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Read CNBC’s full investigation into the alleged organized theft groups that police say are stealing and reselling items from retailers including Ulta Beauty, T.J. Maxx and Walgreens.
Faced with sophisticated organized retail crime rings that investigators say have targeted his company, Ulta Beauty CEO Dave Kimbell is laying some blame on e-commerce sites.
In the primary in-depth interview given by a retail CEO about organized theft, Kimbell responded to a monthslong CNBC investigation that showed how police broke up what they are saying is knowledgeable network of thieves who used Amazon to resell hundreds of thousands in cosmetics stolen from Ulta stores and other retailers across the U.S.
While Kimbell would not comment directly about Amazon, he said online marketplaces are “a part of the issue.”
“[Online marketplaces] give more scale and more opportunity for people to liquidate this product,” Kimbell told CNBC in an on-camera interview. “You used to have to sell stolen goods at flea markets or out of the trunk of your automobile, or possibly just locally. Now, you may have more sophisticated tools to have a broader reach across the country and even internationally.”
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As a part of an investigation into retail crime rings and the actions corporations and law enforcement are taking to crack down on the issue, CNBC followed a case that involved Michelle Mack, a San Diego woman whom prosecutors accuse of using her Amazon digital storefront to resell goods 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 theft and receipt of stolen property in reference to the alleged crime ring. During a raid at her California mansion in December, California Highway Patrol and Homeland Security agents say they found $387,000 in suspected stolen goods, most of which had come from Ulta. Investigators say her crime ring brought in hundreds of thousands of dollars over more than a decade. Each Michelle Mack and Kenneth Mack have pleaded not guilty.
For Kimbell, the dimensions of such an operation wasn’t surprising.
“Unfortunately, I’m not that shocked because we have seen it in other parts of the country,” said Kimbell. “The magnitude of this one is critical. But that is what’s happening, and that is the environment through which we’re operating.”
Ulta Beauty CEO Dave Kimbell said online marketplaces need to do more to prevent the sale of stolen goods.
CNBC
Kimbell said he doesn’t think the onus is on consumers to evaluate whether a product they’re buying from a web based marketplace is stolen. Many consumers may not even consider that the products might be stolen from one retailer and sold by one other, he said, adding it is a largely online phenomenon.
“That does not occur in brick-and-mortar [stores]. You would not come right into a retailer and see any person [at] a table in front [selling] stolen goods,” Kimbell said. “We shouldn’t have an environment where it’s possible to steal from one retailer and [have it] find yourself on every other platform, every other large-scale, mainstream platform.”
Anyone who sells products online “must be committed to ensuring that nothing that they sell is stolen goods,” Kimbell said.
“I can inform you with 100% certainty, nothing that we sell at Ulta.com or any online platform is product that is been stolen from one other retailer,” he said. “There are tools, there’s data, there’s analytics, there’s capabilities that we collectively have that we could try to take even more motion.”
Amazon declined CNBC’s request for an interview but said in an announcement the e-commerce giant has “zero tolerance for the sale of stolen goods.” An Amazon spokesperson said the corporate invests $1 billion annually and employs “hundreds of individuals” to combat fraud, including detection and prevention tools.
The spokesperson said Amazon works with law enforcement and other retailers to “stop bad actors and hold them accountable.”
Within the Mack case, Amazon said it didn’t receive signals that might have indicated the vendor was offloading stolen goods. Mack’s page was taken down after her arrest.
How bad is organized retail crime?
It’s unclear exactly how big of an issue organized retail crime is. The National Retail Federation and the Retail Industry Leaders Association say not every instance is reported, tracked or tallied.
According to essentially the most recent NRF survey on shrink — the industry term for lost inventory from damage, theft or other sources — the full value of products stolen in external theft instances totaled $40.5 billion in 2022, representing 36.15% of total shrink, compared with 37% in 2021.
Ulta Beauty is considered one of a variety of retailers which have began to discuss retail crime as an issue but have not quantified the way it is affecting their businesses. Ulta Beauty Chief Financial Officer Scott Settersten and Chief Operating Officer Kecia Steelman have discussed theft or organized retail crime specifically on earnings calls or at investor conferences.
Ulta Beauty said it goals to have all of its fragrances locked up in stores in the primary few months of this 12 months. Fragrance has been considered one of the hardest-hit categories for the retailer due to its high value and the relative ease of reselling it, Kimbell said.
The CEO didn’t quantify the rise of organized retail crime his company has seen, but he said “it has definitely gotten worse.”
“Retail crime has been a part of the retail industry perpetually … but what we have seen over the previous couple of years, really the last couple of years, is a major elevation,” he said.
Retail executives are increasingly frightened a couple of rise in violence related to theft, according to the NRF survey, with 81% reporting a rise in violence and 28% reporting that their company has closed a selected location due to crime. Ulta said it has not yet closed a store due to crime.
Kimbell said he is especially concerned about how the rise in crime affects Ulta’s 50,000 employees across 1,400 stores across the country.
“These situations … they are not fun … they’re threatening; they’re intimidating,” Kimbell said. “They can be traumatic.”
– Additional reporting by Ali McCadden.