Death By A Thousand Cuts

Retailing has never been an easy business, but these days it’s harder than ever. Supply shortages, inflation, and a weakening economy are making their problems worse. There's one other issue that should be added to this list: shoplifting.

Shoplifting – taking someone’s property without permission and with no intent to pay for it – is taking a huge toll on businesses large and small. Indirectly, even the shareholders of retailers are feeling the pain. 

There are several variations of this crime. On the simplest level, someone takes an item off a store shelf and leaves without paying for it. But there are more sophisticated variations. Shoplifters, for example, may take items of considerable value and resell them in flea markets or online. In this case, both the losses to the stores and the profits made by the thieves are much greater.

In all of these cases, stores bear the brunt of the losses, which are surprisingly high. In fact, at some point businesses simply can no longer continue to absorb these losses and are forced either to raise prices or, as we’re seeing more frequently these days, to bite the bullet and hang a “store closed” sign. 

Anyone who doesn't believe that this problem has gotten out of hand should take a look at how The New York Post described it in late December. “A nationwide shoplifting epidemic is crippling the finances of brick-and-mortar retailers, which warn that they may be forced to raise prices or even shutter stores in order to offset tens of billions of dollars in lost inventory.”

 

A Fistful of Merchandise

The National Retail Foundation estimates that in 2021, an amazing $94.5 billion was lost to “shrink,” an industry term that refers to lost inventory. According to the Wall Street Journal the primary reason for shrinkage is shoplifting. And The Journal adds that in 2021 retailers on average saw a 26.5% surge in organized theft.

Shrink is not a new problem, but in the last few years it has become increasingly serious. Between 2014 and 2019, shrink rose at a compound rate of 7% – certainly a high rate, but one that most stores were able to cope with. But in 2020, the first year of the pandemic, it soared by 47%. And in 2021, it rose by an additional 4%.

Target recently acknowledged that theft has become a huge problem. In the first nine months of fiscal year 2022, gross profit declined by more than $400 million from last year, and it said theft contributed “significantly” to this drop. 

But Target is certainly not the only retailer forced to contend with shoplifting. In an interview with CNBC, Walmart CEO Doug McMillon acknowledged that theft at Walmart “was higher than it has historically been,” and warned that if the problem continues the store may be forced to raise prices or even close stores.

Joe Parisi, president and COO of the New York City grocery chains D’Agostino’s and Gristedes, said they “are fighting increased costs from higher levels of organized crime, and they’ve had to double the security guards at stores from a year ago.” Of course, it is the consumer who ultimately pays for the losses from theft and the costs of increased security.

Walgreens, Best Buy, and Home Depot are also experiencing these problems, and so are countless smaller, lesser-known stores across the country.

 

A Sign Of The Times

Why has shoplifting become such a serious problem? Many retailers trace the answer back to the pandemic. At that time, staffing shortages became an issue, and since then retailers have had difficulty hiring the number of employees they need to prevent this crime.

Moreover, supply chain shortages have created a huge opportunity for shoplifters to sell their wares at premium prices; consumers who need certain merchandise will buy them wherever they are sold – at whatever price they have to pay.

Adding to this problem is that too often shoplifters simply walk out of stores unabashedly carrying (and in some cases literally dragging) numerous items with no one challenging them and courts not prosecuting them, while the laws meant to protect the property of retailers are ignored.

At least one California district attorney said shoplifting has gotten out of control because of criminal justice reform laws. DA Vern Pierson explained that new state laws allow many criminal activities to go undeterred – shoplifting among them.

Zero Hedge explains that these laws downgraded certain crimes from felonies to misdemeanors. They also made other changes in the law. Among the most important of those was raising the minimum amount for stolen goods to be classified as a felony; before these laws it had been $450 – now it’s $950. This means shoplifters can take not just things they need but also things they want, do so repeatedly, and with little worry of getting punished.

These laws also allow felons already serving time to petition for resentencing or to have their convictions reclassified to misdemeanors. Critics say changes in the laws like these are in large part responsible for the rise in petty theft across the state.

 

Happening All Over

It’s not just retailers in Los Angeles and San Francisco that are suffering. In fact, shoplifting in other cities is even worse – even in places generally not associated with high crime rates such as Great Falls, Montana; Fairbanks, Alaska; Salt Lake City, Utah; and Memphis, Tennessee. In fact, shoplifting in these cities leads the country.

Over the years, shoplifters have changed not only their strategies but also the items they take. Items like meat, allergy medicine, and pain relievers are still high on their lists, but these days so are expensive liquors, laptops, designer handbags, and laundry detergent. Cheese is the most stolen food item in grocery stores.

Shoplifting certainly is not as serious or shocking as other crimes. Still, it takes a heavy toll on businesses, the prices all of us pay for the merchandise we buy, and affects the level of crime that we, as a society, are willing to tolerate.

Unfortunately, this level keeps increasing, and as it does society inches toward anarchy. Some stores have hired guards to protect their businesses.

For some retailers shoplifting is a lot more than a nuisance. It is death by a thousand cuts and not everyone is willing to sit by passively and watch their businesses being ripped away from them, piece by piece. In fact, there have been reports of some who have resorted to vigilantism. The legal system needs to take more effective action, because this problem is getting out of hand.

Sources: blog.cheapism.com; cnbc.com; legaldictionary.net; nypost.com; retailresearch.org; statista.com; zerohedge.com; YouTube: Decoy Voices