Smash-and-grab mobs descended on two luxury retailers in the Los Angeles area last week and made off with nearly a half-million dollars in merchandise. The mayhem was caught on camera for all to see, causing shoppers to think twice before setting foot in luxury stores where so much loot is so easily had.
Last Tuesday, 30 to 40 thieves descended on a Yves Saint Laurent store in the Americana at Brand lifestyle center in Glendale. They hit the store around dinnertime and stole an estimated $300,000 in merchandise, escaping in multiple get-away cars. Americana at Brand is a prime retail and dining destination operated by Caruso.
Then, around 4 p.m. on Saturday, a similar-sized mob ransacked a Nordstrom store at the Westfield Topanga Mall in Woodland Hills. This group was armed with bear spray to take out security guards. An estimated $100,000 worth of merchandise was lifted with numerous vehicles ready to speed the thieves away.
In both instances, nobody was caught, though the police reported they had “investigative leads.”
While retailers calculate the direct losses in dollars and cents, it will have a long-lasting impact on luxury shoppers already on high alert from rising crime rates.
And it’s not just happening in California, where shoplifting laws have been rolled back. Major cities nationwide are seeing a rise in organized retail crime with New York, Houston, Miami, Chicago, Seattle, Atlanta and Dallas among the top ten cities most affected.
Once luxury shoppers lose confidence in their safety and security in the store, restoring it will take a long time, with retailers’ losses mounting accordingly.
Luxury Retailers Aren’t Ready
As shocking as these recent assaults on luxury retailers are, even more shocking is how ill-prepared luxury retailers seem to be dealing with it.
A recent survey among 50 senior executives at major global luxury retailers found 88% were satisfied with their overall level of security. Some 24% rated it as excellent, and 64% said it was good. The highly-publicized thefts last week prove otherwise.
Nearly two-thirds of those surveyed expect theft losses to rise over the next three years, and they plan to increase spending on additional security measures by 28% on average. But one wonders if that is nearly enough. Pure Profile conducted the survey for U.K.-based Communications Specialist Ltd., which supplies businesses with advanced communications technology.
The National Retail Federation (NRF) downplays the threat of retail theft to luxury retailers. In its in-depth study, “Organized Retail Crime: An Assessment of a Persistent and Growing Threat,” conducted by K2 Integrity, it found luxury goods were under-represented in its organized retail crime (ORC) database compiled from public information drawn from court cases and media reports about 116 ORC groups.
The analysis identified that 81% of ORC groups target “everyday consumer goods,” like laundry detergent, cosmetics and over-the-counter medications. Only 11% of the ORC groups in the ORC database targeted luxury goods.
“These items are sold in stores with enhanced security measures, making them more difficult to steal,” the report states. But traditional security measures are useless when a mob of hoodlums in masks invade a store in overwhelming numbers.
Clearly, the criminals are one step ahead of luxury retailers. They must do a better job protecting their goods, customers, and employees from retail theft.
Intractable Problem
The NRF estimated retail losses totaled nearly $100 billion last year, according to its 2022 National Retail Security Survey, conducted with over 60 retailers. The survey found ORC incidence was up 26.5% since 2021.
Despite the threat of retail theft growing, about half reported their loss prevention budgets remained the same in 2022. While some 45% of more pro-active retailers reported plans to increase their security budgets, their increases are minimal, with 29% increasing budgets between one-to-9.9%. Only 16% are increasing budgets by more than 10%.
Retailers are ill-prepared to tackle organized retail crime, like that recently perpetrated on luxury retailers. Only 32% of retailers reported having a ORC team in place. The NRF report warns, “If retailers do not have dedicated resources to investigate ORC, then they will be less likely to identify when ORC is occurring.”
This is particularly problematic because 81% of retailers reported that ORC offenders are becoming more violent than last year.
Retailers see the criminal justice system as contributing to the problem. Over 70% reported an increase in ORC crime when felony thresholds are lifted, and 55% reported reduced or eliminated cash bail has been associated with a substantial increase in repeat offenders.
Everybody loses from retail theft, and luxury retailers have the most to lose since they have so much valuable, easily-lifted merchandise on hand. Criminals have figured out how to hit them, and retailers have been caught flat-footed.
Luxury retailers invest a lot of time and effort to make shopping in their stores a delightful, enchanting customer experience. Now they’ve got to make sure it is a safe and secure one as well. That, sadly, is going to be a tougher nut to crack.
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