Retail loss prevention executives are becoming more aggressive in their efforts to fight the $30 billion organized retail crime gang problem. The National Retail Federation (NRF)’s 11th annual Organized Retail Crime (ORC) Survey, a poll of 67 senior retail loss prevention executives, has revealed that nearly all (97%) retailers surveyed have been a victim of ORC in the past year, up from 88.2% who said so last year.
30 states now have ORC laws; Federal legislation still on wish list
Five states enacted their own state legislation around ORC in 2015, bringing the total to 30 states that now have laws against criminals who are found to be associated with an organized retail crime gang.
NRF asked retailers about the support they get from law enforcement in the states where they have a presence and that have ORC laws, and the survey found 15.4% of those surveyed said they have noticed an increase in support from federal law enforcement, up from 9.6% who said so last year; 43.1% said they’ve noticed an increase in support from local/county law enforcement and 24.6% said support from state law enforcement has grown.
Because organized retail crime gangs have the means to transport stolen products through multiple states and even overseas, the need for federal legislation is greater than ever. NRF for the first time asked if they believe a federal ORC law is needed to effectively combat the issue, and 78.8% said yes.
“Organized retail crime continues to be an issue plaguing retailers, and there continues to be a need to pass strong ORC legislation that defines the issues and provides law enforcement with the necessary tools to help retailers combat the issue,” said NRF vice president of supply chain and custom policy Jon Gold. “These vast and often dangerous crimes are not limited to any state or jurisdiction and are why we continue to push for federal legislation.”
As such, more companies are investing in tools and resources to combat the growing problem. Overall, 47% of those surveyed said they are allocating additional resources of some kind, up from 41.3% last year. Specifically, the survey found 31.8% of retailers are allocating additional resources to staffing, up from 22.7% last year, and nearly one-quarter (24.2%) are adding additional budget resources.
“Even with state-of-the-art technology available, trained employees on the ready, extensive partnerships with all levels of law enforcement and additional resources on hand, retailers continue to grapple with the challenges that come with fighting organized retail crime,” said NRF vice president of loss prevention Bob Moraca. “Brazen and often dangerous criminals are finding new ways every day to manipulate the retail supply chain; from the docks where merchandise comes in to criminal flash mobs that involve several individuals running into a store at once, the methods used by crime gangs today run the gamut. These new criminal methods are making it even more crucial for retailers and law enforcement to work together to combat this crime.”
Top management aware of severity of ORC
Given the severity and growth of the issue, retail loss prevention executives were asked about the level of understanding they feel top management has of ORC. The survey found 62.7% believe senior leaders understand the severity and complexity of the issue, up from 60.5% last year.
Financial impact of ORC heavy
Retailers on average report they have lost $453,940 per $1 billion in annual sales over the past year. Additionally, the survey found on average retailers allocate approximately $434,032 to specific organized retail crime personnel in their company.
Retailers making a dent in locating fencing, e-fencing operations
Organized retail crime gangs often use fake locations for their extensive operations, including store fronts, pawn shops, flea markets and kiosks. According to the survey, nearly six in 10 (59.1%) said they have recovered stolen merchandise from a physical fence location in the past 12 months. When criminals aren’t using actual locations to house their stolen goods and run their crime operation, many turn to the internet for the anonymity it offers. Over the past year, 59.7% of retailers surveyed said they have identified or recovered stolen merchandise from an e-fencing operation.
Gift card, store credit schemes affected two-thirds of those polled
Savvy criminals are also finding ways to manipulate well-intentioned store return policies. According to the survey, two-thirds (66.7%) of respondents said they have experienced thieves returning stolen merchandise for store credit, to then sell that merchandise credit to secondary market buyers or sellers.
For the first time NRF asked where retailers have recovered the stolen merchandise credit cards, and most said they have found them on websites (54.5%), at pawn shops (24.2%) and at check cashing stores (13.6%).
Four in 10 retailers victims of cargo theft
Organized retail crime affects retailers in several ways, and one of the biggest problems happens before the product even reaches the store. The survey found 37.9% of those polled have experienced cargo theft in the past year, up from 35.4% last year.
Top Locations for Organized Retail Crime Activity
Organized retail crime gangs wreak havoc throughout the country, but many cities have remained top locations for ORC activity for the past several years, including Los Angeles, Miami and San Francisco. The top 10 locations that retailers said have the most criminal activity are (by rank):
- Los Angeles
- New York
- San Francisco/Oakland
- Orange County, Calif.
- Northern New Jersey