Across the retail industry, shoplifting, also known in the business as shrinkage, is a growing concern, and the outdoor and sporting goods industry is not immune.
In a recent earnings call, Lauren Hobart, president and chief executive officer for Dick’s Sporting Goods, said the retailer has lost business due to shrink from organized retail crime and theft in general. Hobart said this is an “industry-level problem.”
“It’s actually a problem for our entire country,” she said. “We’ve all seen the stories. It’s quite alarming what’s going on.”
Other large companies, including Nordstrom and Target, have also called out the problem, while outdoor industry stores such as REI and Cotopaxi have struggled with crime and theft at some of their locations in San Francisco and Portland.
For insights into the issue and possible solutions, The Daily called up veteran outdoor industry analyst Matt Powell.
Organized Theft
Powell emphasized that while it may seem that rates of retail theft have risen in recent years, it’s important to note that stores were shut down in 2020 during the pandemic, which skews the comparisons.
“If you go back to 2019, we’re in a normal phase,” he said.
Powell added that some are making the problem sound worse than it is.
“It seems to be getting blown out of proportion a little bit,” he said. “It clearly is happening, but I do think there are some news outlets who would like it to seem like it’s more pervasive than it really is.”
However, the amount of organized retail theft does seem to be on the rise, Powell added.
On Aug. 12, dozens of masked shoplifters robbed a Nordstrom at the West Topanga Mall in California, dousing security guards with bear spray before taking off with more than $300,000 in luxury goods.
In a recent earnings call, CEO Erik Nordstrom said overall theft has not exceeded expectations but “the drag on earnings just from a financial performance (view), that needs to come down.”
Target CEO Brian Cornell said on an earnings call that theft, while in line with expectations, is “well above the sustainable level where we expect to operate over time.” Cornell added that “violence or threats of violence” in stores surged 120% during the first five months of the year.
Higher Price-Points Make Attractive Targets
As outdoor apparel becomes increasingly more mainstream and price points continue to climb, it stands to reason that thieves would find this merchandise attractive.
“In outdoor apparel, half the business is in outerwear, which all carries a fairly high ticket,” Powell said.
As opposed to grabbing a pile of T-shirts for $15 apiece, one item of outerwear can be worth $300 or more, he added.
“We’re seeing a high level of interest in better-priced outdoor apparel on the fashion side, which means there’s a greater opportunity to resell it at some kind of multiple,” Powell said. “The scarcer an item is, the higher the multiple.”
REI and Cotopaxi City-Specific Problems
In April, REI announced it planned to close its store in Portland, Oregon’s Pearl District early next year because of increasing crime and theft.
The company emailed its members and said the store last year had its highest number of break-ins and thefts in two decades.
But that could have been as much of a Portland problem as anything, Powell said.
“Business in downtown Portland is not very good right now for anybody,” he added. “I’m sure there were other factors that went into REI’s decision, in addition to retail theft issues.”
The Daily reached out to REI for comment, but a company representative declined to speak on the issue at this time.
In August, REI announced it will open a store in Portland suburb Beaverton and that location will be the largest in the state.
Last October, Cotopaxi closed a store in the Hayes Valley neighborhood of San Francisco after then-CEO Davis Smith wrote on LinkedIn that “San Francisco appears to have descended into a city of chaos.”
The post went viral, and Smith detailed how the first week the store was open its windows were broken and thousands of dollars in merchandise were stolen.
Three weeks later Smith apologized and announced Cotopaxi had reopened the store with full-time private security.
The Daily reached out to Cotopaxi for comment but did not hear back as of press time.
Once the store reopened, Cotopaxi made an agreement with local police to increase supervision in the area.
While guards are a good, relatively inexpensive way to ward off some of this, “it’s not going to stop it altogether,” Powell said. “But having a guard at the front of the store in a uniform, maybe it’s off-duty police, would be a pretty good deterrent.”
Bart Schaneman can be reached at bart@ordaily.outdoorretailer.com.
