By Scottie Barnes
Walmart announced in February that it will close its last two stores in the city of Portland, Oregon, by March 24.
Though the retailer did not say whether relentless shoplifting was a factor in shuttering the locations, Walmart CEO Doug McMillon warned last year that an uptick in retail theft could lead to store closures or higher prices.
“Theft is an issue. It’s higher than what it has historically been,” he told CNBC’s “Squawk Box” in December.
600 Jobs to Go
“We’ve got safety measures, security measures that we’ve put in place. It is really city by city, location by location, its store managers working with local law enforcement,” he said of how the company deals with theft and other crimes.
The closure will affect 600 employees.
The announcement drew national attention, with Texas Gov. Greg Abbott taking a shot at the Rose City on Twitter.
“This is what happens when cities refuse to enforce the rule of law,” the Texas governor tweeted on March 5. “It allows the mob to take over. Businesses can’t operate in that environment, and people can’t live in it.”
Portland Mayor Ted Wheeler replied on Twitter the following day.
“Governor Abbott, are the dozens of Walmart stores that have closed in Texas in recent years all communities that ‘refuse to enforce the rule of law?’ The retail industry is changing and retail theft is a national issue.”
But there’s no doubt that retail theft is a problem.
Shoplifting has reached a “crisis level” in Portland according to Jeremy Girard of the Oregon Retail Crime Association
The state’s largest business group, Oregon Business and Industry (OBI), reports that organized thefts have cost the state thousands of jobs and millions of dollars in tax revenue.
Though it’s too late for the city to retain its biggest discount retailer, a pair of bills now before the state legislature would put millions toward fighting organized theft and allow prosecutors to seek stiffer penalties for offenders.
Bills Aim to Crack Down on Retail Crime
The proposals, which received a hearing in the Senate Judiciary Committee on March 8, would designate $5 million to help pay for the cost of cracking down on theft in cities and counties.
Additional money would be allocated to pay for new positions within the Oregon Department of Justice to help cities and counties analyze and fight organized theft.
These crimes are “not due to houseless individuals just trying to get by or teenagers stealing candy bars,” OBI lobbyist Derek Sangston told state lawmakers during the hearing.
“This is theft being driven by organized retail crime syndicates.”
Michael Zacher, a detective with the Clackamas County Sheriff’s Office, said thefts are “largely driven by substance abuse and the ability to sell in secondary markets.”
Police report that thieves coordinate their efforts to steal large amounts of merchandise, then sell it on websites or at flea markets.
“These individuals are targeting a large amount of merchandise at one time—losses from anywhere between $10,000 and $100,000,” Phil Smith, a retail crime investigator for Fred Meyer and vice president of the Organized Retail Crime Association of Oregon, told lawmakers.
“As a result of these actions retailers are now starting to close their doors or relocate to combat these issues.”
The legislation would allow prosecutors to seek stiffer penalties for people convicted of organized retail theft.
Those who would currently face misdemeanor theft charges could face a felony charge if thieves recklessly endanger people in the course of a crime. Repeat offenders of organized retail theft could face much stiffer penalties.
Help can’t come too soon for Portland’s businesses.
Businesses Under Siege
Though Walmart did not directly attribute its closing to retail theft, one prominent Portland business did.
One of Nike’s iconic downtown stores has been shuttered for months.
The company recently sought to hire off-duty police officers to provide security so it could reopen.
The city of Portland rejected the proposal given the police bureau’s existing staffing shortages.
When the Rains PDX clothing shop closed permanently in November after 17 break-ins, the owner posted a scathing note on the front door.
“Our city is in peril,” it said. “Small businesses [and large] cannot sustain doing business, in our city’s current state. We have no protection, or recourse, against the criminal behavior that goes unpunished.”
“Retailers are leaving,” Jordan Zaitz, a member of the Portland Police’s Neighborhood Response Team told Portland’s KGW8.
“I mean, to have Walmart close two of its stores is a really big deal. The people in those neighborhoods, that’s where they shop.”
Success of Police Stings
Last fall, the Portland Police Bureau launched a retail theft sting operation to crack down on shoplifting by organized crime rings and individuals.
A sting in December resulted in 64 arrests and almost $9,000 in stolen merchandise recovered.
In February, a sting in the same area netted 40 arrests and more than $2,000 in stolen merchandise.
Results of the recent March sting have yet to be made public.
Zaitz said even with the sting operations, she has not seen much of a decrease in thefts but hopes they’ll make a difference.
“I know the public and the stores just really appreciate our presence,” Zaitz said. “If they are going to commit crimes, they are going to be arrested and held accountable.”
The problems associated with retail and other crime are rippling throughout Portland’s economy, according to the Portland Business Alliance. And it’s not just businesses that are leaving.
Running for the Exits
According to the Portland Business Alliance’s annual State of the Economy report released in February, the population of Multnomah County (where Portland is located) declined by 12,691 in 2022.
Employee foot traffic in Portland’s Central City district is 48 percent below 2019 levels. In the Downtown District, employee foot traffic is down 65 percent.
More than 8 million square feet of office space sits empty.
“People and businesses vote with their feet, and they are not voting for Portland, the city or the region, in the way they have in the recent past,” the report states.
Making the city even less attractive for retailers, local business taxes are up sharply.
“Taxes paid by businesses located in the City of Portland increased 32 percent during 2019-2021, and, with the passage of two local income tax measures, Portland residents now face the second highest top marginal income tax rate in the nation—behind only New York City,” according to the report.
“Downtown Portland is challenged with high and rising office vacancy rates as hybrid work behaviors and policies take hold, alongside a rapid increase in crime rates,” wrote Portland Business Alliance president and CEO Andrew Hoan in the report.
“Without urgent and focused interventions that deploy every available tool to help return liveability and vibrancy to our downtown, we will not enjoy the promise of shared economic prosperity that is vital for our region and the state.”