board, 2023). This includes a Whole Foods location that received $11 million in subsidies from the city council in 2016 to open (Maidenberg, M., 2014). In Washington, D.C., a local Giant grocery store closed after $500,000 in losses due to theft, according to city council member Trayon White (Joseph, J., 2023). This has created fears among residents that the store might shut down, and it comes despite the store investing hundreds of thousands of dollars in security efforts.

Walmart, CVS, and Target have also implemented locked plexiglass cases for everyday items. Store associates must help consumers unlock the case to buy an item. An investigative report from Inside Edition looking at these same three stores in the New York City metropolitan area found that it often took more than 10 minutes for a store associate to unlock one of these cases and more than 40 minutes at one Walmart in New Jersey (Inside Edition, 2023). Beyond these changes, other large and small retailers have experimented with new layouts for businesses, such as putting more expensive items in the back of stores or behind cashiers, closing stores at hours most targeted by shoplifters, and hiring security guards (Miller, H., 2023; Debter, L., 2022). Shoppers have noticed—48 percent of Americans overall and 58% of those in cities say they have seen stores make changes due to retail theft, such as reduced hours and increased security measures (Shriber, 2023).

Discounting the Critics: Fighting Accusations that Retail Theft is Overblown

Commentators have questioned and, at times, dismissed the notion that retail theft is rising, arguing that the phenomenon is exaggerated and that fierce e-commerce competition and higher labor costs are the true reasons for declining retail profit margins. Some claim that retailers would rather blame economic problems on theft than on their own strategic failures (Meyersohn, N., 2023a). They argue that the retail “shrink rate,” the amount of shrink relative to total retail sales, has also stayed relatively constant over the years.

However, these arguments do not appropriately consider the documented spikes in retail theft in large cities or the threatening rise in organized retail crime, and they downplay the small but significant shrink rate increase from 1.4 percent to 1.6 percent among retailers in 2022 (National Retail Federation, 2023). Reporters and law enforcement have extensively documented high levels of crime in retail establishments (Colton, E., 2023; Kaste, M., 2023). While the data itself is troubling, it also likely underestimates true theft rates, as many shoplifting incidents are not reported (Meyersohn, N., 2023b). Retailers may also be concerned about reputational damage to their stores or being labeled an unsafe destination for shopping.

Taken together, data from retailers and law enforcement agencies, along with troubling reports from retail employees and business owners, strongly suggest that retail theft is an increasing problem.

The Solutions

America First solutions to retail theft center around keeping communities safe and ensuring criminals face the consequences of their actions. Without sufficient deterrence of retail crime, the scourge will continue unabated.

Local and State Solutions:

1. Remove Prosecutors Who do not Prosecute

When prosecutors do not charge non-violent thieves for the crimes they have committed, these criminals are essentially given a hall pass to continue harassing businesses. Some states have the option to set up recall elections or have their governor forcibly remove prosecutors for “neglect of duty” or “malfeasance.” Voters successfully recalled San Fransisco District Attorney Chesa Boudin after he failed to prosecute many thefts and had sent a message that he was on the side of criminals (White, J., 2022). Voters also turned against Baltimore City State’s Attorney Marilyn Mosby after crime in the city increased. She had publicly stopped prosecuting certain “low-level” offenses (Stimson & Smith, 2020).

2. Crack Down on Repeat Non-Violent Offenders

As documented in New York City and Chicago, it is often a small group of perpetrators who account for a large portion of retail crime committed in cities. To combat this problem, Ann Davison, the city attorney of Seattle, pioneered an approach that placed more attention on these repeat offenders. Davison’s “high utilizer initiative” first identified 168 people who contributed to 3,500 misdemeanor referrals in 2017. Then, when those “high utilizers” committed crimes, they faced a faster review of cases, faster-charging decisions, and increased coordination with the county’s prosecutor and police offices, among other measures. The number of misdemeanor criminal referrals for “high utilizers” to the city attorney’s office dropped from 6.3 per year before the initiative to 2.7 per year during the initiative. For those who exited the initiative, the average was 0.6 per year (Seattle Attorney’s Office, 2023). Prosecutors can also use conspiracy charges—defined as an agreement between two or more people to commit a criminal act—against those who participate in ORC or are repeat group offenders.

3. Reaffirm Support for Law Enforcement

As the media and anti-police activists harm the public’s perception of law enforcement, the attractiveness of becoming a police officer or staying in the law enforcement profession has declined. Officer morale is repeatedly cited as a key driver of police officer resignations (Police Executive Research Forum, 2021). Public leaders, from governors to mayors, should reiterate their respect and gratitude for law enforcement.

In addition, raising wages and benefits for police officers, creating meaningful career development opportunities, and supporting officers’ mental health would make the profession more attractive to new recruits, ensuring that law enforcement agencies were attracting the best possible candidates (Erickson, 2023). Higher pay also has the potential to help hold police officers to the highest standards, attract quality applicants, and improve the public’s perception of the profession (University of North Dakota, 2020).

New Mexico recently exemplified this by signing into law House Bill 68, which creates a $40 million dollar fund to recruit police officers (Office of the Governor of New Mexico, 2022). In the same vein, Florida is awarding $5,000 bonuses to new police officer recruits with the passage of House Bill 3, which enabled the Law Enforcement Recruitment Bonus Payment System (Holland, C., 2022).

Federal Solutions:

1. Enact the Combating Organized Retail Crime Act

Members of Congress have introduced the Combating Organized Retail Crime Act (S. 140), which would implement a number of measures to help law enforcement crackdown on organized retail crime. The legislation would direct the U.S. Department of Homeland Security to establish the Organized Retail Crime Coordination Center, which would help officials track and prosecute organized retail crime perpetrators with the help of industry representatives and local law enforcement. Among its other positive provisions, the legislation gives federal prosecutors permission to aggregate the dollar value of crimes over the course of a year, rather than treating each crime separately, to ensure repeat offenders of organized retail theft are penalized appropriately (International Council of Shopping Centers, 2023).

2. Increase Department of Justice Grant Funding for the COPS Program

The Community Oriented Policing Services (COPS) program within the U.S. Department of Justice provides the majority of federal funding to state and local law enforcement agencies for the hiring of police officers (Erickson, 2023). Given the large hiring shortfalls present in local policing, funding increases to the COPS program have the potential to be a lifeline to localities in desperate need of more law enforcement. Funding should be provided with the stipulation that the financial burden of the new officers’ salaries will eventually be absorbed by localities. Police officers’ physical presence is one of the most reliable deterrents to criminal activity, including retail theft (Weisburd, 2021).

Conclusion

The health of America’s local economies, communities, and workers depends on the success of small and large retailers. Protecting these establishments against crime requires prosecutors who prosecute and laws that provide deterrence and hold criminals accountable. It also requires monitoring the success of the INFORM Act at preventing illicit sales of merchandise online, community leaders reaffirming their support for police, and additional funding for local law enforcement for the expressed purpose of hiring more police officers. Implementing these recommendations is critical to ensure not only that retailers can survive but also that communities can thrive.

[1] Although the INFORM Act, which requires online marketplaces to collect, verify, and disclose identifying information about high volume sellers on their platforms, went into effect on June 27, 2023, it remains to be seen whether this legislation will have the desired effect in countering illicit sellers (Amazon, 2023).