This is the final part of a three-part series on organized retail crime. The stories examine the claims retailers make about how theft is impacting their business and the actions companies and policymakers are taking in response to the issue. Read the first story here and the second here.
Pedestrians walk past a vacant storefront along the Magnificent Mile shopping district on October 21, 2021 in Chicago, Illinois. Retailers are moving out of the luxury shopping district which has been hit hard by a drop in traffic from the pandemic and a rash of robberies and retail thefts.
When Walmart’s CEO, Doug McMillon, was asked what will happen if shoplifters aren’t aggressively prosecuted, he warned it would have a massive impact on consumers.
“If that’s not corrected over time, prices will be higher, and/or stores will close,” the top executive of the country’s largest retailer said during a December interview with CNBC.
The retail industry is the nation’s largest private sector employer, and it contributes $3.9 trillion to the country’s annual gross domestic product, according to the National Retail Federation. Shutting down a store as large as Walmart can deprive communities of both jobs and a place to buy everyday goods – and lawmakers are paying attention.
Since 2022, at least nine states – six so far this year – have passed laws to impose harsher penalties for organized retail crime offenses. Similar bills are pending before legislatures across the country and in the U.S. Senate.
Behind the sweep of legislation are retailers and trade associations, which are using their collective power to get the bills written and past the finish line. They have also seized on a moment when lawmakers in many parts of the country, and from both sides of the aisle, see a political benefit from appearing tough on crime.
Legislators jump on organized retail crime
Throughout 2021 and 2022, retailers and their trade associations were laser-focused on garnering support for the Inform Act. The law requires online marketplaces to disclose the identities of certain high-volume sellers to deter the sale of stolen goods, and proponents said it would fight organized retail crime by making it harder to anonymously resell stolen merchandise.
The primary targets of the bill, which took effect in June, were Amazon and eBay. They are some of traditional retail’s biggest competitors. While the digital behemoths eventually backed the legislation after certain concessions were added, they will now face steep fines if they’re found in violation of the law.
Now that the Inform Act has become law, retail has set its sights on a new target: the Combating Organized Retail Crime Act (CORCA), introduced in January by Sens. Chuck Grassley, R-Iowa, and Catherine Cortez Masto, D-Nev.
The NRF, the world’s largest industry trade association, helped write the bill, the group told CNBC. The NRF is funded by retailers and its board is comprised of top retail executives from Walmart, Target and Macy’s, among others, according to records and the association’s website.
CORCA proposes stiffer penalties for theft offenses and calls for a change in the threshold prosecutors must meet before bringing federal theft cases.
Currently, people can be charged with federal theft crimes only if the stolen goods are worth $5,000 or more in a single instance. CORCA would allow federal prosecutors to bring cases if the aggregate value of the goods reaches $5,000 or more over a 12-month period.
Cortez Masto told CNBC the bill aims to provide investigators with more tools to take down organized theft groups and give the current laws on the books “more teeth.”
Will the new and proposed laws work?
Both CORCA and the state measures rely on a crime-fighting strategy long used to thwart drug trafficking rings: start with the little fish, the boosters who steal repeatedly from retailers, and then bring in the big fish, the kingpins controlling organized crime rings.
“With the shoplifters and the boosters being the publicly visible criminals, you work through them in order to find out who [the larger players are],” said David Johnston, vice president of asset protection and retail operations at the NRF. “Let’s relate it to drugs, right? Very similar. Who are the people on the street, to who are the people supplying the drugs, to who are the people getting the drugs into the country?”
While the measures are a sure way to hold repeat boosters accountable, they may not actually reduce organized retail crime, said Jake Horowitz, a senior director with the nonpartisan, nonprofit The Pew Charitable Trust.
“If the question for policymakers is, ‘how do I reduce organized retail crime?’ The answer is unlikely to be through the threat of stiff sanctions to boosters,” said Horowitz, who oversees Pew’s safety and justice portfolio.
That’s because the same strategy has had little impact on dismantling the illegal drug trade.
A group robs a jewelry store, in an incident law enforcement says is an example of organized retail theft
police handout
The drug trade is a different market than retail theft. But it’s well studied and offers lessons that can be applied to organized retail crime, which has been researched little, numerous policy experts and criminologists told CNBC.
In the 1980s and 1990s, Congress enacted sentencing laws that created far stiffer penalties for drug trafficking. But decades later, it hasn’t significantly reduced drug availability or use, research shows.
Retail’s influence on policy
Despite the uncertainty surrounding the claims retailers make about organized theft, they have influenced public policy in large part because of the critical role the industry plays in the economy.
When retailers that provide jobs and essential goods come under threat, public officials act quickly because store closures can lower employment, tax revenue and the general health of a community.
“If the Walgreens shuts down and this grocery store shuts down, that’s going to decrease property values in the neighborhood because you’re going to have to drive further to go pick up your groceries or your sundries that you would normally get at the Walgreens,” said Hemond from Grassroots Midwest.
“So people are less likely to want to move into these neighborhoods, they are less likely to pay top dollar for the real estate, and other commercial businesses are less likely to move there because they’re not getting the benefits of colocation with popular retail locations.”
Manhattan DA Alvin Bragg is pictured during a press conference related to reducing shoplifting Wednesday, May, 17, 2023 in Manhattan, New York.
Voters also care, and elected officials believe they’ll be rewarded for cracking down on issues that receive a lot of media attention and complaints from the public, said Molly Gill, vice president of policy at the nonpartisan nonprofit Families Against Mandatory Minimums.
However, the solutions they propose don’t always work, said Gill, a former prosecutor who now advocates for sentencing and prison reform. When lawmakers are presented with problems involving crime, they tend to jack up penalties for the offenses instead of addressing the root causes of an issue. She’s concerned the same approach is being used to target organized retail crime.
