In her 2023 State of the City Address, San Francisco Mayor London Breed acknowledged that the city faces a new reality: “San Francisco downtown as we knew it is not coming back. And that’s ok.”
As Mayor Breed emphasized throughout the address, entrenched public safety issues since the COVID-19 pandemic have fundamentally altered downtown landscapes, with rising street crime, homelessness, and open-air drug use hampering urban recovery efforts. These proximity risks, along with an increase in on-premises incidents like organized theft and assaults on employees, have led major retailers to rethink their presence in large American cities. Earlier this year, Whole Foods announced that it was closing its downtown San Francisco location, citing concerns for worker safety. In May, Nordstrom announced its own departure from key urban locations in the city for similar reasons.
As policymakers grapple with how best to govern the future of cities, retailers themselves must develop their own corporate security solutions to better navigate the new urban reality Mayor Breed alluded to during the State of the City Address.
Public safety concerns have become a prominent issue across American cities. In October of last year, Pew Research highlighted that 61 percent of registered voters considered violent crime as “very important” when deciding who to vote for in the congressional elections. Cities like San Francisco are suffering through the municipal version of “long Covid,” struggling to withstand enduring remote work dynamics and a pandemic-fueled migration to suburban environments that has yet to reverse. These trends have resulted in a reduced tax base for municipal coffers, which directly impact funding for public safety agencies. Coupled with policy reforms around policing and prosecutorial discretion, America’s big cities face an inflection point in their pandemic recovery, with public safety as a key determinant in whether downtown areas decline or thrive.
Retailers are at the forefront of this struggle for the future of cities. They face a complex set of risks: proximity risk to nearby criminal activity, on-premises crime against customers and employees, and persistent theft that is both organized and opportunistic. Shrink constitutes a “$112 billion problem” to companies, according to the just-released National Retail Federation’s 2023 National Retail Security Survey. As we’ve seen in the most challenging operating environments like San Francisco, risk avoidance has become an increasingly favored approach in retailers’ risk management strategy. Put simply, retail executives are opting to shutter stores in higher crime areas where shrink rates and in-store incidents prove too costly for continued operations.
But the risk avoidance approach—in this case, closing stores—creates a problem not just for retail, but for the cities themselves in the form of accessibility issues and potential food deserts. The risk of food deserts imperils local residents’ quality of life and contributes to rising gaps of inequality in the most vulnerable communities.
The future of America’s downtowns hinges on more than just sound public policy. Given the backdrop of constrained municipal budgets and fewer police officers in many large cities, how effective retail security programs are in deterring, mitigating, and responding to criminal activity weighs heavily on the ability of retailers to navigate a changing risk landscape in American cities.
Corporate Security programs have historically been viewed as “cost centers,” but must be recognized as business enablers for the elevated risk landscape confronting retailers across the country. New, innovative investments in people, process, and technology resources within asset protection programs are particularly important.
Retailers are clear-eyed about these risks and are increasingly focused on technology solutions to enable faster detection—particularly of recidivists who target multiple storefronts in a certain geographic area. Retailers also continue to seek rich data sources beyond crime data when considering which locations to fortify and invest.
Asset Protection programs should be supported by the broader corporate security program, including the Security Operations Center (SOC), risk intelligence, security investigations, and security leadership. The varied functions within an enterprise security program must coalesce quickly and effectively during a major store incident. The new risk landscape, where isolated incidents devolve quickly into kinetic threats, places added importance on enterprise crisis management plans and tailored, scenario-based incident response plans. Once response activities have been effectively deployed, organizations must be positioned to seamlessly transition toward business continuity measures that inform recovery efforts and ensure resilience during future incidents.
Perhaps most importantly, retail executives should “lead from the front” on public safety issues in major cities. Retail executives should seize the moment by steering public-private dialogue toward a holistic, “whole of community” approach to downtown revitalization, investments in public safety and community spaces, and the need to hold repeat and organized theft offenders accountable. Retailers play a vital role in the future of big cities, and investment in public safety agencies and the security programs of the retailers themselves is crucial to navigating the realities of the post-pandemic American downtown.
Brendan North is a member of the Security Risk & Resilience team at The Chertoff Group. The Chertoff Group is an advisory firm that helps organizations achieve their security objectives in a complex risk environment.