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Can Retail Survive in America’s Cities?

From masking and COVID-19 testing to remote working and TikTok dances, the past four years have brought a plethora of changes. Few things have changed quite as much as America’s cities, though. As businesses shut down and social distancing was recommended, people left large cities en masse for what they perceived to be safer, greener pastures in the suburbs and more rural areas. And, in the midst of this crisis, another erupted that spurred protests, lootings, and devastating damage to storefronts and the communities they serve around the country.

As a result, people lost their jobs, the economy suffered, and inflation skyrocketed. In many cases, people became desperate, and more willing to commit crimes—especially against retail giants who, in their distorted estimation, surely wouldn’t feel the pinch.

Lisa LaBruno

“There is no doubt that retailers have experienced a surge in crime in many cities, particularly dating back to the pandemic and recovery,” said Lisa LaBruno, senior executive vice president of retail operations with the Retail Industry Leaders Association (RILA). “Anyone who has traveled the country pre-pandemic and post‑pandemic can spot the difference—it truly is amazing that there are still some people and journalists who think the problem is fabricated.”

LP Solutions

Many have debated whether retailers are inflating retail crime numbers, but to those working in retail, and even many consumers, the change is clear.

Rhett Asher

“You can’t walk down a city street without realizing things are getting worse,” said Rhett Asher, senior vice president of partnership development at ALTO USA. “From what our clients are saying, there is an evident increase in crime in big cities, and not just shoplifting—retail crime also includes violence, ORC, even groups of teenagers who don’t respect authority doing store sweeps. And what do you do about all of that? Retailers are fighting multiple battles on multiple fronts, and everyone is under-resourced, which makes this even harder to deal with.”

Amanda Hobert. CFI

Amanda Hobert, CFI, president of the Metro Organized Retail Crime Alliance (METRORCA), said that while there has been plenty of conversation around rising crime in New York City, it’s not the only area being affected.

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“Retail crime has absolutely increased in big cities,” she said. “Hearing from other retailers this is not just an isolated issue in New York City, but throughout the country, there’s an elevation in retail crime, though particularly in big cities. I do not think it’s overhyped.”

According to the National Retail Federation’s 2022 Security Survey, the cities with the highest level of retail crime are:

  1. Los Angeles
  2. San Francisco/Oakland
  3. New York City
  4. Houston
  5. Miami
  6. Chicago
  7. Sacramento
  8. Seattle
  9. Atlanta
  10. Dallas

While all these cities (and most others) are in an uphill battle with retail crime, this article will focus specifically on Los Angeles, San Francisco, New York City, and Chicago.

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LA and San Francisco

With two of its largest cities boasting the highest retail crime numbers in the country, California has suffered the most from the recent rise in retail crime.

In California, shoplifting is defined by Proposition 47 as stealing merchandise worth less than $950 during business hours. In 2022, San Francisco County had 333 reported shoplifting incidents per 100,000 residents—a 24 percent increase since 2019. Los Angeles County actually saw a 6 percent decrease in shoplifting from 2019 to 2022.

This could be due to more retail crime incidents being considered a commercial burglary incident, defined as stealing more than $950 worth of merchandise. Los Angeles County saw a 29 percent increase in commercial burglary from 2019-2022, while San Francisco County saw a 26 percent increase with 429 incidents.

Where Los Angeles really stands out is in its number of commercial robberies, where force is threatened or used. These incidents increased by 13 percent, with 60 per 100,000 residents.

Rachel Michelin
Rachel Michelin

“In LA, we have a DA who isn’t prosecuting, whether it’s cargo theft, retail theft, or otherwise,” said Rachel Michelin, president and CEO of the California Retailers Association. “He was a big proponent of Prop 47, and when you have a DA not holding people accountable, that creates an environment where people are taking advantage of the law. What we see a lot is people dipping their toe into crime by stealing small amounts, and it starts to escalate. Lately, there’s been an escalation with all the smash-and-grabs. And now we have no bail. When you start adding these things together, it creates an environment where criminal activity thrives.”

Michelin added that San Francisco has its own host of problems.

“San Francisco was under the harshest lockdowns during COVID and took the longest to move out of that, and they were very focused on office workers, so when folks started working from home and left the city to move elsewhere, they didn’t come back,” Michelin said. “When you don’t have that traffic, that has an impact. For a while, there was a DA who was not prosecuting a lot of crimes, but he was recalled, and I think the current DA is trying to prosecute, but that genie was kind of already out of the bottle. Until San Francisco figures out what it’s going to be in its next resurgence and gets people to move back, crime will continue to be a challenge.”

For both California cities, a growing homeless population is also contributing to the increase in retail crime.

Phil Pasquini / shutterstock.com

“People who don’t have enough resources will steal things they can’t afford,” Michelin said. “Couple that with the growing homelessness problem and mental health issues, that all adds to the larger issue of retail crime. But fundamentally you have this attitude where you won’t be held accountable. There needs to be consequences or diversion programs. What’s fueling a lot of this is addiction and mental health, and they utilize stealing to continue the destructive lifestyle without the intervention.”

However, even those who originally supported relaxed prosecution are growing tired of the overwhelming crime and closing businesses, and politicians are following suit.

Thanks in part to the lobbying of the California Retailers Association (CRA), the state passed AB 331, which toughens penalties for retail crime, and provides funding for a California Highway Patrol ORC Task Force. As of August 2023, the task force has recovered over $30.7 million worth of stolen merchandise since 2019.

Los Angeles launched its own ORC Task Force in August of this year with involvement from multiple Southern California law enforcement agencies, including the LAPD, the Los Angeles Sheriff’s Department, the US Marshals Apprehension Task Force, and the Federal Bureau of Investigation Apprehension Task Force. The move came after more than thirty masked individuals stole over $300,000 worth of merchandise from a Nordstrom store on August 12.

Magraphy / shutterstock.com

“What we’ve seen over the past week in the City of Los Angeles and in surrounding regions is unacceptable, which is why today we are here announcing action,” LA Mayor Karen Bass said at the time. “These are not victimless crimes—especially in the case where Angelenos were attacked—through force or fear—as they did their jobs or ran errands. No Angeleno should feel like it’s unsafe to go shopping and no Angeleno should feel like it’s unsafe to open a business in Los Angeles or Los Angeles County. This task force will aggressively investigate these incidents and hold individuals that are responsible for these crimes fully accountable.”

Action is happening on the state level as well. In June 2023, California Attorney General Rob Bonta signed an agreement committing to specific actions aimed at helping to address growing retail crime. On September 12, California Governor Gavin Newsom announced that California would make a $267,118,293 investment to combat ORC, providing an opportunity to hire more police, make more arrests, and secure more felony charges against suspects.

“Enough with these brazen smash-and-grabs,” Newsom said. “When shameless criminals walk out of stores with stolen goods, they’ll walk straight into jail cells.”

After having a hand in all these successes, Michelin’s next goal is to fix the unintended consequences of Prop 47 that relate to retail theft.

“In California, we’re hitting that tipping point where people are getting frustrated; retail crime is affecting every community, not just big cities, and people want to see some accountability,” Michelin said.

New York City

New York City saw more than 63,925 shoplifting incidents in 2022—a 45 percent increase from 2021. Over the past five years, shoplifting complaints have nearly doubled. Unfortunately, only about 34 percent of these resulted in arrests last year, compared with 60 percent in 2017.

One interesting finding when looking at the retail crime stats in New York City is that nearly a third of all shoplifting arrests in 2022 involved just 327 people, who were arrested and rearrested more than 6,000 times. Out of all the stores in New York City, eighteen department stores and seven chain pharmacy locations accounted for 20 percent of all complaints. And the items being stolen are decreasing in value. By the end of 2022, the theft of items valued at less than $1,000 had increased 53 percent since 2019 at major commercial locations.

Nick Starichenko / shutterstock.com

In May of this year, NYC Mayor Eric Adams announced a new plan to combat rampant retail theft.

“Shoplifters and organized crime rings prey on businesses that have already taken a hit due to COVID-19, but, with this comprehensive plan, we’re going to beat back on retail theft through a combination of law enforcement, prevention, and intervention,” Adams said at the time. “This plan will help us invest in diversion programs and in underlying factors leading to retail theft; works upstream to stop some of the factors leading to a crime before one takes place; trains retail workers in de‑escalation tactics and security best practices; and takes numerous actions to increase necessary enforcement against repeat shoplifters and deter organized retail crime rings perpetrating these thefts.

“Most importantly, this plan aims to reassure our store owners that we know they are essential to our city, and we have their backs.”

“[Eric Adams’ new plan] is a step in the right direction,” Hobert said. “Seeing these crimes in the media and the issue being in the spotlight is helping. It’s unfortunate because I think the reason it’s coming to light is the sheer amount of what’s happening and the degree to which it’s happening—smash-and-grabs are $100,000 hits and present massive safety issues. This is a step in the right direction, but it will take time to put things in place and for perpetrators to realize changes are being made not in their favor.”

Adams’ plan includes two diversion programs, retail employee training, a neighborhood retail watch, and the establishment of a New York City Organized Retail Theft Task Force.

Peter Chie, CFI

“New York City is one of the [cities dealing with retail theft best] because a lot of resources are allocated in New York,” said Peter Chie, CFI, operating vice president of asset protection and risk management at Bloomingdale’s. “Other cities struggle with both deterrence and prosecution.”

METRORCA also works to bring relief to retailers in New York City and has been pushing for more member collaboration to identify ORC groups so they can be prosecuted.

Chicago

The Chicago Police Department does not separate retail thefts in its reporting, but there have been 14,470 total theft incidents so far in 2023, as of Sept. 10. In 2022 during the same time period there were 13,327 total incidents, meaning there has been a 9 percent increase in theft already. Looking at the past two years, there has been a 79 percent increase in theft, and a 98 percent increase in the past three years.

In the state of Illinois, the US Chamber of Commerce estimates that more than $2 billion worth of goods were stolen from retailers in 2021, and the cost to businesses was more than double that when taking other factors into account, such as lost sales.

While crime has increased, arrests have decreased. Many point to Cook County State’s Attorney Kim Foxx’s move to raise the threshold for felony shoplifting charges to $1,000 from $500 as the reason. However, this does not stop the Cook County State’s Attorney’s Office from prosecuting ORC groups and high-level offenders who are responsible for far more than $1,000 of theft.

Similar to New York City, many of the retail crimes committed in Chicago are carried out by the same people, in the same locations. One-third of shoplifting arrests in Chicago in 2022 involved the same 195 people who were arrested at least twice for retail theft. Of the 1,499 shoplifting arrests in the city in 2022, 12 percent resulted from thefts at the Macy’s store on State Street, downtown.

Illinois Attorney General Kwame Raoul has been a passionate advocate for reversing the tide and stopping retail crime in the state. He created an ORC Task Force in 2021 and helped to pass a bill that combats ORC in 2022.

Also working to combat retail crime is the Cook County Regional Organized Crime Task Force (CCROC), formed in 2010. Since then, the group has brought together more than 120 private companies and over 100 local, state, and federal law enforcement arms.

David Williams

“They’re sharing information and that’s the biggest key, having a place for people to go with the issues they’re having, and to know they’re not alone,” said David Williams, chairman of CCROC and supervisor of the Cook County State’s Attorney’s Office Special Prosecutions Bureau. “Before, everyone was working in their private silo instead of realizing the same criminal enterprise was victimizing multiple companies and jurisdictions. We figure out how to bring all of the jurisdictions and victims together to build investigations and prosecute.”

CCROC has bimonthly meetings to share information, and from those, they’ve learned a lot. “We’re seeing a lot of trends in financial fraud by gangs,” Williams explained. “They used to be all about narcotics, but now we see them doing financial fraud. And we see money going overseas to finance international crime groups and even terrorist groups. Millions and millions of dollars are being sourced out of Chicago.”

iWonder TV / shutterstock.com

According to Williams, there are four victims of retail crime: the business being attacked, the consumer who then has to pay more for products, the cities and states that are losing tax dollars due to fewer legitimate sales, and the communities being deprived of resources.

“One thing that’s happening more in Chicago is store closures like in San Francisco,” added Williams. “We also have semi-legitimate businesses in high-crime areas, in places you’d consider food deserts, and instead of providing food, they provide places for fencing operations and fraud. Instead of providing jobs, they take resources from the community. And the impact at that level is so critical. Shutting down these criminal enterprises can have an impact in high-crime areas.”

Why Are Cities Being Hit So Hard?

While some details and specifics vary from city to city, there are a few factors that are contributing to the general rise in big city retail crime.

“I don’t think there’s a simple explanation, and I am sure it is something that will be studied extensively, but from my vantage point, anxiety, anger, fear, and division have all been on the rise over the past several years,” Lisa LaBruno said. “The pandemic made much of this worse, and I don’t think we’ve really gotten past some of the scar tissue from that year-plus of chaos. Trust in law enforcement is down, which is a huge problem. Law enforcement officers themselves are exhausted and demoralized, and they are underfunded in many urban areas. It’s just a perfect storm, and unfortunately, criminals aren’t always as dumb as we think they are—criminals are exploiting the moment because it’s been easy and profitable to steal and sell stolen products.”

Hobert agrees that the pandemic had an impact on retail crime.

“With the ability to mask up, it was an avenue for these subjects,” she said. “The leniency in the laws in some cities doesn’t help either. These crimes are looked at as low-level shoplifting offenses when they’re part of a much larger organization and issue. Coupled with that is the increase in violence. A lot of retailers are forced to be hands-off for the safety of customers and employees, and that’s known by offenders.”

The rise in e-commerce was another way the pandemic indirectly affected retail crime.

“The fact that people had to stay home, and shops were closed, you had to shop online for everything, and that increased the prevalence of e-commerce,” Chie said. “So not only did retailers have to change the way they execute at the store level, but a lot of people sat on the couch and ordered online and that created an atmosphere in stores where they had to reduce payroll to accommodate this shift in fulfillment versus in-store shopping, and with fewer people on the store floor, it created more opportunity for theft. And then you add in the fact that masks are common to wear now, and all those things fit together like a puzzle.”

The biggest factor contributing to a rise in crime across all cities and states might be the lack of prosecution.

“The reason for all of this is because there is no accountability, no consequences,” Asher said. “When there’s no consequences, things become chaotic, and that’s what we’re seeing. Between under‑resourced communities and very loose laws, I think the consequences of committing crime today are much less severe than they’ve ever been. It’s the perfect storm.”

“[The increase in big-city crime is] predicated by some of the legislation that’s decriminalized a lot of the activity and really kind of lessened the consequences to some of these bad actors,” Chie added. “And you’ve also got the challenges with law enforcement today, especially around staffing and recruiting—just the attrition rate with law enforcement in the big cities is a tough challenge. Not only are they having more people retiring early, but they have fewer recruits coming in, and that’s creating a deficit in their ability to execute strategy, and the first thing that goes by the wayside is the property crimes.”

Then, of course, there’s also the ease of peddling stolen goods on online marketplaces.

“The ability to quickly and easily sell stolen product anywhere in the world from behind a screen name made organized theft low-risk and high reward, particularly—but not limited to—jurisdictions where felony thresholds went up over the last decade,” LaBruno said. “If criminals can evade prosecution and fence anonymously through an online marketplace anywhere in the world, you’ve created a business model for the theft and resale of stolen products—a lucrative one.”

Selling stolen goods only becomes more lucrative during tough economic times.

“What’s desired in the legitimate world is desired in the illegitimate world, and that’s because those groups take advantage of the fact that there is an economic crisis looming or general chaos, and they use that to profit because they know there are people looking to save a dime,” Asher said. “This is probably the most under-resourced communities have been in a long time, and it’s a breeding ground for bad actors.”

It’s Time to Lay Down the Law

With the lack of accountability and prosecution being a major driving force behind the rise in retail crime in big cities, it’s clear that now is the time to get serious about laying down the law.

“ORC existed for years—these folks are doing this not just for profit but drugs, human trafficking, and so many other things are funded through these gangs, so we need to look at things from that perspective,” Chie said. “Cutting down on ORC would cut down on other things as well. There’s no federal shoplifting law right now, so federal funding does not exist. Every state has to fund the issue individually, and that’s where we’re running into problems.”

Retail organizations like RILA have been hard at work trying to strengthen laws against retail crime, though it’s not an easy task.

“Getting the details right on criminal justice reform is hard, same with bail reform,” LaBruno said. “I don’t know many serious people who want to lock up young people who do something stupid, or who think incarcerating addicts or homeless individuals is a wise long-term solution to society’s problems. Reasonable people can have a serious conversation about bail reform for nonviolent and first-time offenders. But we cannot have a revolving door for people who are violent or habitual offenders. Prosecutors who don’t get tough on people who are violent or get serious about career and habitual criminals in the community are going to keep their cities from recovering. Businesses will not come back if they don’t feel secure; people will stop coming to live, work, and eat in downtowns they don’t feel safe in.”

This is why, LaBruno said, RILA fought so hard for the INFORM Act, which makes it more difficult to anonymously sell stolen products online. Now the FTC and fifty state attorneys general are policing that law. This is also why RILA supports state and federal ORC task forces and will continue to advocate for funding.

Recently, RILA forged a partnership with the National District Attorneys Association (NDAA) to drive collaboration at the local level between prosecutors and retailers. The next step, LaBruno said, is their new Vibrant Communities Initiative, where RILA and the NDAA are launching pilots in two communities that bring together district attorneys, police departments, social service organizations, local policymakers, civic and business groups, and other stakeholders to identify effective approaches for dealing with high-impact habitual offenders.

But don’t sit back and wait for retail organizations to do all the work—contact your local lawmaker and urge them to take action against retail crime in your community. Even more vital is getting store-level employees to share their experiences.

“The most important thing for everybody is to get involved,” Chie stressed. “Frontline employees should be writing to their senator and explaining how retail crime is affecting their livelihood.”

Protecting Your Stores

It can be easy to feel helpless against the rising tide of big-city retail crime. But there are several steps you can take to keep your stores safe and secure.

“The biggest thing is really making sure we differentiate between the types of external theft—opportunistic shoplifting and ORC,” Chie explained. “Making sure our colleagues are educated and aware of the type of activity they’re encountering predicates how they’re going to react. If it’s opportunistic, great customer service will deter them. However, ORC groups are not deterred at all by those types of things. If we identify ORC, it’s all about speed and urgency; you need to remove yourself from that situation, get as much information as you can, and work with law enforcement on the back end to help them close the case. We may not get the instant gratification of recovering merchandise right then and there, but we can down the road. And the most important thing is keeping people safe during the incident.”

One thing to consider is the type of restrictions there might be on frontline employees.

“Share info, make sure all stores have camera systems that are in tune with the police department, and that they’re sharing information and signing complaints,” Williams emphasized. “Some businesses won’t sign complaints or act in real-time. If you have an employee watching a theft and they must contact a manager first before contacting the police—I understand corporate rules, but you lose the opportunity to identify the criminals at that point. And give them the ability to follow-up on cases in court, because if you’re not there to advocate for your case, it becomes difficult to prosecute.”

Finding partners in your fight against crime is also key. “We’re way beyond the point where we’re competitors in LP,” Hobert said. “We all have the same challenges, so reach out to your partners in LP and see what they’re doing. We’re all in this together.”

Your local ORCA or retail organization can be a huge support system. “We’re really trying to do what we can to give retailers, law enforcement, and district attorneys the tools they need to be successful when it comes to combating retail theft and ORC,” Michelin said. “We do retail theft roundtables all over the state with local officials, law enforcement, and retailers to talk on a smaller scale and information share—that’s really powerful. There are a number of district attorneys who will prosecute, but retailers need to help prepare cases.”

National associations are a great resource as well. “Make sure you’re plugged in with RILA’s asset protection peer communities,” LaBruno said. “They are made up of the best and brightest AP executives in the business, and if you aren’t in those meetings, you are missing out. Sign up to walk stores with your local prosecutors. Attend our webinars, workshops, and collaborative programs with the NDAA. Sign up to be a part of the Vibrant Communities Initiative.”

Collaborating with others can often lead you to solutions you would never have thought of on your own.

“Don’t give up,” Asher advised. “The great thing about retail and LP is that we’re tenacious. We are smart and we are relentless, and my bit of advice would be that security in retail has always been a collaborative, layered approach, and it’s always also been about innovation and trying different things. Keep trying new things, because at the end of the day, we will get our arms around this and hopefully mitigate some of what is going on.”

The Future of Retailing in Big Cities

Many big box retailers, among others, are closing locations in high-crime areas, raising the question of whether there’s a viable future for retailing in big cities.

“What concerns me is that today, we have historically low long-term unemployment, which has traditionally been a boon for urban centers and downtowns,” LaBruno said. “Those areas are hurting today despite record employment and wage growth. We absolutely need to get a handle on violent and habitual crime in these communities now, because I would wager that the problem will get worse with a future recession or higher unemployment, whenever it arrives.”

Peter Chie suggests that a shift from urban locations to suburban locations might happen, or that city locations will decrease in size, making them more manageable.

“In a lot of these high-crime cities like Portland and San Francisco, we’re opening stores, but they’re not big box department stores like they were in the past, they’re off-mall concept stores that are more flexible,” Chie said. “We’re going into areas in big cities where the traffic is, but in the remote working world with fewer people in the city, it’s not as fiscally beneficial for a retailer to be in the city. Malls, too, aren’t destination retail spaces anymore, so retailers are moving out to standalone locations.”

However, Hobert believes that people will soon start moving back into the cities they once abandoned.

“With anything, the pendulum swings one way and has to swing back the other way,” she said. “As we talk about ORC being in the media and people being more aware, there’s nothing else to do except react in the way we need to. We’ve seen some legislation, more ORC task forces, etc., and once we see success with those, the hope is that we’ll really start to see an impact throughout the US. Brick-and-mortar will always have a place in cities. People like shopping online, and they like the pickup in-store experience.”

It’s important that retailers actively work to mitigate crime in cities now, though—before it’s too late.

“I am an optimist, but a realist,” LaBruno said. “There is no silver bullet and there is a lot of work ahead. RILA has a strategy and a playbook, and we’re not giving up. But if we don’t dedicate ourselves to the playbook, I fear you will see more stores closing. And cities without vibrant retail won’t survive, so we have to get this right. The domino effect of retailers closing will lead to restaurants closing, hotels closing, and workers and residents leaving. We have to get this right. Now is the time!”

The good news? Retail is resilient.

“I’ve been in this industry my whole life, and one thing I will tell you is that retailers are resilient,” Asher said. “We have weathered ORC ups and downs for the past thirty years; we’ve weathered pandemics, hurricanes, tornadoes, droughts, and more. Brick-and-mortar will never completely go away. Some larger format stores may close but smaller footprints take hold, or they move out to the suburbs. We’re an adaptive industry and these retailers are super smart. And while it might get media attention to say some stores are shutting down because of crime, I don’t think that’s the whole puzzle, just a piece. We’re going where the sales are.”

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