A recent investigation in retail theft across Florida Home Depots shows that organized crime isn’t just for the mob.
Three people in Florida have been charged with grand theft for allegedly stealing over $100,000 worth of goods from Home Depot stores across the state, Florida Attorney General Ashley Moody’s Office announced on Monday. As part of a “fraudulent bar-code-switching scheme,” the investigation claimed, suspects Vicky Popat, Christopher Abad, and Christopher Eduardo Baglin allegedly worked together to replace the bar codes of more expensive items with those on cheap products.
The group allegedly stole 281 buckets of roof sealer in more than 25 incidents in three years across 11 south and central Florida counties by swapping bar codes for Henry 887 Tropi-Cool roof sealer—which cost $349 per 4.75-gallon pail, according to the Home Depot website—for Henry 345 Pre-Mixed Patch and Level, which costs about $40 per gallon.
“Florida is a law-and-order state, and we are dismantling organized retail theft rings,” Moody said in a press release. “Now, this group faces our statewide prosecutors and time in prison, where I can promise there is no self-checkout line.”
This isn’t Home Depot’s first run-in with organized retail crime in Florida. Robert Dell, a former pastor in Tampa, was charged in October with operating a multimillion-dollar theft ring after he and four others allegedly stole $1.4 million of goods from Home Depot stores and resold the products on eBay.
Dell’s case has been one of over 90 involving organized retail theft filed in Florida since 2019, according to the state’s attorney general’s office; Moody launched the Florida Organized Retail Crime Exchange in December 2021 to address the issue. And it is an issue: Miami ranked in the National Retail Federation’s top 10 cities most affected by organized retail crime in 2022.
The attorney general’s office did not respond to Fortune’s request for comment.
Organized theft has retailers reeling
Organized retail crime is not just a Florida problem. In 2022, retailers reported $112.1 billion in losses, according to the NRF’s Retail Security Survey, and it’s an issue they believe is urgent, with 78.1% of respondents saying organized retail crime is more of a priority than it was a year ago.
Home Depot CFO Richard McPhail attributed the retailer’s drop in gross margin in the 2023 second quarter to “shrink,” or inventory loss that includes theft. Home Depot’s gross margin was 33%, a decrease of eight basis points from the year before.
“Shrink has been a consistent pressure over the last several quarters and even the last few years. It’s something we’re tackling every day,” he said.
Minimizing shrink is particularly important for Home Depot now, as it faces weakening sales due to inflation and high mortgage rates deterring home ownership, despite exceeding fourth-quarter earnings expectations.
Target and Walmart have also both attributed recent profit margin hits to shrink.
But to address theft-related shrink, retailers have had to make concessions, particularly in self-checkout services, which have been linked with theft.
Self-checkout accounted for 30% of transactions in 2021, according to the Food Industry Association, and that number has held steady. The kiosks have helped retailers save on labor costs—and consumers, particularly younger ones, prefer self-checkout for its convenience and means of avoiding interactions.
Those consumer benefits also mean self-checkout has become an easier means of stealing goods, so retailers are taking action. Wegmans discontinued its self-checkout app in 2022 because of too much shoplifting, and last year, Walmart removed three self-checkout kiosks in Albuquerque stores. Costco has begun to check customers’ membership cards in self-checkout lanes to crack down on Netflix-style membership sharing. And earlier this month, Target began limiting self-checkout hours in some of its stores to combat theft. Other locations limit customers to 10 items or less for self-checkout.
“If and when we do have to close the self-checkouts in the morning and in the evening, we’re going to have a lot of people extremely upset with us,” a Michigan Target worker told Business Insider. “I’m going to have to explain to them that they are closed down due to theft.”
Home Depot did not respond to Fortune’s request for comment.
