As concerns mount about organized retail crime, these are the products being targeted

By James Rogers

Target, Dick's Sporting Goods and Home Depot have all highlighted the problem of retail theft

Organized retail crime has once again cast a shadow over retail earnings season, with companies such as Target Corp., Dick's Sporting Goods Inc. and Home Depot Inc. all highlighting the problem of retail theft.

Perhaps unwilling to draw attention to at-risk products, retailers have provided few details of items targeted during their recent earnings calls. However, Lowe's Cos. (LOW) did discuss its use of technology to combat power-tool theft.

Carol Spieckerman, president of retail advisory firm Spieckerman Retail, described theft as a "multi-category headache" for retailers, but told MarketWatch that some categories are particularly vulnerable. "Beauty products are tempting targets due to their small form factor and premium prices," she explained, via email. "It's much easier to load up on these items and resell them in higher volumes. Unfortunately, beauty is also a high-margin category that many retailers are determined to expand."

Related: Dick's Sporting Goods CEO highlights impact of organized retail crime: 'It's quite alarming what's going on'

Spieckerman noted that Target (TGT) has been quite candid about the impact crime is having on its bottom line, even as the retail giant touts its partnership with Ulta Beauty Inc. (ULTA) as a major growth vehicle.

Apparel, footwear and accessories are often pursued by individuals and crime rings, according to the retail expert. "Here again, these categories are retail profit-builders that are also fairly easy to grab and resell," she told MarketWatch. "For retailers like Dick's, Target and Nordstrom that specialize in these categories and count on them to drive profitability, retail crime is a shocking everyday reality."

Store associates can't be expected to police these situations and retailers don't want to encourage that, as some incidents turn violent, Spieckerman told MarketWatch. "Additionally, local police forces don't always have the bandwidth to take on retail crime, particularly in smaller communities," she added.

Related:Here's the technology Lowe's plans to deploy to combat power-tool theft

Last week, Ann-Marie Campbell, Home Depot's (HD) executive vice president of U.S. stores and international operations, said she is hopeful that the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act will aid efforts to tackle organized retail crime.

The INFORM Consumers Act, which came into effect June 27, is designed to add more transparency to online transactions and deter criminals from acquiring stolen, counterfeit or unsafe items and selling them through online marketplaces. The Act requires e-commerce sites to verify and disclose information about their high-volume third-party sellers.

"The recently passed INFORM Consumers Act promises to unify and standardize the fragmented elements that make retail crime such a tough nut to crack," Spieckerman told MarketWatch. "Most importantly, it targets the demand side of the equation rather than relying on reactive, post-incident strategies."

Related:Target facing 'unacceptable amount' of retail theft and organized retail crime, CEO says

"Tightening the reins on the online marketplaces where most stolen goods are fenced is the focus for the act, so it's not a quick fix," Spieckerman said, noting that it will take time for the act's impact to be realized. "Still, it's a step in the right direction. Starting this holiday season and going into 2024, I expect retailers to make major investments in theft-thwarting technology as an augmentation strategy."

Speaking during a conference call to discuss the company's second-quarter results this week, Dick's Sporting Goods (DKS) CEO Lauren Hobart said that the retailer has deployed Lot Cop surveillance cameras in its fight against organized retail crime.

Earlier this month, Target CEO Brian Cornell said that the company is facing an "unacceptable amount" of retail theft and organized retail crime. "Theft and organized retail crime are urgent issues that are increasingly impacting the team and guests at Target and other retailers," a Target spokesperson told MarketWatch on Wednesday. "The problem affects all of us, limiting product availability, creating a less convenient shopping experience and putting our team and guests in harm's way."

Related:Walmart's 'shrink' challenges differ from those of other retail giants, CEO says

"We are working with legislators, law enforcement and retail industry partners to advocate for public policy solutions to combat theft and organized retail crime," the spokesperson added.

A spokesperson for the Retail Industry Leaders Association told MarketWatch that organized retail crime is a massive problem and the industry is working on it at local, state and federal levels. "Retailers are spending billions of dollars on theft deterrent technology, deploying more security guards, closing stores in high-crime areas and partnering with state AGs, Homeland Security and local prosecutors to address theft," they said.

Additionally, more than a dozen state attorneys general have launched organized retail-crime task forces to coordinate investigations between retailers and prosecutors. There are also more than 40 Organized Retailer Crime Associations across the U.S. These associations assist law enforcement, retail investigators and prosecutors with the identification, investigation and prosecution of those involved in organized retail crime.

Related:Foot Locker sees softer-than-expected sales, weaker start to back-to-school

Underlining the scale of the problem facing retailers, shocking video of a mob ransacking a Nordstrom Inc. (JWN) Rack store in California also went viral recently, one of a number of theft incidents in the Los Angeles area. "What happened at the Nordstrom in the Topanga Mall this weekend is absolutely unacceptable," tweeted Los Angeles Mayor Karen Bass on Aug. 14. "Those who committed these acts and acts like it in neighboring areas must be held accountable."

The Los Angeles Police Department announced the establishment of a multi-agency task force made up of law enforcement partners and prosecutors to address "the striking increase" in incidents of violent organized retail theft.

Organized retail theft has also prompted discussion about judicial deterrents. "Start with zero bail for grand theft and organized retail theft -- no consequence -- no deterrent," tweeted Los Angeles Police Chief Michel Moore on Aug. 11. "It's not rocket science."

-James Rogers

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08-24-23 0757ET

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