The national retail crime problem extends well beyond store walls, with an early September ransacking of trailers at a Nike distribution center in Memphis, Tenn. resulting in the loss of more than $800,000 in sneakers and apparel.
But the potential impacts of the heist caught the attention of one of the biggest resale players in sneaker sales, potentially leading the way for changes in how online marketplaces operate. StockX temporarily paused sales of sneakers it felt might be connected to the Memphis theft, including the Air Jordan 11 “Cherry,” Air Jordan 6 “Chrome” and the Air Jordan 4 “Navy Blue.” Because these particular sneakers weren’t yet released, StockX would have somewhat less trouble identifying the stolen merchandise if it’s coming from somewhere around Memphis.
None of the three sneakers are currently available for purchase on StockX, although users can view the Cherry product page on the platform.
The decision also highlights a dilemma for both online platforms reliant on resale, as well as sellers who procure their merchandise the honest way. While various reports from sellers indicated that they had funds removed from their accounts for selling the sneakers, no investigation was made into how sellers acquired the sneakers in question.
Major StockX competitors including eBay and Goat did not discontinue sales of the sneakers in question in the wake of the theft.
StockX, which has a dedicated fraud team that monitors platform activity and employs its own proprietary practices to prevent fraudulent behavior, confirmed the moratorium on certain sneaker sales but did not explicitly confirm the removal of funds for those that sold the sneakers.
“This team takes action on any suspicious buyer or seller activity, and when items are determined to be in violation of our terms of service, we take necessary steps to maintain the integrity of our marketplace,” a StockX representative told Sourcing Journal. “In this instance, following a known robbery at a brand’s distribution center, we took proactive measures to temporarily halt the trading of the sneakers in question.”
In the wake of the theft, StockX told Sourcing Journal it is continuing to work with local authorities to support their active investigation. Additionally, the company reiterated its full commitment to marketplace integrity, and said it frequently deploys new technologies and processes to stay ahead of bad actors.
‘Smash-and-grab’ targets Michigan sneaker store
Sneakers continue to be a hot target for criminals throughout the U.S., with another $8,000 of merchandise taken in a “smash-and-grab” robbery in Saginaw, Mich.
Kingdom Kicks, a store that sells high-value collectible sneakers, reopened days after thieves stole a collection of shoes and T-shirts on display, as well as sneakers from the back of the store.
The burglars used a sledgehammer to break in through the front door. Owner Don Evans Jr. said they weren’t able to get their hands on much product, but they did steal high-value items.
“One, a lot of these items, they’re not cheap, and two, they’re very difficult to get,” Evans Jr. told local CBS news affiliate KION-TV. Evans believes part of the reason his store was targeted is because he sells a lot of expensive, hard-to-find collectible items like the popular Travis Scott Jordan 1.
Evans said he plans to install outdoor cameras in the front and back for extra security.
Manteca, Calif. cracks down with dedicated ORC detective
One city police department in California is taking matters into its own hands and may have found an answer that many municipalities are seeking, with Manteca police chief Mike Aguilar dedicating a full-time detective to fighting ORC.
Manteca ORC detective Dave Brown said that the town has been able to cut retail crime losses 50 percent in the last two years. It arrested or identified 202 suspects in 2020 and 187 in 2021.
The catalyst for the change occurred when Home Depot and Walmart stores saw theft losses of $5 million between them over a two-year span.
According to Brown, the presence has had an impact on retailers store operations since. Ulta Beauty representatives initially wanted to close the company’s Manteca store after it incurred $200,000 in theft losses, but kept it open after seeing the department effectively target ORC. Additionally, the effort was one of the reasons Boot Barn cited for opening a store in Manteca.
Brown said the department is planning to add a second detective if funding is available next year. By having a dedicated detective who can be contacted directly by store loss prevention officers and who also networks with nearby departments, Manteca has been able to position itself to be at the locations of retail theft crimes either in advance or within minutes.
The department trained store loss prevention officers to properly fill out crime reports and forward them to the police for more minor shoplifting incidents when they retain individuals caught trying to steal less than $950 in merchandise which makes it a misdemeanor. Those reports are reviewed by Brown, who then forwards those reports to an assistant San Joaquin County district attorney dedicated to prosecuting retail crime.
NRF, RILA back bipartisan ORC bill
Congressional leaders on a federal level are making strides to curb the ORC problem, with Sens. Chuck Grassley (R-Iowa) and Catherine Cortez Masto (D-Nev.) introducing a bill on Friday to crack down on “smash-and-grab” robberies and similar schemes.
The bipartisan Combatting Organized Retail Crime Act would establish a Center to Combat Organized Retail Crime at Homeland Security Investigations that combines expertise from state and local law enforcement agencies, alongside retail industry representatives. The act also would create new tools to assist in federal investigation and prosecution of ORC, and help recover lost goods and proceeds.
The bill would also amend current legislation, for example allowing federal judges to order criminal forfeiture after convictions of organized retail theft-related crimes. Additionally, the bill would strengthen federal money laundering statutes allowing investigators and prosecutors to target the illegal proceeds of ORC groups.
Top industry trade associations including the National Retail Federation (NRF), the Retail Industry Leadership Association (RILA) and the former International Council of Shopping Centers (now known as ICSC), as well as the U.S. Chamber of Commerce threw their support behind the newly introduced bill.
NRF’s senior vice president of government relations David French highlighted the act’s establishment of a coordination center that would develop a national-scale ORC intelligence perspective that facilitates information sharing and cross-agency investigations and delivering expertise for training and technical assistance.
French called the initiative “a critical step for retailers to effectively combat these criminal activities.”
The NRF has long sought to spread awareness of retail crime, conducting an annual National Retail Security Survey across the industry. According to the 2022 survey, retailers reported a 26.5 percent increase in ORC, on average. Perhaps more concerning, 81.2 percent of retailers noted a wider increase in violence and aggression associated with ORC over the past year.
Michael Hanson, senior executive vice president, public affairs, RILA, lauded the establishment of a federal task force to help track and prosecute criminals, particularly due to the potential for increased collaboration and transparency among stakeholders.
“Homeland Security has tracked the proceeds from selling stolen goods online to other nefarious criminal activities such as human trafficking, gun smuggling, narcotics and terrorism,” said Hanson. “It is vital that the federal government focus attention on this growing problem. Bolstering online transparency with a task force that aligns the resources of the federal government would be a welcome one-two punch to addressing this threat to our stores and communities.”
On Tuesday, RILA sent a letter to Congress urging that the bipartisan INFORM Consumers Act amendment sponsored by Sens. Bill Cassidy (R-La.) and Dick Durbin (D-Ill.) be included in the final version of the 2023 National Defense Authorization Act (NDAA).
The association argued that the INFORM Consumers Act would help keep Americans safe by mandating verification of a seller’s identity on online marketplaces. In a release, RILA called the verification of this basic information “critical” in helping law enforcement, manufacturers, retailers and online marketplaces of all sizes work together to protect consumers from bad actors peddling counterfeit and stolen goods.
“Including this legislation within the 2023 NDAA is a win for transparency and accountability and is a crucial step in curbing the growth of organized retail crime,” said Hanson. “We urge congressional leaders to capitalize on this opportunity and pass the INFORM legislation. Doing so will help protect retail employees, consumers and give law enforcement additional tools to stop these criminal actors.”