On Sept. 26, Purpose truly helpful a national firestorm when it acknowledged it would possibly maybe perhaps shut 9 stores in four states because theft and organized retail crime had made them too unhealthy to hotfoot.
On its face, Purpose’s announcement became evidence that retail crime became combating one of the most nation’s most prominent stores from working stores profitably and safely. It challenged skeptics who believed that stores had exaggerated the affect of organized retail crime and passe it as an excuse for downhearted monetary efficiency.
Purpose’s shuttered tiny-format store on Folsom Motorway in San Francisco’s SoMa neighborhood, November 2023.
Gabrielle Fonrouge | CNBC
There became apt one blueprint back with the explanation Purpose gave for closing stores: The locations it shuttered usually saw fewer reported crimes than others it selected to retain open nearby, a monthslong CNBC investigation has chanced on.
CNBC’s findings solid doubt on Purpose’s explanation and elevate questions about whether the firm’s announcement became designed to advance its legislative agenda — searching for a crackdown on organized retail crime — and to imprecise downhearted monetary efficiency on the stores because it grapples with sliding sales.
In some instances, Purpose selected to retain working stores in busier areas that had better foot net page traffic or elevated median incomes, although the locations saw extra theft and violence, the probe printed. In those areas, police departments would possibly maybe even very smartly be better funded ensuing from elevated tax bases, and purchasers would possibly maybe even salvage extra to spend on discretionary goods.
Various the locations Purpose closed had been “tiny-format” stores the firm opened over the closing five years as section of an experiment to extend its footprint in dense, urban areas. The strikes followed Purpose’s resolution to shutter four comparable stores in the spring that it acknowledged had been underperforming, Retail Dive previously reported.
At the time it introduced the 9 store closures in September, Purpose acknowledged, “We can now not continue working these stores because theft and organized retail crime are threatening the protection of our team and company, and contributing to unsustainable industry efficiency. We can easiest be a hit if the working and shopping ambiance is compile for all.”
The news came apt hours after the National Retail Federation issued a key annual retail security peek — in which it acknowledged violence at stores had elevated however losses from theft hadn’t changed mighty — and exactly one month before the synthetic neighborhood became planning to lobby Congress for stiffer punishment for organized theft offenders. Purpose CEO Brian Cornell sits on the NRF’s board of directors and is a member of its executive committee.
One longtime retail executive and educated puzzled whether Purpose’s claims about theft on the stores had been designed to conceal its struggles, because the retailer’s sales fell from the prior year in each its 2nd and third quarters.
“I don’t desire to employ the phrase ‘stunt,’ because I do now not know exactly what went on in Minneapolis [where Target is based], however to me, it read love a stunt, taking a watch to divert consideration from the firm’s lack of efficiency total,” acknowledged Keep Cohen, a professor and director of retail stories at Columbia Industry Faculty who previously served because the CEO of Sears Canada, Bradlees and Lazarus department stores.
“They didn’t yelp their real shortage statistics,” he added. “They talked about it in fashioned terms; they didn’t yelp some other components that would possibly maybe salvage triggered them to resolve to shut any of those stores. They implied that essentially the most efficient procedure they had been closing the stores became ensuing from theft. That would possibly maybe or would possibly maybe well now not be right. My wager is: No longer right.”
In response, Purpose spokesperson Jim Joice told CNBC that as a mumble firm, Purpose is “repeatedly opening contemporary stores, initiating remodels, investing in our team and infrastructure, and refining our operations as we watch to bring the shopping ride that participants salvage advance to are looking ahead to of Purpose.”
“In 2023 alone, we opened 21 contemporary stores and remodeled 150 stores as section of our relating to $5 billion investment in strategic initiatives. The recently introduced store closures connected to security, retail theft, and unsustainable industry efficiency characterize less than 0.5% of our U.S. footprint, with 1,956 stores at the moment working and serving our company,” Joice acknowledged.
Purpose purchasers are encouraged to demand support gaining access to products that are kept in locked instances.
Gabrielle Fonrouge
CNBC passe public document requests and law enforcement sources to originate crime statistics and 911 name data for 21 Purpose stores in New York Metropolis, Seattle, the San Francisco Bay Dwelling, and Portland, Oregon — the four areas where the retailer closed stores. The info involves the 9 stores Purpose shuttered and comparable locations it kept open nearby, spanning from January 2021 thru September 2023, when the closures had been introduced. The info contemporary how over and over Purpose became listed because the sufferer of against the law on the locations, or how over and over police had been known as to the stores and arrested somebody, acknowledged they addressed the field or generated a story or log of what took place.
CNBC’s methodology
When analyzing 911 name logs and other crime data for this story, CNBC integrated in its tally easiest incidents that ended in an arrest, police story or log, or incidents that police acknowledged they responded to and handled. Spurious complaints, duplicate calls, requests for backup, and store and welfare checks had been weeded out from the logs and now not counted, alongside with other irrelevant data. Mental smartly being crises, overdoses, automobile thefts, automobile burglaries and other occasions that weren’t without delay connected to Purpose or looked as if it would possibly maybe perhaps happen open air the confines of the shop had been additionally now not integrated.
The info paint a startling portray of the frequent crime on the locations. But they additionally contemporary a clear fashion. Practically each store the retailer closed saw less police assignment and fewer reported crime incidents than the locations it kept open nearby.
Completely one of the most 9 stores that Purpose closed across the four regions, a location in Pittsburg, California, saw extra crime and police assignment than its closest comparable location, in Antioch, California, per CNBC’s evaluation.
Retailer-particular crime data for the 9 locations Purpose closed has now not been previously reported.
Relish most data on theft, organized retail crime, and “shrink,” or stores’ inventory loss, the info obtained by CNBC are now not total. Theft and crime total are complicated to measure, as they usually plod unreported and undetected, experts salvage told CNBC.
Purpose declined to provide its interior crime figures. Without those numbers, the info obtained by CNBC are “essentially the most efficient portray that you just’re going to even be going to earn” about what crime looked love on the locations the retailer closed and the ones it didn’t, acknowledged Christopher Herrmann, an assistant professor at John Jay Faculty of Prison Justice and an educated in crime evaluation and mapping.
“Or now not it’s engaging that they are using public security, or employee security, as an excuse, extra or less, for closing the stores,” acknowledged Herrmann. “For the reason that reality is, they’re now not closing the stores with the splendid payment of retail theft.”
In response, Purpose’s Joice told CNBC that “store-stage incidents fluctuate broadly in severity, and police data would possibly maybe even now not contemporary the fats extent of what our teams ride on the floor.”
“Now we salvage usually shared monetary data and interior data on the agree with bigger of theft-connected crime,” Joice acknowledged. “Now we salvage additionally repeatedly conveyed our emphasis on security and highlighted team participants’ experiences that conceal the affect that theft and organized retail crime salvage had on our firm, our company, and the communities we abet.”
“We continue to take a position carefully in security, alongside with systems to discontinue and discontinue theft and organized retail crime in our stores, as smartly as partnering with law enforcement, legislators, and retail traffic to note lengthy-time interval solutions,” Joice acknowledged.
Purpose has previously acknowledged it saw a “marked agree with bigger” in theft involving violence or threats between 2021 and 2022, and on the origin of 2023. In the first five months of this year, stores saw a relating to 120% agree with bigger in those incidents, the firm has acknowledged.
Table of Contents
The San Francisco Bay Dwelling
Purpose closed three stores in the San Francisco Bay Dwelling — one in San Francisco, one in Oakland and one other in Pittsburg, a suburb about 40 miles open air the metropolis.
Your total locations had been interior about a miles or a brief force away from one other Purpose that remained open, which can maybe salvage played a job in the firm’s resolution to shutter them, experts acknowledged.
Retailers usually “miscalculate how mighty the contemporary store will cannibalize contemporary stores,” acknowledged Cohen, of Columbia Industry Faculty.
Purpose opened its now-closed tiny-format store in Oakland in 2019, apt two miles away from its Emeryville location. Between January 2021 and September 2023, 96 crime incidents had been reported on the Oakland store when put next with 440 on the Emeryville store over the identical time frame.
Purpose’s Emeryville, California, location remains open about two miles away from a store the retailer closed in Oakland.
Gabrielle Fonrouge | CNBC
The findings judge some total theft developments in Oakland and Emeryville in 2023. Overall theft, excluding automobile theft, became down 15% in Oakland from Jan. 1 to Oct. 29, when put next with the identical interval a year ago, per police data. In Emeryville, petty theft and immense theft had been up 16% and 14%, respectively, for the interval from Jan. 1 to Oct. 31, when put next with the identical interval a year ago, police data contemporary.
Demographics is one other element that would possibly maybe well also very smartly be at play. In the ZIP code where the Oakland store is positioned, the median earnings stage is $76,953, when put next with $114,286 in Emeryville, per U.S. Census Recordsdata.
Other folks with elevated incomes tend to salvage further money to spend on discretionary goods. Police departments in those areas would possibly maybe even additionally be extra inclined to put in power property crimes corresponding to theft if there would possibly maybe be less violent crime to support to, which can maybe perhaps conceal the distinction in police responses between stores, experts who peep crime salvage told CNBC. For instance, one homicide and three rapes had been reported in Emeryville up to now this year. In comparability, 106 homicides and 159 rapes had been reported in Oakland in the identical time frame.
Looters rob a Purpose store throughout protests in Oakland, California, on Can also just 30, 2020, over the death of George Floyd.
Josh Edelson | AFP | Getty Photos
At some point soon of the metropolis of San Francisco, the tiny-format store on Folsom Motorway that Purpose closed saw now not less than 84 crime incidents that resulted in police stories between January 2021 and September 2023.
Two miles away at Purpose’s sprawling Union Sq. location, which remains open, 486 incidents had been recorded throughout the identical time frame.
The stores’ neighborhoods and the foot net page traffic they saw additionally differentiated them.
The Purpose signal from its Mission Motorway store in San Francisco’s Union Sq. glows on a building across the road, November 2023.
Gabrielle Fonrouge | CNBC
The closed store became sandwiched between a automobile dealership and a throughway in an house that locals acknowledged had mild foot net page traffic and had attracted a homeless encampment throughout the Covid pandemic. In comparability, Purpose’s Union Sq. location is in the coronary heart of San Francisco’s bustling tourist and shopping district.
Portland
Purpose closed three stores in the metropolis of Portland that saw less crime than locations it kept open.
For instance, the Purpose on Southeast Washington Motorway, which remains open, had 718 reported incidents between January 2021 and the tip of September 2023, which is bigger than all three closed stores saw blended over the identical time interval, per police data.
Unquestionably one of the most locations, a tiny-format store on Northeast Halsey Motorway, became open for beneath three years before it became closed.
Consistent with readily accessible data in Portland, CNBC’s findings echo some house crime statistics.
In the Hazelwood neighborhood, where Purpose’s store on Southeast Washington Motorway remains open, reported larcenies are up 5% in 2023 between Jan. 1 and the tip of October, when put next with the identical interval a year ago. In Hollywood and Richmond, where Purpose closed stores, reported larcenies had been down 37% and 8%, respectively, for the identical time interval.
Then over again, in downtown Portland, where Purpose’s store on Southwest Morrison Motorway became closed, reported larcenies had been up 13% for that point interval.
Seattle
Purpose closed two stores in Seattle, each tiny-format locations that saw fewer crimes than the closest Purpose stores.
For instance, the shuttered Targets on Northwest Market Motorway and College Methodology Northeast had 235 and 395 reported incidents, respectively, between January 2021 and the tip of September 2023. In comparability, two locations about five miles away that remain open, on 2nd Avenue and Northeast Northgate Methodology, saw 878 and 901 reported incidents, respectively, throughout the identical time interval.
In some instances, the info additionally suits local crime statistics. Between Jan. 1, 2021, and Oct. 31, 2023, reported larcenies had been 30% lower in the house of Purpose’s Northwest Market Motorway location and 33% lower in the house of the College Methodology store, each of which had been closed, than in the house where Purpose’s Northeast Northgate Methodology store remains open.
New York Metropolis
Purpose closed one store in New York Metropolis. The location became in East Harlem and housed interior a elevated shopping complicated that borders the East River, about a 15-minute trudge from the closest subway field.
It recorded now not less than 844 incidents between January 2021 and the tip of September 2023, however the figures faded in comparability with those throughout the identical time interval at other Purpose stores dotted across the Mountainous Apple.
A store on Greenwich Motorway in Decrease The contemporary york saw 2,090 reported incidents, bigger than double the number in East Harlem in that point interval. At one other location, on Huge Motorway, 1,628 incidents had been recorded.
The locations are vastly totally different. The 2 Decrease The contemporary york locations are in busier areas with extra foot net page traffic and elevated median earnings stages. In the ZIP code where the East Harlem store became positioned, the median earnings is $36,989, when put next with bigger than $250,000 in the house across the Greenwich Motorway store and $43,362 in the house across the Huge Motorway location, U.S. Census data shows.
Purpose closed the East Harlem location — ensuing from crime and security, it acknowledged — on the identical time it deliberate to open a store about a mile and a half of away on West 125th Motorway in Harlem. Crime developments are worse in the house where the contemporary store is opening, per police data.
Purpose’s New York Metropolis store in East Harlem became housed interior a elevated shopping complicated.
Gabrielle Fonrouge | CNBC
At the time Purpose introduced the East Harlem closure, reported petty theft incidents had been down 2.5% between Jan. 1 and Sept. 24, 2023, in the house where the East Harlem store became and up 9% throughout the identical interval in the house where the proposed store shall be, when put next with the identical interval a year ago. Purpose didn’t observation on the discrepancy.
— Graphics by CNBC’s Gabriel Cortes
