MCL 750.360a.
If he's charged with third-degree retail fraud, he would be better served by dealing with that charge rather than arguing that he shouldn't be convicted of retail fraud because he committed a more serious offense. Also, even if he were charged with first- or second-degree retail fraud, it looks like it's a context in which the additional charge could be added -- not an "either/or".
For the statute you found, the video footage would be compelling; the question would be whether they could prove intent to steal. I suspect that it would be difficult for a jury to come to any other conclusion under the circumstances, but I'll leave some room for doubt having not seen the video.

