"Retail America - The Silent Victim of ORC' - Is No Longer Silent

A Chorus of Retail CEO's Call Out ORC & Violence as Top Issue in Quarterly Results
An industry first!

As retailers are pulling back or going silent about their urban plans, in the last few weeks, ten major retailers have listed and discussed in their quarterly results how ORC is impacting results and how employee and customer safety has become a major concern.

News channels, from CNBC to Fox News and CNN, and a multitude of local news shows are covering it, as never before have we seen such coverage. 

CNBC Episode Debunked

Even with the March 18th CNBC's episode questioning the "validity of the data," with their Cato Institute subject matter expert claiming "all of these crime trends from petty theft and organized shoplifting rings all the way up to various category's of violent crime is blown out of proportion by people who have an agenda, either to get more eyes on their content or to get more funding."  

And following up with the now infamous Walgreens CFO who in Jan. back tracked on his early comments with Wall Street about ORC by saying "maybe we cried to much last year when we were hitting numbers that were 3.5% of sales."

Meanwhile Walgreens was closing San Francisco stores for just that reason.

Regardless of CNBC's position however, the episode itself gave prominent industry subject matter experts the opportunity to truly create an awareness amongst the general viewers. 

But now, the reality is, the numbers speak for themselves and the chorus of top CEO's in America can't be denied by any group or party. 

Interestingly the BJ's CEO, Bob Eddy, said:  ORC is posing a challenge in "particular" areas where "blue state or local blue governments that don’t really feel like prosecuting crime.”

With the Giant Food CEO, Ira Kress saying this weekend on Fox that "it's out of control," and he doesn't want to have to close stores. Which means they're discussing it.

Let's hope these messages and coverage reaches Congress.  Just my thoughts  Gus Downing

Fox Business Episode Covers ORC with Matt Shay, President NRF

Retailers Nationwide Call Out ORC As Industry Wide Problem That Needs Action
NRF VP LP Dave Johnston reiterated it's not just about protecting profits.
It is about protecting employees and customers as these crimes have gotten more violent

Kohl's, Foot Locker, Target, Walmart say brazen retail theft worsening 

Matt Shay, NRF President, says on Fox Business episode that right below the normal economic concerns worrying everyone ORC is the #1 concern amongst retail CEO's

The nation's largest retailers are still feeling the effects of brazen retail theft despite their best efforts to prevent loss and increase safety for customers and employees.

The issue is putting employee and customer safety at risk, and also taking a toll on the profits of companies across the industry. Experts project things will continue to get worse unless laws are enacted to better assist in the federal investigation and prosecution of organized retail crime and recovery of lost goods.

In 2022, total shrink — the loss of inventory due to circumstances such as retail theft — cost retailers nearly $100 billion, and it is only getting worse, David Johnston, vice president of asset protection and retail operations for the National Retail Federation (NRF), told FOX Business. 

"Based on what we're hearing already from many of these CEOs and based on what we're experiencing daily in retailers across the nation… I do foresee us to have a much higher loss in 2023," Johnston said. 

On Wednesday, Kohl's CFO Jill Timm told analysts on an earnings call that the company faced higher shrink during the first fiscal quarter and projected that this headwind will continue.

"We feel like we can definitely put some actions against that to at least moderate it, but we will expect that to continue," she said. 

Last week, Foot Locker CEO Mary Dillon also warned that the problem is "having an increased impact on Foot Locker," specifically its apparel because one shoe is left out for customers to try on. 

"I would just say that, again, this has been a multi-year dynamic industry, we are not immune to it, it's increasing," Dillon said. 

Walmart U.S. CEO John Furner said on an earnings call last week that retail theft "has been really challenging" for the entire industry. 

"We're going to actively manage this issue," he said. "We're going to continue to take the steps that are reasonable and required to make sure we're protecting our customers, protecting our associates and protecting our assets and inventory."

Furner said, though, that the industry cannot tackle this problem alone. 

"It will take communities stepping up and enforcing the law to be able to bring this issue back under control," he said. 

Target CEO Brian Cornell is in agreement, saying that "while we're doing all we can to address the problem, it's an industry and community issue that can't be solved by a single retailer."

Cornell said the Minneapolis-based retailer — which expects to take a more than $500 million hit in profits this year due to theft — is working with legislators, law enforcement and retail industry partners to advocate for public policy solutions.  foxbusiness.com

BJ's CEO Says ORC Rise is in Blue States or Local Blue Governments That Don't Prosecute

Organized retail crime is definitely a thing, says BJ’s CEO: ‘We see it, and it is material’

BJ’s Wholesale CEO Bob Eddy says he’s been talking to his industry counterparts about the problem of organized retail crime

The impact of organized retail crime has been a subtheme of earnings season in the retail sector, with BJ’s Wholesale Club Holdings Inc. CEO Bob Eddy the latest executive to weigh in on the issue.

“Organized retail crime is definitely a thing,” he said, during a conference call to discuss the company’s first-quarter results Tuesday. “We see it, and it is material,” he added.

The CEO identified some parts of the U.S. as posing a particular challenge when it comes to shrinkage. “It is a much more pointed problem in certain places, particularly on the West Coast or places like Chicago or Albuquerque that have blue state or local blue governments that don’t really feel like prosecuting crime,” Eddy said, in an apparent nod toward a popular talking point among Republican politicians and aligned media outlets about Democratic public prosecutors who favor bail reform and new approaches to incarceration.

“My view is the government’s first obligation is to provide a safer environment for people to do their daily business and in some places that’s not happening. But politics aside, I think you continue to see this be a problem that the retail industry as a whole needs to work on.”  marketwatch.com

Dollar Tree Q1 Results: 'Elevated Shrink' Contributes to Gross Margin Decline in Q1 & Rest of 2023

Revises Fiscal 2023 EPS Outlook: $5.73 to $6.13 on Macro-Driven Higher-Than-Anticipated Shrink and Unfavorable Mix Shift Towards Consumables, Including $0.12 per Share Legal Reserve

“While we are seeing early results from our initiatives, we are not immune to the external pressures affecting all of retail, notably, the margin impact of elevated shrink and the product mix shift to consumables.”

“While we are maintaining our full-year 2023 sales outlook, we are adjusting our EPS outlook as we expect the elevated shrink and unfavorable sales mix to persist through the balance of the year.

Dollar Tree also incurred a $30M charge to legal reserve as a result of the rat infestation at Family Dollar distribution facility in Arkansas.  businesswire.com

Another Fox News Episode on ORC - "It's Out of Control"

Giant grocery chain fighting to keep stores open as theft, violence has 'increased exponentially:' Report

One grocery chain is fighting hard to keep stores open despite rampant shoplifting and an uptick in violence forcing many retailers to leave major cities across the country.

Giant Food, which operates 165 supermarkets in D.C., Maryland, Virginia and Delaware, has taken multiple measures to combat theft and keep stores safe, according to a report in The Washington Post. That includes limiting store entrances; hiring security guards; restricting the number of items at self-checkout stands; putting less high-value items on shelves; and securing razor blades in containers that make noise if opened.

Company president Ira Kress said he's seen theft rise at least "tenfold in the last five years" and violence increase "exponentially."

He hopes these measures will help keep stores open, even if they inconvenience shoppers. "The alternative is worse for customers," he told the Post. "The last thing I want to do is close stores. But I’ve got to be able to run them safely and profitably."  foxnews.com

Giant Food is taking several small steps to cut costs and stop theft without deterring customers

Cartels Become Retailers to Launder Drug Money
Shipping Chinese cell phones & goods through the U.S. & down to Colombia

33 arrested as global money laundering service is shut down

Authorities in Italy and Spain arrested 33 suspects in a coordinated action against a globally active money laundering criminal network. The alleged perpetrators, who are of Italian, Albanian, Colombian, Moroccan, and Syrian nationality, had built up an international network of companies to launder dirty money. As a so-called “money laundering network controller”, the criminal network offered a professional criminal service to veil the origin of proceeds generated by illegal drug trafficking from South America. 

With the support of Europol and Eurojust, money-laundering specialists from the Italian Guardia di Finanza uncovered a network of electronics companies located around the globe and seized EUR 18.5 million in assets. The intricate structure used companies in countries such as China, Türkiye, and the United States of America, amongst others. This complex web of companies allowed organised crime to disguise the nature, source, location, ownership, control, origin and/or destination of illegally acquired funds and to avoid their detection.

Trade-based money laundering

In order to launder drug profits generated in Europe, the arrested criminals offered a service of trade-based money laundering known as the “Black Market Pesos Exchange”. This process reduces the risk of losing money through seizures and allows for faster access to the funds. The drug producers would provide drugs to the Italian buyers as a form of credit. The profits generated from the sale of the drugs in Europe were then picked up by brokers, introduced into companies, and used for ordering goods such as mobile phones from China, to state just one example. These goods were then shipped to the United States and further transported to Colombia, where they were offered on the market. Upon being sold, the cartels such as the Grupo Armado Organizado received the cash and thus their veiled payment for the drugs provided to European sellers.  europa.eu

Shoplifting is "Soaring in the UK With England Up 24%

The UK's Biggest Shoplifting Hotspots

Shoplifting is on the rise in the UK, mainly due to the constantly rising cost of living and food prices.

The number of reported shoplifting incidents soared in the most deprived regions of the UK, where the crisis has hit the hardest. In 2022, the England and Wales Police processed nearly 296K reports, a 24% increase compared to 2021. Scotland also saw an increase, albeit by a smaller percentage of approx 10.3% (22,913 vs 20,557 offences). The only exception is Northern Ireland where shoplifting has been on a constant decline since 2016.

The most dangerous UK region in terms of shoplifting is the North East with an average rate of 778 offences per 100,000 people as confirmed by the Office of National Statistics. What is more, as many as 3 of the areas with the highest number of offences per capita in 2022 are located there – Cleveland, Durham, and Northumbria.

However, neither of these is the UK shoplifting hotspot. It is hardly surprising that the crown belongs to the City of London. With a population of 8,600 residents, it recorded 680 shoplifting incidents in 2022, which pushes its crime rate to 7,907 per 100,000 residents. Its score far surpasses the ones of Cleveland and Nottinghamshire which make up the Top 3 with shoplifting rates of 1,172 and 1,005 offences per 100,000 people. According to CrimeRate, the City of London is the most unsafe small city and one of the most dangerous localities overall, with various types of crimes taken into account.

The second most dangerous UK region for shoplifting is Yorkshire and The Humber, with an average crime rate of 702 offences per 100,000 residents. It is the home of another 3 of the areas with the most offences per capita – Humberside, West Yorkshire, and South Yorkshire with shoplifting rates of 848, 759, and 687, respectively.  tradingpedia.com

Lawmakers ask DOT to create supply chain theft task force

Pointing to an increase in supply chain thefts, several lawmakers are asking for the creation of a permanent task force to address the issue.

Sen. Mike Braun, R-Ind., Rep. Mike Bost, R-Ill., and several other lawmakers wrote to the U.S. Department of Transportation’s Office of Inspector General on May 22.

“We write to share concerns regarding an area of increasing supply chain fraud and theft,” the lawmakers wrote in the letter. “Specifically, stolen truck loads and funding fraud schemes, when truckers drop of their loads but do not get paid, are disrupting freight hauling by truck and brokering.”

The lawmakers said that there are about 3,500 such schemes conducted each year.

Members of Congress suggested the creation of a task force.  “We urge the Office of Inspector General to consider creating a special unit within the office, in consultation with the Federal Motor Carrier Safety Administration and the Department of Justice, to investigate, refer and prosecute cases of transportation fraud in a systematic, concerted manner.”  landlinemedia.com

The George Floyd Civil Unrest

The 2nd costliest civil uprising in U.S. history ($500M) & still a backlog of unfinished redevelopment projects.

Three years after George Floyd civil unrest, state offers $120 million for rebuilding businesses. Is it enough?

Yes, Porter recalls community members showing up in the immediate aftermath of the civil unrest. They brought brooms, dustpans, buckets and garbage bags to help clean up some 1,500 locations across the Twin Cities — many of them businesses owned by people of color and immigrants — that sustained an estimated $500 million in damage.  minnpost.com

S.F. downtown exodus: Another major retailer closes at Westfield mall - Banana Republic