The Impact Of Shoplifting

Walmart announced recently that it will be closing its last two stores within the city limits of Portland, Oregon, because the performance of the two stores wasn’t meeting the company’s financial expectations. The decision follows a recent statement by Walmart’s CEO that increasing retail theft was affecting the performance of its stores. The two store closures will affect 600 employees, who will be given the opportunity to transfer to suburban Walmarts in the surrounding area, as well as the people who live nearby and use the store regularly.

Portland evidently has a significant shoplifting problem, and it is making businesses make a difficult choice. Walmart’s CEO noted that the spike in shoplifting means that prices “will be higher and/or stores will close.”  Other businesses, including Nike and Cracker Barrel, have closed Portland locations. Smaller businesses have been hurt, too. The owner of an upscale consignment shop at a Portland-area mall had to close that location because it was hit by shoplifters 19 times in the course of a year. The shoplifters stole $56,000 in merchandise, which was more than the business could absorb. Portland news media reports that the shoplifters often are brazen, stealing even in the view of security cameras, and apparently have little fear of being arrested or prosecuted.

The consignment store’s owner voiced her frustration with the situation in this way: “The amount of work that goes into running a small business, down to the research, tags and training to do this the right way and then someone just steals a day’s worth of all your work, it’s like — ‘What’s the point?'”

Portland’s sad story illustrates the domino effect that occurs when criminals are not caught and punished. If retailers respond to shoplifting losses by raising their prices to cover the cost of the thefts, the impact is borne by shoppers who are actually paying for their goods, as opposed to pilfering them. If stores are closed, jobs are lost, employees are dislocated, storefronts go empty, and the commercial real estate market is hurt. And, because the thieves don’t pay for their crimes, others are incentivized to steal, and entrepreneurs who otherwise might be opening new businesses are discouraged from doing so.

It’s not a positive cycle.