Rampant retail theft making inflation worse, threatens bleeding businesses, economists say
Economists Andrew Puzder and Joel Griffith weigh in on the surge in organized retail theft, saying soft-on crime policies force businesses to raise prices or close.
The surge in organized retail theft will shutter storefronts and further drive up costs for consumers already grappling with high inflation, economists at the Heritage Foundation said.
"If companies can't increase their costs to cover the cost of the theft, if they're not making a profit, then they're going to go out of business," Andrew Puzder, the former CKE Restaurants CEO and a visiting fellow at Heritage, told Fox News.
In 2021, retail "shrink," or thefts, cost the industry $94.5 billion in losses, up 4% year-over-year and nearly double the $50.6 billion in 2018, according to data from the National Retail Federation. The report shows cases of organized retail crime rings — where thieves are hired to steal specific items to be resold online — have surged more than 26% from the year prior.
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"You've got this incredible expense that really comes from a lack of policing," Puzder told Fox News.
"You've seen these groups come in. They destroy everything," he continued. "They break everything and they steal what they can."
Target expects to lose over $600 million in gross profit by the end of the year due to shrinkage from shoplifters, the company's CFO, Michael Fiddelke, said on an earnings call earlier this month.
"This is an industry-wide problem that is often driven by criminal networks, and we are collaborating with multiple stakeholders to find industry-wide solutions," Fiddelke said.
Puzder blamed the surge in crime on progressives' soft-on-crime policies, such as how New York and California raised the threshold so theft under $1,000 or $950, respectively, would only be a misdemeanor rather than a felony.
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"We can't sacrifice law and order and having a safe and civil society to try and meet some nirvana-like social goals that really produce chaos and increase costs for businesses," he said.
Puzder said this puts companies, already raising prices to meet inflation, in a difficult position. U.S. inflation eased slightly last month, with October's consumer price index showing a 7.7% increase over last year and 0.4% increase over the prior month, according to the Bureau of Labor Statistics.
"Businesses can only increase costs so much before people can't go there anymore," said Puzder, whose former corporation owns restaurants like Carl's Jr. and Hardee's. "If you're increasing to meet high inflation, can you also increase to cover the cost of these thefts?"
Stores in cities with soft-on-crime policies are left with two options: further hike up prices to cover the cost of theft or close locations struggling to turn a profit, said Joel Griffith, a Heritage research fellow and former member of The Wall Street Journal's editorial board.
Target CFO Michael Fiddelke said on an earnings call that the company expects to lose over $600 million in gross profit by the end of the year due to "shrinkage" caused by shoplifters. (Target surveillance video)
"The companies have to make up for that loss somehow," Griffith told Fox News.
He said the hit to businesses' bottom lines also has "a very real impact on you as a consumer."
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In order for businesses to survive, consumers will have to either pay a theft tax or lose accessibility to goods and services due to closures, according to Griffith. And residents in low-income areas, which are seeing higher rates of rising crime, will bear the brunt of the fallout caused by organized retail theft, he added.
"It is unfair," he said. "It makes living in these lower-income communities even less desirable."
To watch the full interview on organized retail crime, click here.
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