The rising wave of Organized Retail Crime (ORC) forces major retailers like Target, Nike, and Walmart to grapple with escalating theft challenges. Discover the impact on store closures, safety concerns, and the broader solutions being sought to combat this multifaceted criminal trend.
Is Organized Retail Crime Shutting Down Stores Where You Live?
- Target, Walmart, and Nike announce closures in the face of rising retail theft.
- Retail theft led to over $112 billion in losses in 2022.
- Losses from theft spiked 19.4% from 2021 to 2022.
- Organized Retail Crime (ORC) is becoming more common nationwide.
Target, Nike, and Walmart grapple with escalating theft challenges, seek solutions
Major retailers are facing a growing crisis as theft and organized retail crime continue to escalate, prompting store closures and safety concerns across the United States. Last week, Target joined the list of retailers forced to make difficult decisions, announcing the closure of nine stores in New York City, the San Francisco Bay Area, Portland, and Seattle, effective October 21st. The company cited the rising threat of theft and organized retail crime as the primary reasons for these closures, emphasizing the safety of both customers and employees.
Despite implementing various security measures, the Minneapolis-based retailer described encountering "fundamental challenges" in ensuring store safety and sustainability. Target CEO Brian Cornell had previously expressed concerns about escalating theft, with estimated losses potentially exceeding $1.2 billion this fiscal year. This decision highlights retailers' ongoing difficulties in addressing theft issues while maintaining their presence in areas with limited shopping alternatives.
Nike, another prominent brand, also felt the brunt of rampant theft, leading to the closure of a high-profile store in Oregon. The Nike factory store in Portland shut its doors permanently due to escalating petty theft and shoplifting incidents, impacting the company's profits. In response to these challenges, Nike expressed its commitment to the local community and sought input from local organizations and leaders for a new location. The closure responds to challenging retail conditions and safety concerns, disheartening the local community.
With its widespread presence across the country, Walmart is taking proactive steps to combat inventory shrinkage and improve safety. The retail giant has already closed 22 stores in 2023, citing escalating losses and crime as factors. To address these issues, Walmart plans to reopen its Vine City location in Atlanta with significant upgrades, including a pharmacy, grocery store, and a police station to boost safety and combat crime. The police substation aims to deter in-store crime and create a safer shopping environment.
Retailers resort to locking up products, other measures
The challenges these retailers face are part of a broader trend in the industry. Many retailers, including Home Depot, Lowe's, Dollar Tree, Dick's Sporting Goods, and Ulta, have raised concerns about disappearing inventory, known as "shrink." Retailers have resorted to measures such as locking up high-demand merchandise and hiring more security to combat theft. Despite these efforts, some retailers have chosen to close stores due to persistent safety concerns.
Organized Retail Crime (ORC) is a form of professional shoplifting and theft in retail stores. Stolen items are often resold online. These criminals operate with a high degree of organization and sophistication, making it challenging for retailers to combat their activities. What sets ORC apart is how brazen and violent these criminal rings are becoming. ORC not only endangers customers' safety but also puts store employees at risk.
Organized retail crime, which often involves coordinated efforts to steal items for illegal resale online, remains a significant challenge for the industry. The National Retail Federation (NRF) reported that shrink accounted for $112.1 billion in losses in 2022, a 19.4 percent increase from the previous year. While some industry analysts question whether retailers are blaming poor performance on crime, there's a consensus that in-store violence has increased substantially, further underscoring the need for solutions.
Policymakers aim to help
Retailers have lobbied for legislation like the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (INFORM Consumers Act) to combat organized crime. They've also called on local governments to enforce stricter penalties for shoplifting and low-level offenses. However, store closures continue as retailers grapple with theft, decreased foot traffic, and rising costs.
The INFORM Consumers Act aims to provide more transparent information to consumers—especially in online marketplaces. It seeks to ensure that labels on products include accurate and relevant details about the product's contents, origin, and safety. The Act intends to empower consumers to make informed decisions about what they spend their money on.
In cities like Washington, D.C., Giant Food has taken steps to combat theft by removing national labels from beauty and health aisles, implementing receipt checks at the door, and hiring more security guards. The chain is also limiting the number of items permitted through self-checkout to prevent theft.
As retailers confront this multifaceted crisis, their decisions impact their bottom lines and the communities they serve. The challenge lies in finding effective solutions that ensure store safety, prevent theft, and maintain accessible shopping options for consumers nationwide.