This article is the final installment of a comprehensive three-part series exploring the world of organized retail crime, delving into its repercussions on businesses, and the concerted efforts by retailers and policymakers to counteract the menace.
In a candid interview last December, Walmart’s CEO, Doug McMillon, issued a stark warning about the far-reaching consequences of not vigorously prosecuting shoplifters, indicating that it could significantly affect consumers. “If that’s not corrected over time, prices will be higher, and/or stores will close,” cautioned the head of the United States’ largest retailer in a conversation with CNBC.
The retail sector, a behemoth in the nation’s private job market, contributes a staggering $3.9 trillion to the annual gross domestic product, according to the National Retail Federation. The shuttering of a retail giant such as Walmart could not only result in job losses but also deprive communities of essential shopping outlets. Consequently, legislators are taking heed of these potential ramifications.
Since 2022, an increasing number of states, including six this year alone, have adopted stringent legislation aimed at imposing harsher penalties for organized retail crime offenses. With parallel bills awaiting deliberation in various state legislatures and the U.S. Senate, it is clear that the tide is turning against such criminal activities.
Central to this wave of legislative measures are retailers and trade associations, who are utilizing their collective influence to champion these bills and shepherd them through the legislative process. The timing is opportune, as lawmakers across the political spectrum perceive a political advantage in displaying toughness against criminal activities.
The newly enacted and proposed laws carry a two-pronged objective: to act as a deterrent against audacious retail crime and to target the leaders of organized theft groups, often referred to as “kingpins.” However, critics of these measures voice concerns that they might not necessarily lead to a reduction in organized retail crime and could disproportionately affect marginalized communities.
Adrian Hemond, CEO of the political consulting firm Grassroots Midwest, underscored the extent of influence wielded by organized interest groups, whether from the business sector, organized labor, or NGOs. He contended that these groups’ policy agendas often prioritize organizational interests over the broader public good.
The backdrop of these legislative endeavors is a growing trend among retailers to attribute escalating crime rates to higher inventory losses, also known as shrink. Yet, these retailers have not provided concrete data to substantiate the extent of the financial toll. Experts interviewed by CNBC raised the possibility that some companies may be overemphasizing theft’s impact on profits to divert attention from internal vulnerabilities. The upcoming release of second-quarter results by several major retailers may shed more light on this aspect.
As the battle against organized retail crime intensifies, concerns regarding the potential unintended consequences of these laws loom large. The delicate balance between deterring criminal activities and avoiding disproportionate harm to vulnerable communities remains at the heart of the ongoing debate.
