Read CNBC's full investigation into alleged organized theft groups that police say are stealing and reselling items from retailers including Ulta Beauty, TJ Maxx and Walgreens.
Confronted by sophisticated organized crime syndicates that investigators say targeted his company, Alta Beauty CEO Dave Kimball places some of the blame on e-commerce sites.
In the first in-depth interview by a retail executive about organized theft, Kimble responded to a months-long CNBC investigation that showed how police dismantled what they say was a professional network of thieves who used Amazon to resell millions of cosmetics stolen from Ulta stores and other retailers in All over the United States
While Kimbell did not comment directly AmazonOnline marketplaces are “part of the problem,” he said.
“[Online marketplaces] “Give more scope and more opportunities for people to filter that product,” Kimble told CNBC in an on-camera interview. “You used to sell stolen goods at flea markets or out of the trunk of your car, or maybe just locally. Now, you have more sophisticated tools to reach a broader reach across the country or even internationally.”
As part of an investigation into retail crime rings and the actions companies and law enforcement are taking to crack down on the problem, CNBC followed a case involving Michelle Mack, a San Diego woman who prosecutors accuse of using her Amazon digital storefront to resell merchandise. 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 crime ring. During a raid on her California mansion in December, California Highway Patrol and Homeland Security agents said they found $387,000 worth of suspected stolen merchandise, most of which came from Ulta. Investigators say her crime ring brought in millions of dollars over more than a decade. Both Michelle Mack and Kenneth Mack have pleaded not guilty
To Kimble, the scale of such an operation was not surprising.
“Unfortunately, I'm not shocked because we've seen it in other parts of the country,” Kimble said. “The scale of this disaster is huge. But this is what happens, and this is the environment in which we operate.”
Dave Kimble, CEO of Ulta Beauty, said online marketplaces need to do more to prevent the sale of stolen goods.
CNBC
Kimball said he doesn't believe it's consumers' responsibility to evaluate whether a product they buy from an online marketplace is stolen. Many shoppers may not even consider the possibility of products being stolen from one retailer and sold by another, he said, adding that it is largely an online phenomenon.
“This doesn't happen in bricks and mortar [stores]. You wouldn't come into a retailer and see someone [at] Table in front [selling] “Stolen merchandise,” Kimball said. “We shouldn't have an environment where you can steal from a retailer [have it] “It will end up on any other platform, or any other large-scale major platform.”
Kimble said anyone selling products online “must be committed to ensuring that anything they sell is not stolen goods.”
“I can tell you with 100% certainty, nothing we sell on Ulta.com or any online platform is a product that was stolen from another retailer,” he said. “There are tools, there are data, there are analytics, there are capabilities that we collectively have with which we can try to take further 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 annually and employs “thousands of people” to combat fraud, including detection and prevention tools.
Amazon is working with law enforcement and other retailers to “stop bad actors and hold them accountable,” the spokesperson said.
In Mack's case, Amazon said it received no indications that the seller was unloading stolen goods. Mack's page was removed after her arrest.
How bad is organized retail crime?
It is not clear exactly how big a problem organized retail crime is. The National Retail Federation and Retail Industry Leaders Association say not every case is reported, tracked or recorded.
According to NRF's most recent survey of shrinkage — the industry term for inventory lost due to damage, theft, or other sources — the total value of merchandise stolen in offshore theft cases reached $40.5 billion in 2022, representing 36.15% of total shrinkage compared to 37% in 2021.
Ulta Beauty is one of a number of retailers that have begun discussing retail crime as a problem but have not determined how much it will impact their business. Scott Settersten, Ulta Beauty's CFO, and Kesia Stillman, COO, have discussed theft or organized retail crime specifically on earnings calls or at investor conferences.
Ulta Beauty said it aims to close all of its fragrances in stores in the first few months of this year. Fragrances have been one of the hardest-hit categories for retailers because of their high value and relative ease of resale, Kimball said.
The CEO did not specify how much organized retail crime his company had seen, but said “it's definitely gotten worse.”
“Retail crime has been a part of the retail industry forever…but what we've seen over the last few years, actually the last couple of years, is a significant uptick,” he said.
Retail managers are increasingly concerned about rising rates of robbery-related violence, according to the NRF survey, with 81% reporting an increase in violence and 28% reporting their companies have closed a specific location due to crime. Ulta said it has not yet closed a store due to the crime.
Kimball said he is particularly concerned about how rising crime rates will affect Ulta's 50,000 employees across 1,400 stores across the country.
“These situations…they're not fun…they're threatening and scary,” Kimball said. “It can be painful.”
– Additional reporting by Ali Makdeen.
