Why Are Retailers Fleeing San Francisco?

It's not my sole news source but I do follow news on Twitter. I hear something on the radio or read something in an eNewsletter, then go to Twitter and see what others are saying about it. Stories about crime in San Francisco have been crossing the wire a lot the past few years, so I thought I'd see what the impact has been. Here's what I found.

At least 17 big box retailers have left San Francisco in the past 5 years. These include Nordstrom, Nordstrom Rack, Saks Off 5th, Whole Foods, Anthropologie, Office Depot, CVS, Walgreens, and Amazon. In addition to these big box retailers, many other smaller retailers have also closed their doors there in recent years. The exact number is unknown, but it is estimated to be in the hundreds.

There are a number of reasons why retailers are leaving San Francisco. Some of the most common reasons include:

• The rise of remote work: As more and more people work from home, there are fewer people downtown during the day to shop.
• The high cost of doing business in San Francisco: San Francisco is one of the most expensive cities in the world to do business in, due to high rents, labor costs, and taxes. 
• The increase in crime: San Francisco has seen a significant increase in crime in recent years, which has made some retailers, and their customers, feel unsafe. 

According to a May 17 Associated Press story, Target (nationwide) expects to lose $1.3 billion to shoplifting and organized retail crime in 2023. This is an increase of $500 million from 2022. Here's an example of an organized raid on a Nordstroms that cost that this one store $100k in a single shoplifting spree. That occurred this past week in L.A. Nordstroms closed its SF store in 2021.

The National Retail Federation estimates that retailers lose $68 billion to shoplifting each year. With increasingly lax law enforcement I fear that things will only get worse in our home town as well..

DULUTH, MN

One reason I pay attention to San Francisco and Portland is because I do not want to see their crime trends replicated here. If you talk to businesses downtown, many of the problems we see in SF have been quietly festering for some time.

According to the FBI's Uniform Crime Reporting (UCR) Program, Duluth, Minnesota has a higher crime rate than most cities of comparable size in the United States.

In 2022, the violent crime rate in Duluth was 4.6 per 1,000 residents, which is higher than the national violent crime rate of 3.9 per 1,000 residents. The property crime rate in Duluth was 37.9 per 1,000 residents, which is also higher than the national property crime rate of 29.1 per 1,000 residents.

Crime here is not "out of control" yet, though quite a few people don't like the current trends. Personally I don't believe our media paints the full picture. Could it be in part because one of our primary industries is tourism?

There are a number of factors that contribute to crime rates, including poverty, unemployment, lack of education, and drug use. These factors can vary from city to city, which is why crime rates can also vary. What I do know is that there are two agencies in this city that distribute free needles, one of them alone serving up nearly half a million free needles a year. Few of these needle recipients are shooting up with water or vitamins. Common sense tells you that there are drug dealers coming here to profit by supplying goods to meet the demand.

Another factor many people miss is that Duluth has a higher poverty rate than most cities of comparable size. In 2020, the poverty rate in Duluth was 16.6%, compared to the national poverty rate of 11.4%. Duluth also has a higher unemployment rate than most cities of comparable size. In 2020, the unemployment rate in Duluth was 6.5%, compared to the national unemployment rate of 3.5%.

Much more can be said, but I'll leave off here. Make the most of your weekend. Make hay while the sun shines.