Record number of retailers report being victimized by ORC

WASHINGTON—A new survey reveals that 96 percent of retailers were victims of organized retail crime within the past year, the highest percentage ever reported in the survey's eight years.

Senior loss-prevention managers at 125 retailers participated in the National Retail Federation’s eighth annual Organized Retail Crime Survey, which was released today. The 96 percent of respondents who said their companies were victimized by organized retail crime in the past year represents an increase from 94.5 percent in 2011 and 89.5 percent in 2010. "It's an increasing problem," Rich Mellor, the NRF's vice president of loss prevention, told Security Director News. "Unfortunately, the bad guys ... are finding more ways to steal this merchandise."

Mellor said the increasing use of technology and the ease in which criminals can sell stolen merchandise on auction websites contribute to the problem. "They're making more money on this criminal enterprise than ever before," he said.

While professional shoplifters have benefited from technology to boost and fence stolen merchandise, Mellor said retailers are also leveraging advanced technology to combat the problem. "I view it almost like the flu coming back as a different strain every year. … The loss prevention and law enforcement folks have to deal with a new remedy every year," he said.

Another factor behind the increasing numbers could be that retailers are becoming better at tracking and analyzing organized retail crime with the use of new technology, Mellor said.

What really surprised Mellor is the increasing number of retailers who have been victims of cargo theft. According to the most recent survey, 52.1 percent of retailers were victims of cargo theft during the past year, up from 49.6 percent in 2011. The majority of respondents (68.1 percent) said cargo theft occurred en route from the distribution center to the store, up from the 57.4 percent who said so in 2011. Also, 43.5 percent said they were victims of cargo theft during the transportation of merchandise from the manufacturer to the distribution center, and 15.9 percent experienced shrink at the distribution center, according to the survey.

Though the amount of loss from cargo theft is not covered in this survey, Mellor said anecdotally it's clear it's increasing. "The big surprise is just how large the quantities of merchandise are that are being stolen," he said. "It used to be boxes of merchandise were stolen. Now it's pallets of merchandise that are stolen, and sometimes even a truckload."

Several common trends were identified by survey respondents, such as returned stolen merchandise and gift card fraud, but the survey also contained specific references to some new trends: digital receipt fraud, increased laundry detergent thefts, increased smash-and-grab incidents, and collusion with street gangs.

Survey respondents also were asked in what metro areas was ORC most prevalent. The unranked list of the top 10 metro areas affected by ORC includes six cities that have appeared on the list for three consecutive years—Chicago, Dallas, Houston, Los Angeles, Miami and New York—along with three new areas: Baltimore; Orange County, Calif.; and San Francisco.

When it comes to violence related to ORC, survey respondents reported that 15 percent of apprehensions led to violence, up from 13 percent in 2011. "The law enforcement community and the retailers are getting better at catching these people or attempting to catch them," Mellor said. "When that occurs these people are more brazen, they do not want to get caught, this is too lucrative of a business and they become violent to try to get away."

There are some bright points in the survey. Almost 53 percent of retailers reported allocating additional resources to arrest the problem and 54.4 percent reported an increasing awareness of the problem among senior management. Also, 40 percent believe law enforcement understands the severity and complexity of the issue, up from only 32.3 percent in 2011.

Given the scope of organized retail crime and the fact that professional shoplifters often cross state lines to commit their crimes, the NRF believes federal legislation is needed to define and penalize the crime. The NRF had a bill approved in the House a few years ago, but it stalled in the Senate. "At the moment, the NRF is trying to craft another bill that would have more specificity in it and may be easier to get it through the House, as well as the Senate," Mellor told SDN.