Read the full CNBC investigation to alleged organized theft groups that police say steal and resell items from retailers such as Ulta Beauty, TJ Maxx and Walgreens.
Faced with sophisticated organized retail crime rings that investigators say have targeted his company, Ulta Beauty CEO Dave Kimbell puts some of the blame on e-commerce sites.
In the first in-depth interview given by a retail CEO on organized theft, Kimbell responded to a months-long CNBC investigation that showed how police dismantled a professional network of thieves who used Amazon to resell millions of cosmetics stolen from Ulta stores. and other retailers throughout the US
While Kimbell would not immediately comment Amazonsaid online shopping is “part of the problem”.
“[Online marketplaces] give more scale and more opportunities for people to liquidate this product,” Kimbell told CNBC in an on-camera interview. Now, you have more sophisticated tools to have a wider reach across the country or even internationally.”
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As part of an investigation into retail crime rings 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 used its Amazon digital storefront to resell shoplifted goods.
The 53-year-old mother of three and her husband, Kenneth Mack, were charged with conspiracy to commit organized retail theft, grand theft and receiving stolen property in connection with the alleged crime ring. During a raid on her California mansion in December, California Highway Patrol and Homeland Security agents said they found $387,000 in suspected stolen goods, most of which came from Ulta. Investigators say the crime ring netted her millions of dollars for more than a decade. Both Michelle Mack and Kenneth Mack have pleaded not guilty.
To Kimbell, the scale of such an undertaking was no surprise.
“Unfortunately, I’m not that shocked because we’ve seen it in other parts of the country,” Kimbell said. “The magnitude of this is significant. But this is what is happening and this is the environment in which we operate.”
Ulta Beauty CEO Dave Kimbell said online stores need to do more to prevent the sale of stolen goods.
CNBC
Kimbell said he doesn’t think the burden is on consumers to evaluate whether a product they buy from an online marketplace has been stolen. Many shoppers may not even consider that products could be stolen from one retailer and sold at another, he said, adding that it is largely an online phenomenon.
“That doesn’t happen in bricks and mortar [stores]. You wouldn’t walk into a retail store and see someone [at] a table in front [selling] stolen goods,” Kimbell said. “We should not have an environment where it is possible to steal from a retailer and [have it] they end up on any other platform, any other large-scale, mainstream platform.”
Anyone selling products online “should be committed to making sure that nothing they’re selling is stolen products,” Kimbel said.
“I can tell you with 100% certainty that nothing we sell on Ulta.com or any online platform is a product that has been stolen from another retailer,” he said. “There are tools, there are data, there are analytics, there are capabilities that we have collectively, and we could try to take even more action.”
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 a year and employs “thousands of people” to fight 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 that the seller was offloading stolen goods. Mack’s page was taken down after her arrest.
How bad is organized retail crime?
It is not clear how big a problem organized retail crime is. The National Retail Federation and the Association of Retail Industry Leaders say not all cases are reported, tracked or recorded.
According to the most recent NRF research on shrinkage – the industry term for loss of inventory from damage, theft or other sources – the total value of goods stolen in external theft cases totaled $40.5 billion in 2022, representing 36 .15% of the overall contraction, compared to 37% in 2021.
Ulta Beauty is one of many retailers that have begun to discuss retail crime as a problem, but haven’t quantified how it affects their businesses. Ulta Beauty CFO Scott Settersten and Chief Operating Officer Kecia Steelman have discussed theft or organized retail crime specifically on earnings calls or investor conferences.
Ulta Beauty said it plans to have all of its fragrances locked in stores in the first few months of this year. Fragrance was one of the hardest-hit categories for the retailer because of its high value and relative ease of resale, Kimbell said.
The CEO did not quantify the rise in organized retail crime his company has seen, but said it “has definitely gotten worse.”
“Retail crime has been part of the retail industry forever … but what we’ve seen in the last few years, really the last couple of years, is a significant uptick,” he said.
Retail executives are increasingly concerned about an increase in theft-related violence, according to the NRF survey, with 81% reporting an increase in violence and 28% saying their company closed a specific location due to crime. Ulta said it has yet to close a store due to crime.
Kimbel said he is particularly concerned about how the increase in crime is affecting Ulta’s 50,000 employees at 1,400 stores nationwide.
“These situations … they’re not fun … they’re threatening; they’re intimidating,” Kimbel said. “They can be traumatic.”
– Additional reporting by Ali McCadden.