Read the full CNBC investigation about alleged organized theft groups that police say are stealing and reselling items from retailers like Ulta Beauty, TJ Maxx and Walgreens.
Faced with sophisticated organized retail crime networks that investigators say have targeted his company, Ulta Beauty CEO Dave Kimbell partly blames e-commerce sites.
In the first in-depth interview by a retail CEO about organized theft, Kimbell responded to a month-long CNBC investigation that showed how police broke up what they say is a professional ring of thieves who used Amazon to resell millions. in cosmetics stolen from Ulta stores. and other retailers in the US.
While Kimbell declined to comment directly on AmazonHe said online markets are “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. “You used to have to sell stolen items at flea markets or out of the trunk of your car, or maybe just locally. “Now you have more sophisticated tools to have a broader reach across the country or even internationally.”
As part of an investigation into retail criminal networks and the actions companies and authorities are taking to combat the problem, CNBC followed a case involving Michelle Mack, a San Diego woman whom prosecutors accuse of using her store Amazon digital to resell products. 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 criminal ring. During a raid on her California mansion in December, California Highway Patrol and Homeland Security agents say they found $387,000 in suspected stolen property, most of which came from Ulta. Investigators say his criminal network raked in 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 surprised 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 are operating.”
Ulta Beauty CEO Dave Kimbell said online marketplaces need to do more to prevent the sale of stolen products.
CNBC
Kimbell said he doesn't believe it's consumers' responsibility to evaluate whether a product they're purchasing on an online marketplace is stolen. Many shoppers may not even consider that products could be stolen from one retailer and sold by another, she said, adding that it is largely an online phenomenon.
“That doesn't happen in physical stores. [stores]. You wouldn't walk into a 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] end up on any other platform, any other large-scale mainstream platform.”
Anyone selling products online “should commit to ensuring that nothing they sell is stolen goods,” Kimbell said.
“I can tell you with 100% certainty that nothing we sell on Ulta.com or any online platform is stolen product from another retailer,” he said. “There are tools, there is data, there is analysis, there are capabilities that we have collectively that we could try to take even more action.”
Amazon declined CNBC's interview request but said in a statement that the e-commerce giant has “zero tolerance for the sale of stolen goods.” An Amazon spokesperson said the company invests $1 billion a year and employs “thousands of people” to combat fraud, including detection and prevention tools.
The spokesperson said Amazon is working with authorities and other retailers to “stop bad actors and hold them accountable.”
In the Mack case, Amazon said it received no signals that would have indicated the seller was unloading stolen goods. Mack's page was deleted after his arrest.
How bad is organized crime in retail?
It's unclear exactly how big of a problem organized crime is in retail. The National Retail Federation and the Retail Industry Leaders Association say not all cases are reported, tracked or accounted for.
According to NRF's most recent survey of losses (the industry term for inventory loss due to damage, theft or other sources), the total value of goods stolen in external theft cases reached $40.5 billion in 2022, which accounts for 36.15 percent of total losses, up from 37 percent. % in 2021.
Ulta Beauty is one of several retailers that have begun to talk about retail crime as a problem, but have not quantified how it is affecting their businesses. Ulta Beauty CFO Scott Settersten and COO Kecia Steelman have discussed theft or organized retail crime specifically on earnings calls or at investor conferences.
Ulta Beauty said it aims to have all of its fragrances in stores in the first few months of this year. Fragrances have been one of the hardest-hit categories for the retailer because of their high value and relative ease of reselling them, Kimbell said.
The CEO did not quantify the rise in retail organized crime his company has seen, but said it has “definitely gotten worse.”
“Retail crime has been a part of the retail industry forever … but what we've seen in the last few years, actually the last two years, is a significant increase,” he said.
Retail executives are increasingly concerned about an increase in violence associated with theft, according to NRF survey: 81% reported an increase in violence and 28% reported that their company has closed a specific location due to theft. delinquency. Ulta said it has not yet closed any stores due to crime.
Kimbell said he is particularly concerned about how the rise in crime affects Ulta's 50,000 employees in 1,400 stores nationwide.
“These situations…they're not fun…they're threatening; they're intimidating,” Kimbell said. “They can be traumatic.”
– Additional reporting by Ali McCadden.
