Losses mount as retailers fight theft rings, resale of stolen goods on online storefronts

MILWAUKEE — Thefts from retailers are soaring, with companies saying they are seeing increasingly brazen, organized thieves hitting their stores regularly.

Allowing for a certain amount of theft is part of the business for retailers. It is built into their financial plans. But the growing costs related to thefts have lately become too big to ignore, large national retailers say.

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The growing theft toll has caught Wall Street’s attention and is adding even more pressure to prices and bottom lines that have been rocked by inflation this year.
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It's not uncommon for thieves to fill shopping carts with everything from power tools to laundry detergent to health and beauty products and then run out of stores.

Since 2015, losses from theft have shot up nearly 60%, according to the National Retail Federation, a trade group and lobbying organization.

The trade group says the theft losses from all sources, including shoplifting, fraud and employee theft, are approaching more than $62 billion annually.

While there are certainly employees who steal, the rate of store workers engaging in thefts has remained stagnant as the loss rates have climbed, according to the NRF.

The costs associated with thefts have to be absorbed somewhere, either in higher prices for consumers or smaller profits for retailers, or both.

"If somebody steals something, somebody else is going to pay for it one way or another," said Brandon Scholz, president and CEO of the Wisconsin Grocers Association. "There’s only so much that the industry and store owners can absorb.
 
"The bottom line is, it’s the consumer who is going to pay for this."

When merchandise is stolen, it is often resold online on storefronts such as Amazon and a variety of other sites, brick-and-mortar retailers say.

"Organized retail theft is a serious problem in our industry," said Jim Hyland, vice president of communications and public affairs for Kroger's Milwaukee-based Roundy's division. "There has been a marked increase in organized retail crime over the last year. There is also an increased use of online platforms to resell stolen items. The two are not mutually exclusive."

Big Tech, Big Retail, big fight

The retail theft situation has set up a fight in Congress and state legislatures between brick-and- mortar retailers and online storefronts.
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The fight is pitting Big Tech against Big Retail and each side has created coalitions to advance their point of view with battalions of lobbyists and public relations people engaged in the fight.

Some of the rhetoric is downright nasty, a reflection of what’s at stake: Retail is a $4.4 trillion business in the U.S.
Shameless shoplifters: Retail thefts getting bolder in California and beyond

The debate centers on a bill in Congress known as the “Integrity, Notification, and Fairness in Online Retail Marketplaces" act or the “INFORM Act” and similar legislation being pushed by brick-and-mortar retail interests in various state legislatures.

The prospects for the bill's passage are unclear.

The bill would establish more stringent identification/verification requirements for anyone who is a “high volume” seller on online platforms.

Big-box retailers say Amazon and others are making money off merchandise that is stolen from their stores.

“Dominant online marketplaces make commissions and fees every time a stolen, counterfeit, or unsafe item is sold on one of these platforms,” according to the Buy Safe America Coalition. “Big Tech cannot be left to solve a problem from which they currently generate immense and growing profits."

The online retailers need to police the storefronts just as any other retail operator would, including more stringent identification requirements for online sellers.
 
"The anonymity and an unregulated environment in which these platforms operate have allowed criminals and deceitful third parties to sell products that would never be allowed on a store shelf," according to the Buy Safe America Coalition.

Kroger joined the Buy Safe America coalition on Sept. 16.

Among the other members of the coalition are 3M, Home Depot, HP, Rite Aid and Walgreens. Clearly, big box retailers' ire seems to be aimed at Amazon.

“Amazon — which boasts more than 2.2 million active sellers responsible for more than half of Amazon’s total sales — is the largest online marketplace and has had an alarming history of failing to address counterfeits and stolen products …,” according to the Buy Safe America coalition.

Amazon and others accuse retail behemoths of trying to add onerous, unwieldy regulations onto small, entrepreneurial companies that sell goods on online platforms. They add that retailers themselves aren’t doing enough to stop thefts from their stores.

The lNFORM Act legislation "favors large brick-and-mortar retailers, at the expense of small businesses that sell online, while doing nothing to prevent fraud and abuse or hold bad actors accountable," Amazon says on its website.
The implication is that big-box retailers are seeking legislation to drive a wedge into Amazon's and others' business model.

Big Retail’s pursuit of the legislation is a “thinly veiled attempt to funnel revenue from the online marketplace back into their pockets,” according to a statement from the Makers and Merchants Coalition. “It ignores the true source of organized retail crime – theft at their own stores."

The coalition also advocates for tougher penalties and more enforcement of retail theft laws to curb the problem.

The Makers and Merchants Coalition is backed by the Internet Association, a who’s who of Big Tech companies that includes Amazon, Google, Facebook, eBay, Microsoft, Paypal, Twitter, Uber, Reddit, Airbnb and Vrbo among others.
"Big Retail has become a zealous backer of the INFORM Act, hoping to drive individual sellers
 
Merchants Coalition. "Big Retail’s involvement in lobbying for and supporting the INFORM Act is a transparent and shifty sign of desperation from a sector that would rather bully its competitors than change its business model."
Still another coalition, the Coalition to Protect America’s Small Sellers, has also sprung up. Its members include eBay, Etsy, Mercari, OfferUp and Poshmark Inc.

"We are supportive of efforts to pass a thoughtful federal standard that enhances consumer protection while not negatively impacting our sellers' privacy or placing overly burdensome requirements on our sellers," according to that coalition. “In practice, these measures would inappropriately advantaging big-box retailers over small businesses and casual sellers."

This coalition seems to have distanced itself from other online marketplaces.

“Millions of Americans use our sites to do everything from running successful micro businesses to selling personal items like used cars, collectibles and clothing. When shopping on our sites you know you are interacting with a third-party seller with their information conspicuously available. It's not hidden a couple of clicks away like on larger blended retail marketplaces.”

Stringent identification rules for sellers "unfairly targets everyone engaged in legitimate activities on online marketplaces," according to the coalition.