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Organized theft costs US retailers 700.000 dollars per each billion dollars in sales

By Angela Gonzalez-Rodriguez

Nov 29, 2021

Business |ANALYSIS

Image;Neiman Marcus, San Francisco

Major retailers across the U.S. are facing a surge in organized shoplifting, with about 80 people participating in the organized ransack of a Nordstrom store in California and more than a dozen people swiping merchandise from a Louis Vuitton store in Chicago, where Neiman Marcus saw one of its store also looted. On Thanksgiving day another luxury store, this time a Bottega Veneta store in Los Angeles, was also robbed.

“Retailers have always had shoplifting, but the concern now is there seems to be a surge in organized, gang-related theft,” said Neil Saunders, an analyst and managing director at GlobalData Retail. “Shoplifting was very covert — you don’t see it — but this is very blatant.”

In California, the local state law enforcement agency (CHP), is joining forces with retailers to help tackle this growing issue: “The CHP remains steadfast in its efforts to help reduce organized retail theft,” CHP Commissioner Amanda Ray said in a public statement. “We are collaborating with local law enforcement and district attorneys to apprehend and prosecute the criminals involved in this nefarious activity.”

Organized retail theft costs the national economy more than 30 billion dollars

According to the National Retail Federation, organized retail theft accounts for an estimated 30 billion dollars in economic loss each year nationwide or, in other words, on average, organized retail crime costs retailers on average 700,000 dollars per 1 billion dollars in sales every year. Similarly, Buy Safe America estimates that crime results in billions of dollars in lost economic activity each year.

“What we’re seeing today are people who are essentially building a business model, stealing from local retailers and reselling those products quickly and rather anonymously online,” said in this regard Jason Brewer, senior executive vice president of the Retail Industry Leaders Association, a trade group. The group’s study estimates Ohio lost 2.1 billion dollars to organized theft, while Indiana lost 1.8 billion dollars and Kentucky, 727 million dollars. California, for example, leads the nation in the percentage of retail sales lost to theft, at 2.32 percent. “The economic impact of retail crime is profound,” said the research, adding that “Retailers face increased costs for lost product, security, and labor, which lead to higher prices for consumers and, ultimately, lower sales. Lower sales translate to fewer jobs throughout the economy.”

Although it isn’t a new problem, the study concludes organized theft has worsened in recent years due to the growth of online shopping venues that allow people to sell stolen merchandise under screen names.

Organized retail theft typically involves a criminal enterprise with multiple theft rings at numerous retail stores and uses a fencing operation to sell the stolen goods, explain from CHP. While retailers are the first ones suffering the impact of this criminal activity, carrying losses from theft on several levels, ultimately the cost might be passed on to consumers through price inflation.

Image:Neiman Marcus, San Francisco