Risky Retail Business
Risky Retail Business
Stories from around the country paint a gloomy portrait of the brick-and-mortar retail industry in American cities. First up, Walmart announcedthat it will close its two stores in Portland, Oregon, on March 24. No surprise there. Back in December, Walmart CEO Doug McMillon warned that the rise in thefts across American cities, “if not corrected over time,” could force store closures. Also in Portland, Nike is looking to hire off-duty police officers in an attempt to reopen an outlet it closed last year due to rampant shoplifting.
A few days ago, Texas Governor Greg Abbott took a dig at Portland over Walmart’s exit, saying, this is “what happens when cities refuse to enforce the rule of law.” Portland Mayor Ted Wheeler’s response: “The retail industry is changing, and retail theft is a national issue.”
In other words, don’t blame me. Everybody’s doing it.
Which is true enough. In New York City, Mayor Eric Adams recently added shopping to the list of activities—such as social-justice protesting—deemed Covid-safe. “We are putting out a clear call to all of our shops, do not allow people to enter the store without taking off their face mask,” he said. Why? “When you see these mask-wearing people, oftentimes it’s not about being fearful of the pandemic, it’s fearful of the police catching them for their deeds.” Or, as Bob Nardelli, CEO of Home Depot, put it in December: Retail theft is an “epidemic” that’s “spreading faster than Covid.”
But for New Yorkers who don’t see things that way and still want to put on a mask, Mayor Adams added, “Once they’re inside, they can continue to wear it if they so desire to do so.” Kind of like masking up between bites at a half-empty restaurant.
Political expedience and Covid flip-flops aside, New York City has seen a terrible increase in shoplifting since the country first went defund-crazy. Gothamist reports that there were 17,411 robberies in New York City in 2022, “compared to 13,831 in 2021, according to NYPD data.” The last time New York robberies topped 17,000 was 2013. Last year, in only one quarter, Rite Aid lost $5 million to theft in its New York City stores.
And New York comes in only third on the National Retail Federation’s listof top cities affected by “organized retail crime.” California is at the top of the list with Los Angeles at number one and Oakland at number two. The point is, retail theft is bad in every major American city. Dallas, Miami, Chicago—they’re all in the top ten.
The national frustration with rising crime of all types will eventually force city leaders to take action—or suffer the kind of public rejection that Chicago’s soon-to-be ex-mayor Lori Lightfoot suffered last week. But what about now? Until the day that police will be empowered to enforce the law, store owners are on their own. That’s just the way it is. As Ted Wheeler blithely says, “the retail industry is changing.”
Retailers have a few options for rolling with the changes. They can, like Nike, hire their own off-duty cops while the on-duty ones are still hobbled. They can accept the deputization of Mayor Adams and enact theft-prevention measures on their own. (And it sure will be interesting to see what happens if shop owners actually start demanding that New York shoppers take off their masks.) They can do what most big chain stores have done and lock up hundreds of items behind plexiglass. But according to Axios, “locked cases can cause sales to drop 15% to 25%,” driving away customers who don’t want to deal with the inconvenience of wrangling a store assistant to unlock the shelf and hover impatiently while you decide on a shampoo. Or they can do what Walmart did in Portland: accept some degree of loss until it’s no longer worth it and then close shop.
At Bloomberg, Sri Taylor recently reported that big retail chains are increasingly shutting stores in major cities and opening shops in the suburbs, where they can “serve the new generation of remote workers.” Taylor writes, “In response to changing consumer behavior, giants like Abercrombie & Fitch Co., Macy’s Inc. and Kohl’s Corp are opening smaller storefronts closer to where shoppers live.” “Changing consumer behavior,” huh? Maybe stores leaving cities for the suburbs has at least something to do with other changes as well.
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