As if retailers didn’t have enough problems with tariffs, store traffic and consumer delivery demands, they now have to deal with a spike in thefts by sticky-fingered syndicates.
Nearly all merchants were victimized by organized retail crime this year and it’s getting worse, according to the 15th annual Organized Retail Crime (ORC) study from the National Retail Federation (NRF).
“Organized retail crime continues to present a serious challenge to the retail industry,” Bob Moraca, vice president of loss prevention at NRF, said. “These criminal gangs are sophisticated, but so are retail loss prevention teams. Retailers are committing more resources and constantly evolving their tactics to fight this ongoing challenge.”
The report found that 97 percent of retailers had been victimized by ORC in the past year and that 68 percent had seen an increase in such activity. Losses averaged $703,320 per $1 billion in sales, marking the fourth year in a row that the figure topped the $700,000 mark, the report noted.
About 65 percent of retailers said ORC is a higher priority for their companies than it was five years ago, while 56 percent are allocating additional technology resources to the issue and 44 percent are increasing their loss prevention budgets.
Several steps are being taken to fight ORC, according to the survey: 38 percent had changed or were planning to change return policies, while 37 percent were doing the same with point-of-sale policies, 27 percent with employee screening and 24 percent with the way they handle trespassing.
While ORC often involves stealing from stores, 73 percent of those surveyed had been victims of cargo theft. Theft of cargo occurred most often (59 percent) en route from distribution centers to stores, at distribution centers (33 percent) and en route between stores (30 percent).
Another problem is that stolen merchandise is sometimes returned for store credit, usually in the form of gift cards. Those cards can then be sold for cash and 51 percent of retailers had found them for sale on websites, while 17 percent found them in pawnshops.
The most common thefts by ORC gangs are a combination of high-end designer products and easy-to-fence everyday necessities. Top items stolen included designer clothing, infant formula, razors, designer handbags, laundry detergent, denim pants, energy drinks, allergy medicine and high-end liquor.
Retailers in areas with state-level ORC laws said they were pleased with the help received from local law enforcement (84 percent) and state law enforcement (75 percent), but somewhat less so with federal law enforcement (64 percent). ORC often crosses state lines and 71 percent said a federal ORC law is needed.
A number of states have increased the threshold of what constitutes a felony in recent years, allowing criminals to steal more before being subject to the stronger penalties that come with a felony, the study said. Among retailers surveyed, 51 percent had seen an increase in average ORC case values in states where that has happened.
Retailers’ efforts to fight ORC go beyond preventing the theft of merchandise. The survey found that 68 percent of retailers said ORC gangs had shown more aggression or violence in the past year and many anti-ORC resources are directed toward protecting the safety of customers and employees.
The top five cities for ORC in the past year were Los Angeles, New York, Houston, Chicago and Miami.