Stores in Chicago, Minneapolis-St. Paul are the latest to be hit by organized thieves

Organized shoplifting is an ongoing menace for major retailers across the U.S., with groups of thieves making off with electronics, clothing and footwear on Black Friday in Minneapolis-St. Paul and Chicago.

Large groups of criminals stole pricey products from Best Buy stores in Maplewood and Burnsville, Minnesota. 

"We can't tolerate that kind of behavior. Just as a society, we just can't," Ramsey County Sheriff Bob Fletcher told a live stream. "As an industry we are working with local law enforcement and taking additional security precautions where it makes sense," Best Buy told a local CBS affiliate.

Police in Chicago are investigating four "smash-and-grab" retail robberies downtown and on the city's near Northwest side targeting stores including Foot Locker, the North Face and Canada Goose, WGN9 and the Chicago Sun-Times reported. 

The large-scale thefts follow other alarming incidents this month that had an estimated 80 thieves ransacking a Nordstrom store in California and more than a dozen people swiping merchandise from a Louis Vuitton store in suburban Chicago. Thieves tend to target densely populated urban areas with a high volume of stores in close proximity to one another. 

"A lot of times they will target stores located near major interstates. They won't go to stores that are way off beaten path because it's all about return on investment," said Tony Sheppard, who heads loss prevention at ThinkLP, a software company that helps retailers report and prevent organized theft. "Stealing from retailers in bulk is widespread and it's happening where the population is. If I go to a city, there are more targets and I will get more bang for my buck because there are more locations."

Pandemic-fueled uptick 

Multiple retailers and at least two states have reported an increase in mass thefts, with experts saying that the COVID-19 pandemic has fueled the uptick in this kind of activity. 

"Retailers have always had shoplifting, but the concern now is there seems to be a surge in organized, gang-related theft," said Neil Saunders, an analyst and managing director at GlobalData Retail. "Shoplifting was very covert — you don't see it — but this is very blatant."

Electronics retailer Best Buy is hiring additional security personnel at some of its more vulnerable locations and also locking up valuable in-store merchandise to combat the rise in theft. While reasonable, these measures can scare away shoppers who may be intimidated by a large security presence or who don't want to have to flag down a salesperson to unlock products they wish to purchase, experts say.

A problem that "hurts and scares people"

"Across retail, we are definitely seeing more and more, particularly, organized retail crime and incidence of shrink in our locations," Best Buy CEO Cori Sue Barry said during an earnings call early last week. "This is a real issue that hurts and scares people."

The problem is also hurting Best Buy's bottom line and could make it harder for the retailer to hire and retain workers in an already tight labor market, Barry told CNBC's "Squawk on the Street" this week. Some criminals are armed with guns and crowbars and can scare away customers and employees alike, she said. 

In the call, Barry also said such crimes are "traumatizing" to the company's employees, calling the crime spree "unacceptable."

Cleaned out

Sheppard, the loss-prevention expert, said the orchestrated raids impact retailers, customers and even the local community. "Retailers do all sorts of things to protect product, but even when merchandise is locked up it hurts sales because they don't have the manpower to unlock things for customers," he said.

According to Sheppard, crime groups often take a store's entire supply of a given product, like allergy medication Zyrtec or the cold treatment Mucinex, and swipe the same item from neighboring stores, leaving customers to do without. Consumers may have to wait a week or more for a new shipment to arrive, with delays exacerbated by the ongoing supply chain slowdown retailers are grappling with. 

"They take everything that these locations have, and they will hit all the stores that sell the product in the vicinity, too," Sheppard added. "Then, when a consumer comes in to buy a legitimate item, it's not in stock and the retailer loses a sale." 

Online shopping emboldens criminals

Organized retail crime was on the rise before 2020, but the jump in online shopping during the pandemic has emboldened criminals, who typically take to the internet and its online marketplaces to resell stolen merchandise for a profit. 

Such thefts have risen nearly 60% since 2015 and costs stores an average of $700,000 for every $1 billion in sales, according to a 2020 National Retail Federation survey of 61 retailers. 

"At the end of the day, it is all about supply and demand," Sheppard told CBS MoneyWatch. "We saw this rush to online marketplaces among customers who had never shopped online, and that is where you find the bulk of your stolen goods." 

In other words, organized shoplifting has risen in tandem with the rise in online shopping, as thieves respond to increased demand for everyday items online. 

"The pandemic created a larger demand for the stolen goods marketplace for more criminals to make huge profits. It's lucrative because the customer base is everyone," Sheppard added. 

Thieves tend to steal those items that are most in demand by consumers and can range from cold and allergy medication and other toiletries to jeans and portable electronic devices. 

"It's things that are typically smaller and that can be resold at a decent value," Sheppard said. 

Sharp rise in organized retail crime

Organized retail crime "has increased dramatically over the last two years," the Illinois Attorney General's Office stated in September. In one recent incident in the state, more than a dozen people stormed a Louis Vuitton store in Oak Brook, Illinois, and stole about $120,000 worth of merchandise. 

The November 17 robbery involved 14 suspects wearing masks and sweatshirts who escaped in three separate vehicles, one of which has been recovered, according to local police.  

The problem has only increased during the COVID-19 pandemic, according to Illinois Attorney General Kwame Raoul. He cited CVS' estimate of a 30% increase in thefts and Lowe's Home Improvement's closing of 25 organized retail crime cases amounting to $1.3 million in losses last year — compared to 20 theft cases and $388,000 in losses in 2019.

Recent weeks have also seen smash-and-grab thieves hitting a mall in Hayward, California, where witnesses describe as many as 50 people wielding hammers and breaking glass cases inside a jewelry store. Separately, a group of suspects stole merchandise from a Lululemon store in San Jose on Sunday night, marking a third straight day where large groups stole from retailers in the Bay area. 

The brazen acts came after police in Walnut Creek, California, issued a warning on social media that thieves might strike again, after about 80 people swarmed a Nordstrom store, then fled with stolen goods in waiting vehicles. Five Nordstrom workers sustained minor injuries, the retailer said.

"There's absolutely a very similar MO with what you're seeing in other cities and what we're seeing here," Barry Donelan, president of the Oakland Police Officers' Association, told CBS San Francisco's Justin Andrews about the string of retail robberies in the Bay Area. "We just have significantly more violence associated with it."

Stores shut down

California Governor Gavin Newsom ordered the state's highway patrol to heighten its presence in highly trafficked shopping areas in response to increased organized retail theft activities across the state. 

"Businesses and customers should feel safe while doing their holiday shopping," stated Newsom, who is also proposing an increase in the state's 2022-23 budget to fight retail theft.

Walgreens said last month it would shut down five stores in San Francisco due to increased thefts. 

The National Association for Shoplifting Prevention (NASP) predicted the pandemic would lead to a spike in retail theft and organized crime as stores started reopening, citing similar surges after the September 11 attacks and the 2008 financial crisis.

"We believe the existential threat we're now facing with COVID-19 will be both financially and emotionally traumatic, and could lead to even greater increases," NASP Executive Director Caroline Kochman stated in a May 2020 report. "Times of hardship make it easier for [organized retail crime] teams to recruit regular people and employees."