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Organized Retail Theft Figures Might Have Been Way Off But …

Try telling that to retailers and law enforcement

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The National Retail Federation (NRF) may be backing off its previous assessment of organized retail theft, but it was probably onto something.

It turns out that the prevalence of organized retail theft in the United States was exaggerated for the most part in an April report stating that nearly half the $94.5 billion in inventory that vanished in 2021 was due to organized crime, which the report claimed had increased 60 percent since 2015.

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The claim didn’t exactly hold up to a fact check when Retail Dive took a closer look and found that only about 5 percent of 2021’s losses were tied to criminal enterprises shoplifting and selling inventory on the black market.

But is it really overstated when retailers like Target say to hell with locations in cities such as New York and San Francisco, and explicitly cite a wave of theft undermining the viability of stores there? It looks as though outlaws everywhere are truly heeding The Smiths’ message from 1987: “Shoplifters of the World Unite.”

After Retail Dive’s report found a wider audience in early December, NRF revised its report

That report had worked off the theft figure that Brendan Dugan, the then-president of an organization called the National Coalition of Law Enforcement and Retail (CLEAR), cited before a U.S. Senate hearing in November 2021. Dugan’s figures, it turns out, came from 2015, and included losses from all unpaid merchandise, such as from damage or faulty inventorying, not just theft. For its part, NRF blamed the discrepancy on an analyst from K2 Integrity, a firm it hired to carry out the research and that used Dugan’s remarks.

The NRF removed the phrase “nearly half of which was attributable to [organized retail crime]” from the report.

An NRF report from September said retailers saw $112.1 billion in losses in 2022, an increase from $93.9 billion in 2021, but did not provide an estimate of how much theft can be tied to organized crime.

“We stand behind the widely understood fact that organized retail crime is a serious problem impacting retailers of all sizes and communities across our nation,” NRF spokesperson Mary McGinty said in an email to Commercial Observer. “At the same time, we recognize the challenges the retail industry and law enforcement have with gathering and analyzing an accurate and agreed-upon set of data to measure the number of incidents in communities across the country.”

K2 Integrity declined to comment. Dugan and CLEAR could not be reached. 

Whether or not it’s tied to organized crime, shoplifting has become increasingly prolific in New York City. The NYPD recorded 32,246 shoplifting incidents in 2017, 35,315 in 2018, 37,919 in 2019 and 32,352 in 2020. Where it gets out of control is in 2021, when there were 43,869 recorded incidents followed by 63,704 in 2022 — a figure nearly double the volume just five years before.

Over the course of 2023, however, there was a steady decrease in reported thefts in New York.

From Jan. 1 to Oct. 31 in 2022, there were a total of 53,630 thefts. Over the course of the same period in 2023, there were a total of 49,384 thefts, according to NYPD. Nearly every month in 2023 saw fewer incidents than the previous year, with September having the biggest decrease in thefts: 4,678, an 18.6 percent decline from the same month in 2022.

In May, Mayor Eric Adams started the Organized Retail Theft Task Force within NYPD to create solutions — citing the NRF report — but when asked for a breakdown of what percent of thefts are related to organized crime, the police department told CO to file a Freedom of Information request, a process known to take months if not years for government agencies to fulfill.

Instead, CO was referred to the mayor’s office for more information from the task force, but an Adams administration spokesperson said that the task force does not collect data and only advises on possible solutions through policy change or technology.

Other cities and states have made stronger efforts to track losses and the offenders.

The state of Iowa estimates that businesses lost up to $1 billion to organized retail theft in 2021 while the state lost out on $68 million in tax revenue, according to Republican Sen. Chuck Grassley. Michigan’s attorney general estimates that organized thieves have taken some $1 billion in merchandise in recent years. Los Angeles County’s various cities are now pooling resources to combat the theft. 

Major retailers, meanwhile, have blamed organized retail theft for plans to curb expansions. The biggest example is Target, which announced in September that it would close nine of its stores, including three in the San Francisco Bay Area and one in East Harlem.

It’s not clear how Target made the determination that organized retail theft was a significant phenomenon rather than individuals stealing for other reasons. Walmart has also closed stores citing theft and stating that its losses would result in price increases.

The Home Depot has been one of the loudest voices in calling for federal legislation to curb organized retail theft, with its vice president of asset protection, Scott Glenn, testifying before Congress on Dec. 12 about crime’s impacts and calling for the passage of the Combating Organized Retail Crime Act. The bill could establish a multi-agency approach at the federal level by creating what would be known as the Organized Retail Crime Coordination Center.

The Home Depot has increased the headcount of its investigative team for shoplifting by 180 percent since 2016 while increasing both security staff and equipment at stores, such as smart shopping carts that can identify all the items being toted, Glenn told Congress.

Federal enforcement can be tricky.

“Some of the challenges with investigating organized retail theft is that most of these crimes often appear as state offenses,” Jose Perez, the deputy assistant director of the FBI’s Criminal Investigative division, testified on Dec. 12. “Things like shoplifting are not immediately reported to the FBI and may not have clear connections to transnational criminal organizations.” 

During the hearing, members of Congress spoke about the many retailers having to take loss prevention seemingly to extremes by placing products behind barriers while employees are forced to deal with violent offenders caught in the act.

“This surge in retail theft is more than just teenagers looking for a thrill, but it’s an abuse of soft-on-crime policies and evidence of a deeper-rooted issue driving crime and fear amongst our communities,” Texas Republican August Pfluger said during opening remarks.

Retail theft is also connected to cybercrime, money laundering, drug trafficking, terrorism financing, weapons trafficking and transnational organized crime, according to a federal report.

A Home Depot spokesperson also noted that third-party online marketplaces have played a part in creating a channel for stolen goods to be sold, and that the company is seeing organized retail theft not only in urban areas but also in rural and suburban markets.

“Some of the most targeted items fall into the categories of wire and wiring devices, power tools, and home automation products,” The Home Depot spokesperson said in a statement. “Congress and states must focus on three paths forward: first, enforcing the new law of the land; second, creating capacity for law enforcement to investigate and prosecute cases through funding federal, state and local task forces; and, third, educating law enforcement and prosecutors on how to partner with retailers to combat dangerous criminals and organized crime.”

The weed of crime bears bitter fruit as law enforcement catches up with this trend.

On Dec. 11, Michigan Attorney General Dana Nessel announced the arrest of three individuals allegedly tied to a crime ring in the Detroit area and provided details.

About once a month from November 2022 to November 2023, a trio of suspects were reported to enter stores and often load up shopping carts to the brim before scuddling to a getaway car. They would take their loot to a fence operation where it was sold in bulk. The losses for the retailers in all these heists exceeded $200,000 combined, while the biggest single score for the group netted them about $19,000 in inventory, according to Nessel.

In another corner of the country, the Los Angeles Police Department has been busy enough that it offered a little more clarity on the extent of its efforts to curb looting, which has come mainly through the placement of plainclothes officers at stores that report a lot of retail theft.

On Dec. 13, LAPD seized $300,000 in goods from an organized retail theft operation in the Westlake District that mostly consisted of diapers, energy drinks and cosmetics. That same day, the California Highway Patrol took down a ring based out of a hardware and plumbing supply business in possession of $500,000 of stolen merchandise from Lowe’s and Home Depot stores.

While the LAPD did not immediately provide data on organized retail theft, the problem has been common enough for law enforcement agencies throughout Los Angeles County to combine enforcement resources.

On Dec. 5, for example, the Organized Retail Crime Task Force — a joint operation between the Los Angeles, Beverly Hills, Santa Monica, Burbank, Torrance and Glendale police departments — arrested 12 people, including four minors, allegedly involved with a theft ring.

Those suspects were reportedly seen by employees or plainclothes officers leaving stores with concealed items, and later tracked down and arrested. 

In New York City, Wegmans, a well-known brand in suburban markets, opened a store at 499 Lafayette Street in October in a space previously leased to Kmart and learned a thing or two about the big city.

The store had an entrance directly into the Astor Place subway station, giving thieves a getaway vehicle that only costs $2.90, so the big-box retailer boarded up the subway entrance and placed armed guards at the main entrance, which is now the only way in and out of the store.

While she could not speak to the exact extent of the problem, Compass’ Adelaide Polsinelli said that stores with an adjacent subway station are particularly exposed to people bagging goods and slipping away on a well-timed train.

Polsinelli, a resident of Lower Manhattan, said thieves often trade ill-gotten goods at places such as Union Square Park, Washington Square Park, Pennsylvania Station and the Roosevelt Hotel. Although less sophisticated than selling stolen goods through illegal online marketplaces, the simple fencing still counts as “organized crime.”

“If more than one person is in a group doing it, that’s organized, there’s a strategy. It’s organized because we’ve let them organize, we’ve let them get away with it, so now they’re putting together a business plan,” Polsinelli said. “The business plan is to steal as much as you can get out with and then go trade it.”

Mark Hallum can be reached at mhallum@commercialobserver.com