Major retailers like Walmart, Target, and CVS are raising alarms about a significant uptick in theft incidents, warning of potential profit drops and store closures as a result. This surge in theft, characterized as organized retail crime, poses a substantial challenge to the retail industry and threatens the financial stability of businesses.
Scale of Organized Retail Crime
Ben Dugan, Director of Organized Retail Crime and Corporate Investigations at CVS Health, brought attention to the scale of organized retail crime during congressional testimony. He revealed that organized crime-related events occur in CVS Pharmacy stores every three minutes, with professional thieves stealing an average of $2,000 worth of goods in just two minutes.
Impact on Retailers
Target’s Chief Financial Officer, Michael Fiddelke, highlighted the significant financial impact of theft on the company’s bottom line. Missing inventory has slashed Target’s gross margin by over $400 million in 2022, with projected losses of $600 million by the end of the fiscal year. Walmart CEO Doug McMillon echoed these concerns, emphasizing that continued theft could lead to higher prices and potential store closures.
Root Causes and Complexities
Dugan emphasized the role of online marketplaces like Amazon and eBay in facilitating organized retail crime. The ease of opening and closing online stores allows criminals to operate undetected, leading to an estimated $500 billion in illicit sales of stolen and counterfeit goods annually. Organized retail crime differs from ordinary shoplifting, involving sophisticated networks that steal and distribute goods on a massive scale.
Criminal Operations
These crime rings typically involve a “booster” who steals goods from stores, followed by delivery to a “fence” who sells the stolen items through various channels, including online marketplaces. The use of weapons and violence during theft incidents has surged, further complicating the situation for retailers.
Financial Toll
The Coalition of Law Enforcement and Retail estimates that organized retail crime costs retailers approximately $45 billion in losses each year. These losses not only affect retailers’ profitability but also contribute to increased prices for consumers and potential job losses within the retail sector.
As the prevalence of organized retail crime continues to grow, collaboration between retailers, law enforcement agencies, and policymakers is crucial to develop effective strategies to combat this pervasive threat. Addressing the root causes of theft and implementing robust security measures are essential steps in safeguarding the interests of retailers and consumers alike.
Hiroto Suzuki
