In 2004, the National Retail Federation released its first report about organized retail crime (ORC). ORC is an organized crime ring of shoplifters who steal items from stores—usually common household things like detergent, baby formula, premium denim, allergy medicine and cell phones—and sell it to unsuspecting customers
Ten years later, organized retail crime gangs are still going strong and threaten retailers of all sizes, to the tune of $30 billion in losses a year. According to the National Retail Federation’s 10th annual Organized Retail Crime Survey, eight out of 10 retailers reported that they have been a victim of ORC in the last year.
So what did we learn from this year’s survey?
Retailers are fighting back
Organized retail crime continues to evolve—thieves are becoming more sophisticated and brazen, so retailers have been investing more resources into fighting this phenomenon.
Seventy-four percent of the executives surveyed said they were investing more resources, including additional staff to help monitor the sales floor and dressing rooms. Even more encouraging, 34.7 percent say they are investing in better technology. This technology includes people counting systems, which is a great defense against ORC. People counting helps you maintain an adequate shopper-to-associate ratio, especially during peak times, sales and the holiday shopping season.
Investing in or upgrading your current technology is a wise move and one that will likely pay off in the future. Additional manpower means another set of eyes on the fitting room, where many of these crimes happen when the rooms are left unattended and on the sales floor, which is great. But a people counting system is always paying attention, it’s never distracted, calling in sick or chatting with a friend.
What happens with the stolen goods?
These gangs take their ill-gotten merchandise and sell it online—a practice known as eFencing– or at a physical location, called a fence. According to this year’s survey, more than 60 percent of respondents have recovered their merchandise from a fence such as a pawn shop, flea market or pop-up store. More than 68 percent have been able to reclaim products from an e-fencing location such as a third-party website, auction site or blog.
Sometimes retailers don’t need to reclaim their merchandise from the secondary market, because one of the thieves brings it back to the store to return it without a receipt for store credit or a gift card. More than 75 percent of respondents have seen stolen products returned to their store for a credit that is then sold on the secondary market.
Buyer beware—retail experts claim that more than one-third of new merchandise listed “new with tags or “new in box” is actually stolen. In addition, thieves will often change expiration dates on stolen medicines or sell items after storing them improperly, putting innocent consumers at risk.
More than 40 percent of people surveyed said they have seen an increase in physical fencing in the last year, but 53.9 percent reported a rise in eFencing.
Does it only happen in stores?
Despite your best efforts to protect your assets, you may still fall victim to ORC—before products even reach your store. More than one-third of people surveyed were a victim of cargo theft this year. Twenty-four percent of those surveyed experienced a cargo theft at the store while 41.4 percent reported a theft while their stock was en route from the manufacturer to the distribution center. Nearly fifty-two percent said they experienced a theft while the stock was traveling from the distribution center to the store.
Where does ORC happen the most?
According to the NRF, if your store is location in one of these cities, you should be on high alert:
- Los Angeles
- New York
- San Francisco/Oakland
- Arlington/Dallas/Fort Worth