How Retail Crime Affects a Local Business Versus a Large Business

It is the story of two companies, one small and one large.

Cole Hardware was founded in the 1920s in the Cole Valley of San Francisco. The company now has six storefronts scattered around the city, providing community members with all of their tool and material needs.

Home Depot opened 43 years ago in Atlanta. Since then, it has grown into a global empire, with 2,000 locations worldwide and $ 132 billion in annual sales.

As San Franciscans grapple with conflicting information about thefts and burglaries in the city, we decided to ask a big box retailer and a local business what their approaches were to property crimes in the city. their stores.

It can be difficult to get large companies to officially talk about retail crime (and police statistics are often unreliable). In the past six months alone, SFGATE reporters have approached Walgreens, Safeway and CVS, among other retailers, to ask them about thefts and burglaries. In response, they mostly sent statements instead of responses – even when we were tracking public statements from companies.

But our interactions with Cole Hardware and Home Depot were surprisingly open. They wouldn’t tell us everything, but they did share some surprising things – including who the police help, how much is stolen, what insurance covers, and who is the target of these infamous retail theft rings.

Small business experience

People steal from Cole Hardware stores on a daily basis, according to company president Rick Karp. In recent years, he said, shrinkage – the percentage of internal and external theft in total sales – has hovered between around 1.5% and 2%.

The shrinkage of retailers across the country was 1.6% in 2019 and 2020, according to a National Retail Federation 2021 survey. (This is far from being a historic crisis: between 2016 and 2018, losses due to thefts and robberies hovered around 1.4% of sales.)

Karp said the most frequently stolen items are hand tools and power tools. Much of the tool department at Cole Hardware stores is locked on the hook or behind security cases to prevent theft, he said.

But the best way to deter theft can also be the best way to keep people coming back. “The best antidote to shoplifting is strong customer service,” said Karp. “We welcome every customer and make sure they know they’ve been seen. ”

This kind of tactic works to “keep honest people honest,” he explained.

Unfortunately, objects are still regularly stolen. When a shoplifter goes on strike, Karp said staff are trained on how to handle it, although he won’t officially reveal what’s going on, lest it will prompt others to steal.

He also noted that the insurance “does not cover anything”. To achieve the insurance deductible for each theft, someone would have to steal “a lot of stuff”, which rarely happens.

The police aren’t much help either, he said.

“No one is reporting shoplifting [to the police], “he said.” It’s a waste of time, and the best thing that can happen is for the police to write a report and file it somewhere. Nothing happens. “

Even when the police are at the store when this happens, there is no guarantee that they will make an arrest. “We actually saw them walk away with the shoplifter and then two blocks later let them go because it’s a pain in the neck for them too,” Karp said.

When asked if the police had ever recovered stolen items from Cole Hardware, Karp replied, “Maybe once, 15 years ago.

“We have Amazon on one side and shoplifting on the other,” he said of threats to his business. “I’m not sure I say shoplifting is such a big threat, but it’s consistent.”

Cole Hardware stores have yet to be affected by a large group of people storming the store, as has happened in San Francisco in recent weeks, and Karp doesn’t think organized networks are generally to blame. for store thefts. He considers most store thefts to be “one-off”.

The exterior of a Home Depot.

ROBYN BECK / AFP via Getty Images

The hypermarket strategy

Unlike Cole Hardware, The Home Depot is so large that it basically has its own government, including a whole division dedicated to retail crime. Stores have security cameras and security guards, as well as plainclothes employees – known as “asset protection personnel” – who have additional training, including how to stop thieves and work with them. cops to investigate the crimes, according to Home Depot spokesperson Christina Cornell.

As for the regular staff who see someone stealing, “we don’t want them to sign up,” she said. “We would give the same advice to customers. I understand it’s frustrating to see someone potentially stealing or shoplifting, but it’s not worth committing.

Instead, the company has an internal platform where employees can report thefts by employees or customers. These complaints go to asset protection staff.

Cornell said Home Depot has partnered with law enforcement agencies ranging from local police “to the FBI” because some cases are “extremely important and occur across state lines.” She said search warrants had been served on pawn shops, storage units and more, with law enforcement sometimes recovering “tens of thousands of dollars in stolen goods.”

“We’re not talking about petty shoplifting,” Cornell explained. “We are looking for organized groups that have an individual or a few individuals organized at the top.” (As with Cole Hardware, insurance does not cover loss of merchandise.)

Cornell said the company’s organized crime investigation team – apparently a joint department for chains their size – had nearly doubled since 2016. Although it declined to provide data, given the Home Depot’s sales figures, it’s no surprise that funding an entire investigative team makes financial sense. . Preventing even a small fraction of its shrinkage could amount to hundreds of millions, if not billions of dollars.

“Although I cannot elaborate on the details in terms of the actual number of incidents, I can say that thefts are generally on the increase,” she said. “Our retail organized crime team has seen a sharp increase in the dollar value of the cases they work on, compared to 2020.”

A major factor behind larger and more organized thefts, she said, is that criminals can close goods with relative security and ease, thanks to sites like Facebook Marketplace, Craigslist and eBay.

“[Criminals] know they can easily get rid of stolen and counterfeit goods in an online marketplace with little oversight, ”she said. “There’s an easy place to get rid of it.”

Cornell said thefts occur in store offerings, from power tools and accessories to smart home electronics, paint and even bathroom accessories.

Instead of taking the customer service route to protect merchandise that can’t be locked, The Home Depot relies on technology solutions, old and new. In addition to security cameras, Cornell said the company is testing “point-of-sale activation,” where products only work if they’re turned on at checkout.

The bottom line

It’s unclear how much retail theft is increasing – or changing shape – in San Francisco and around the country. But it’s obvious that small businesses and giant corporations approach theft in very different ways.

The Home Depot, for example, continues to expand its security technologies and push for more active shoplifting law enforcement; Cornell, for her part, is thrilled to see the country shine the spotlight on shoplifting. “We’ve been trying to get people to pay attention to this for quite some time,” she said.

Karp, president of Cole Hardware, is more resigned to theft from its stores, which neither have the extensive resources of a massive global chain nor serious problems with the criminal networks reportedly targeted by Home Depot.

“We certainly understand that economic situations vary from person to person, and that some people steal out of need, but that doesn’t fix it,” Karp said. “It’s disappointing, but it’s just the reality.”