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Crime is Adding to Supply Chain Woes

February 28, 2022


References to the wild west are being made more frequently as criminal activity increases supply chain woes. Back in the fall of 2021, Walgreens announced it was closing five San Francisco stores, citing ongoing organized retail crime as the reason. At the time, Walgreens spokesperson Phil Caruso stated, “Organized retail crime continues to be a challenge facing retailers across San Francisco, and we are not immune to that.”[1] About a month later, “Best Buy Co.’s shares tumbled after the nation’s largest consumer electronics chain posted a decline in gross profit margin for the fiscal third quarter, citing organized theft and increased promotions.”[2] Around the same time, a new phenomenon emerged smash-and-grab mobs organized using social media. Speaking about rising crime rates, Rachel Michelin (@RachelEMichelin), president and CEO of the California Retailers Association, told the press, “We’ve been sounding the alarm for a while that this issue is not getting better.”[3]


Retail Smash-and-Grab


If retailers didn’t have enough to worry about with the pandemic, inventory issues, and labor shortages, a new type of organized crime has been added to their plate. Last October, journalists Eugene Garcia (@eugenegarcia) and Olga R. Rodriguez (@OlgaRRod) reported, “A group of thieves smashed windows at a department store at a luxury mall in Los Angeles, triggering a police pursuit just days after high-end stores throughout the San Francisco Bay Area were targeted. The latest incident in a national trend of smash-and-grab crimes targeted a Nordstrom store at The Grove retail and entertainment complex.”[4] Joseph LaRocca (@laroccaj), a Los Angeles-based theft-prevention consultant, notes that the groups conducting these smash-and-grab operations are “not your normal shoplifter that’s in and out stealing little items.”[5] In fact, recent smash-and-grab operations give a whole new meaning to organized crime.


Journalist Zusha Elinson (@ZushaElinson) explains, “A recent rash of thefts by fast-moving mobs at stores in the Bay Area and outside Minneapolis were organized on social media and committed by people who often didn’t know one another, according to law-enforcement officials investigating the incidents. Snapchat was among the social-media apps and messaging services used by thieves.”[6] Elinson adds, “The incidents come as social-media companies are facing multiple regulatory investigations, as well as congressional hearings, related to potentially harmful and illegal activity taking place on their platforms.”


According to numerous experts, there are several reasons behind the rise in retail crime rates. Lynda Buel (@CEOLynda_SRMC), president of security consulting firm SRMC, believes “the decriminalization of low-level offenses in some states has created opportunities for criminals to manipulate the system. … For example, Proposition 47, a California ballot initiative passed in 2014, sought to alleviate prison overcrowding by reducing the penalties for some crimes. The measure raised the threshold for felony theft from $500 to $950.”[7] Pete Eliadis, a former law enforcement official and founder of security company Intelligence Consulting Partners, agrees that law like California’s Proposition 47 don’t help; however, he cites a lack of police resources as another reason criminals feel more secure in pursuing their nefarious activities. He explains, “There’s no political will to prosecute the people in this climate. Why should a police officer waste time getting into an altercation when the person is not going to jail because it’s overcrowded and a prosecutor is not going to prosecute that case because it’s not high on the priority list? The takeaway is we need the political will, more prosecution and backing of law enforcement.”[8] Experts also point to how easy it is to sell stolen items online.


Modern Train Robbery


Retail stores aren’t the only places criminals have targeted. Looting trains, especially in the Los Angeles area, has also become an area of concern. Journalists Paul Ziobro (@pziobro) and Ian Lovett (@iglovett) report, “Thousands of boxes [have] recently [been] found littered along Union Pacific Corp. tracks in the middle of Los Angeles. Thieves had broken into the train cars and made off with items shipped by Dr. Martens, Harbor Freight Tools, and small businesses alike. The scene has set off finger-pointing between the railroad, local officials and police about who is to blame and how to stop a modern twist on one of the country’s oldest crimes.”[9] They add, “Union Pacific said it has seen a 160% jump in criminal rail theft in Los Angeles since December 2020.” Ziobro and Lovett note that train robbery has a long history in the U.S.:


Train robberies date to the dawn of railroads, and Union Pacific has had its share of famous heists. In 1899, Butch Cassidy’s gang robbed the Union Pacific Overland Flyer No. 1 as it passed through Wyoming. The group stopped the train and blew up its safe. A posse was sent out in pursuit of the bandits. In other parts of the country, thieves occasionally plunder everything from alcohol to appliances from freight trains that either stop or crawl through areas. The railroads combat the problem with their own police forces. Union Pacific has more than 200 police officers, but they must patrol thousands of miles of track across 23 states. Lance Fritz, Union Pacific’s chief executive officer, said rail theft has been a mostly small-scale problem. What is happening in Los Angeles is different.”


Ziobro and Lovett report that criminals specifically look for boxcars loaded with packages from Amazon, FedEx, and United Parcel Service. They report that “total losses to Union Pacific have come to $5 million over the past year. That doesn’t include losses tallied by customers shipping on its rails.”


Concluding Thoughts


Financial losses for merchants and consumers from rising crime rates is substantial. Daniel Castro (@castrotech) and Morgan Stevens (@MorganStevens), from the Center for Data Innovation, report, “Organized retail crime has escalated in recent years with retailers losing an estimated $45 billion per year from retail crime rings.”[10] They add, “Law enforcement should play a role in preventing, deterring, and responding to organized retail crime. In most states, retail crime is a low-risk, high-reward activity, and their approaches to fighting organized retail crime fail to both hold the crime rings accountable and prevent repeat offenses, which only emboldens instigators of organized retail crime. This lax enforcement needs to change.”


As high as the financial costs are for supply chain crime, the emotional costs could be even more significant. “The National Retail Federation said a recent survey found stores are seeing an increase in organized thefts and perpetrators being more aggressive.”[11] Robberies have always been emotionally scarring for those involved, but increased perpetrator aggressiveness is increasing the stress. Best Buy CEO Corie Barry (@Corie_Barry), has stated, “This is a real issue that hurts and scares real people.”[12] Retail security expert David Levenberg notes, “Loss prevention agents and security guards are generally trained not to engage with thieves. They are not trained or equipped to pursue or subdue suspects, and the likelihood of violence is too great; instead, they are supposed to ‘observe and report.’ The value of the merchandise is not worth somebody being injured or killed.”[13]


Opinion columnist David Brooks (@nytdavidbrooks) writes, “As Americans’ hostility toward one another seems to be growing, their care for one another seems to be falling. … But something darker and deeper seems to be happening as well — a long-term loss of solidarity, a long-term rise in estrangement and hostility. This is what it feels like to live in a society that is dissolving from the bottom up as much as from the top down.”[14] Rising crime rates affecting the supply chain are just another indication that America needs to become more civil and more caring.


[1] Tessa McLean, “Walgreens closing 5 San Francisco stores due to ‘organized retail crime’,” SFGATE, 12 October 2021.
[2] Anne D’Innocenzio, “Best Buy shares tumble on theft, supply constraints,” Associated Press, 23 November 2021.
[3] Rachel Swan, Danielle Echevarria, and Shwanika Narayan, “Is shoplifting forcing Walgreens to cut back in S.F.? Data on the closing stores puts the claim into perspective,” San Francisco Chronicle, 15 October 2021.
[4] Eugene Garcia and Olga R. Rodriguez, “LA luxury mall latest to be hit by smash-and-grab thieves,” Associated Press, 24 November 2021.
[5] Julia Harte and Uday Sampath Kumar, “As holidays near, ‘smash-and-grab’ robbers hit U.S. retailers,” Reuters, 24 November 2021.
[6] Zusha Elinson, “Flash-Mob Thefts Planned on Snapchat and Other Apps, Police Say,” The Wall Street Journal, 13 December 2021.
[7] Faith Karimi, “Why some US cities are facing a spree of ‘smash-and-grab’ crimes,” CNN, 24 November 2021.
[8] Ibid.
[9] Paul Ziobro and Ian Lovett, “Train Robberies Are a Problem in Los Angeles, and a Blame Game Has Ensued,” The Wall Street Journal, 23 January 2022.
[10] Daniel Castro and Morgan Stevens, “California’s Law is an Effective Model to Combat Organized Retail Crime,” Center for Data Innovation, 8 October 2021.
[11] Garcia and Rodriguez, op. cit.
[12] Ibid.
[13] Ibid.
[14] David Brooks, “America Is Falling Apart at the Seams,” The New York Times, 13 January 2022.

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