Read CNBC’s full investigation into the suspected organized theft groups that police say are stealing and reselling items from retailers like Ulta Beauty, TJ Maxx and Walgreens.
Given the sophisticated organized retail crime that investigators say has targeted his business, Ulta Beauty CEO Dave Kimbell blames e-commerce sites.
In the first in-depth interview given by a retail executive about organized theft, Kimbell responded to a months-long CNBC investigation that showed police dismantling an alleged professional network of thieves who used Amazon to resell millions of dollars in cosmetics stolen from Ulta stores and other retailers in the USA
While Kimbell did not want to comment directly on the matter AmazonHe said online marketplaces were “part of the problem.”
“[Online marketplaces] Give people more scope and more ability to liquidate this product,” Kimbell said in an on-camera interview with CNBC. “Before, you had to sell stolen goods at flea markets or out of the trunk of your car, or maybe just locally. Now you have more sophisticated tools to achieve greater reach across the country or even internationally.”
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As part of an investigation into retail crime gangs and the steps companies and law enforcement are taking to combat the problem, CNBC followed a case involving Michelle Mack, a San Diego woman who prosecutors accuse of using her digital Using the Amazon shop to resell goods stolen from stores.
The 53-year-old mother of three and her husband Kenneth Mack were charged with conspiracy to commit organized retail theft, grand larceny and receiving stolen property in connection with the alleged crime gang. During a raid on her California mansion in December, California Highway Patrol and Homeland Security agents said they found $387,000 worth of suspected stolen merchandise, most of it from Ulta. Investigators believe their crime ring made millions of dollars over more than a decade. Both Michelle Mack and Kenneth Mack have pleaded not guilty.
For Kimbell, the scale of such an operation was not surprising.
“Unfortunately, I’m not that shocked because we’ve seen it in other parts of the country,” Kimbell said. “The scale of this problem is significant. But that’s exactly what happens, and that’s the environment we operate in.”
Dave Kimbell, CEO of Ulta Beauty, said online marketplaces need to do more to prevent the sale of stolen goods.
CNBC
Kimbell said he believes it is not consumers’ responsibility to judge whether a product they buy on an online marketplace is stolen. Many shoppers may not even consider that the products could be stolen from one retailer and sold by another, he said, adding that it is largely an online phenomenon.
“That doesn’t exist in brick-and-mortar stores [stores]. You wouldn’t walk into a retailer and see someone [at] a table in front of it [selling] “We shouldn’t have an environment where it’s possible to steal from a retailer.” [have it] end up on some other platform, some other major mainstream platform.”
Anyone who sells products online “should ensure that nothing they sell is stolen goods,” Kimbell said.
“I can tell you with 100 percent certainty that nothing we sell on Ulta.com or any other online platform is a product that was stolen from another retailer,” he said. “There are tools, there is data, there is analytics, there are capabilities that we collectively have that we could try to take even more action with.”
Amazon declined CNBC’s request for an interview, but said in a statement that the e-commerce giant has “zero tolerance for the sale of stolen goods.” An Amazon spokesman said the company invests $1 billion annually and employs “thousands of people” to combat fraud, including detection and prevention tools.
The 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 received no signals indicating the seller was offloading stolen goods. Mack’s page was deleted after her arrest.
How bad is organized retail crime?
It is unclear exactly how big the problem of organized retail crime is. The National Retail Federation and the Retail Industry Leaders Association say not every incident is reported, tracked or counted.
According to the most recent NRF survey on inventory shrinkage – the industry term for inventory lost due to damage, theft or other causes – the total value of merchandise stolen in off-site thefts was $40.5 billion in 2022, accounting for 36.15% of the total total shrinkage, compared to 37% in 2021.
Ulta Beauty is one of several retailers that have begun discussing retail crime as a problem but have not yet quantified the impact it is having on their business. Ulta Beauty Chief Financial Officer Scott Settersten and Chief Operating Officer Kecia Steelman have discussed theft or organized retail crime, particularly during earnings releases or at investor conferences.
Ulta Beauty announced that it will have all fragrances in stores in the first few months of this year. Fragrance has been one of the hardest-hit categories for the retailer due to its high value and relative ease of resale, Kimbell said.
The CEO didn’t quantify the increase in organized retail crime at his company, but said, “It’s definitely gotten worse.”
“Retail crime has always been a part of the retail industry … but what we’ve seen in the last few years, actually the last few years, is a significant increase,” he said.
Retail executives are increasingly concerned about an increase in theft-related violence, according to the NRF survey. 81% report an increase in violence and 28% report that their company has closed a specific location due to crime. Ulta said it has not yet closed any stores due to crime.
Kimbell said he is particularly concerned about how the rise in crime is affecting Ulta’s 50,000 employees at 1,400 stores across the country.
“These situations…they’re not fun…they’re threatening; they’re intimidating,” Kimbell said. “They can be traumatic.”
—Additional reporting by Ali McCadden.
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2024-03-14 20:47:04
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