Read the total CNBC investigation to alleged organized theft rings that police say steal and resell items from retailers including Ulta Beauty, TJ Maxx and Walgreens.
In the face of sophisticated organized retail crime networks that investigators say targeted his company, Ultra beauty CEO Dave Kimbell blames e-commerce sites.
In the primary in-depth interview by a retail executive on organized theft, Kimbell responded to a month-long CNBC investigation that showed how police dismantled what they said was knowledgeable thief ring that used Amazon to resell tens of millions of cosmetics stolen from stores Ulta and other retailers across the United States
Although Kimbell would not comment on it directly Amazonsaid online marketplaces are “part of the problem.”
“[Online marketplaces] give people more scale and more ability to take down this product,” Kimbell told CNBC in an on-camera interview. “It used to be that you had to sell stolen goods at flea markets or from the trunk of your car, or maybe just locally. Now you have more sophisticated tools to achieve broader reach across the country and even internationally.”
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As part of its investigation into retail crime rings and what companies and law enforcement are doing to crack down on the problem, CNBC followed the case of Michelle Mack, a San Diego resident who prosecutors accuse of using her Amazon digital store to resell stolen goods from stores.
The 53-year-old mother of three and her husband, Kenneth Mack, have been charged with conspiracy to commit organized retail theft, grand larceny and receiving stolen property in connection with the alleged criminal network. During a December raid on her California property, California Highway Patrol and Homeland Security Agency agents say they found $387,000 in suspicious goods, most of which came from Ulta. Investigators say her crime ring brought in millions of dollars over more than a decade. Both Michelle Mack and Kenneth Mack pleaded not guilty.
For Kimbell, the scale of such an operation was no surprise.
“Unfortunately, I’m not that shocked because we’ve seen it in other parts of the country,” Kimbell said. “The scale of this is significant. But that’s what happens and that’s the environment we operate in.”
Ulta Beauty CEO Dave Kimbell said online marketplaces must do more to prevent the sale of stolen goods.
CNBC
Kimbell said he doesn’t think consumers have the burden of determining whether a product they buy on an internet marketplace has been stolen. Many shoppers may not even consider that products might be stolen from one seller and sold by one other, he said, adding that it is a phenomenon that happens mainly online.
“This doesn’t occur in a physical store [stores]. You would not walk into a salesman and meet someone [at] table in front [selling] stolen goods,” Kimbell said. “We shouldn’t have an environment where you can rob one retailer and [have it] land on any other platform, any other mainstream platform at scale.”
Anyone who sells products online “should make every effort to ensure that nothing they sell is stolen,” Kimbell said.
“I can say with 100% certainty that nothing we sell on Ulta.com or any online platform is a product stolen from another retailer,” he said. “There are tools, there are data, there are analyses, there are opportunities that we have together that could help us take even more action.”
Amazon declined CNBC’s interview request, but said in a press release that the e-commerce giant has “zero tolerance for the sale of stolen goods.” An Amazon spokesman said the corporate invests $1 billion a yr and employs “thousands of people” to combat fraud, including detection and prevention tools.
A spokesperson said Amazon is working with law enforcement and other retailers to “stop bad actors and hold them accountable.”
In the Mack case, Amazon said it had not received signals that the vendor was unloading stolen goods. Mack’s page was taken down after her arrest.
How bad is organized retail crime?
It is unclear how big an issue organized crime in retail is. The National Retail Federation and the Association of Retail Industry Leaders say not every incident is reported, monitored or recorded.
According to NRF’s latest Shrinkage Study – an industry term for inventory loss due to damage, theft or other sources – the entire value of products stolen from external theft in 2022 was $40.5 billion, representing 36.15% of total shrinkage compared to 37% in 2021
Ulta Beauty is one in every of many retailers which have begun to recognize retail crime as an issue but haven’t assessed the impact it’s having on their business. Ulta Beauty CFO Scott Settersten and COO Kecia Steelman discussed retail theft and arranged crime, particularly during earnings calls or investor conferences.
Ulta Beauty has stated that it intends to close all of its fragrances in stores through the first months of this yr. Fragrances are one in every of the hardest-hit categories for the retailer due to their high value and relative ease of resale, Kimbell said.
The CEO didn’t quantify the rise in organized retail crime his company has seen, but said “the situation has definitely gotten worse.”
“Retail crime has always been a part of the retail industry… but what we have seen over the last few years, and really the last few years, is a significant increase in crime,” he said.
Retail executives are increasingly concerned concerning the rise in theft-related violence, according to an NRF survey: 81% report a rise in violence and 28% say their company has closed a selected location due to a crime. Ulta stated that it has not yet closed the shop due to crime.
Kimbell expressed particular concern concerning the impact of the rise in crime on Ulta’s 50,000 employees at 1,400 stores across the country.
“These situations… it’s not funny… they are threatening; they are intimidating,” Kimbell said. “They can be traumatic.”
– Additional reporting by Ali McCadden.
