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Should Retail Developers Avoid High Crime Areas?

Last month the National Retail Federation released this year’s edition of their annual National Retail Security Survey. According to the survey, shrink accounted for a staggering $112.1 billion in losses in 2022, up from nearly $94 billion the previous year. In a press release disseminated by the NRF, Vice President for Asset Protection and Retail Operations David Johnston was quoted saying, “Retailers are seeing unprecedented levels of theft coupled with rampant crime in their stores, and the situation is only becoming more dire.”

Organized retail crime is perhaps one of retailers’ most significant concerns. The NRF survey showed that while retail theft was being committed, more than two-thirds of respondents reported witnessing levels of extreme violence and aggression. The culmination of these factors has led retailers to reevaluate their store locations.

An increasing number of retailers have decided that opening or maintaining locations in high crime areas is not worth the risk. In one notable case, Westfield, having operated the San Francisco Centre since 2002, returned the mall to its lender citing “challenging operating conditions in Downtown San Francisco.”

The impact of organized retail crime has compounding effects on revenue as would-be shoppers will simply choose to go elsewhere or shop from home. In another example, Target, announced in September that they are considering closing as many as nine US stores due to safety concerns for their staff and shoppers amid unsustainable performance of those locations due to crime. The big-box retailer reported a 120% increase in violent theft incidents or threats of violence during theft incidents over the first five months of the year. According to the NRF survey, 28% of respondents reported having to close store locations due to retail crime.

Some retailers have no other option but to weather the storm in hopes that society will change or legislation will cease to support criminal behavior. Wal-Mart loses an estimated $12-18 billion in profits per year due to theft. Famously, the brand has seen success in some areas partnering with local law enforcement. Even going as far as to open a police substation in one Atlanta-area location.

However, it appears that retailers’ resolve to remain in these high crime areas may be waning as CEO Doug McMillon was quoted in December of last year warning if local jurisdictions won’t assist in reducing theft, “prices will be higher, and/or stores will close.” Since this quote, Wal-Mart has followed through on its promise, closing more than 20 locations in high crime areas as of June of this year.

For retailers resolute to operating in high crime areas, design elements exist to mitigate losses and potentially deter criminal behavior. While not ideal for paying customers, a simple solution is the placement of merchandise such as easily pocketable and personal items, under lock and key. Retailers such as Costco, Walmart, and Kroger are rethinking their self-checkout strategies.

Those that retain self-checkouts are equipping them with facial recognition and AI capability to better recognize shoplifters. Additionally, by limiting the number of exits to code minimum, employees are better positioned to deter theft. Retailers are also investing more on security, with extra personnel and high-tech security systems equipped with better cameras and more sophisticated anti-theft detection in their builds.

Indicators show that retail theft is trending in the wrong direction and will likely continue to get worse in some areas. The resolve of retailers is eroding. Between theft and violent crime in retail environments, it remains to be seen just how much loss retailers can sustain before finally concluding, enough is enough. As architects, the No. 1 rule for design is life safety, and who would have thought that idea would one day take on a whole new meaning?

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