Organized retail crime (ORC) remains an issue that retailers must increasingly combat. In fact, some 83% of merchants surveyed reported an increase in ORC in the past year, according to the 12th annual ORC study released by the National Retail Federation (NRF).
“Retailers continue to deal with the challenges that come with fighting organized retail crime,” NRF Vice President of Loss Prevention Bob Moraca said. “Every day, criminals are getting more creative in the ways they manipulate the retail supply chain. Combating ORC is a full-time job, and it is a constant battle industry-wide for retailers large and small to stay one step ahead of these savvy criminals.”
The survey of 59 senior retail loss prevention executives found that 100% said their companies had experienced ORC in the past year, up from 97% in 2015 and marking the first time in the survey’s history that all responding companies reported being a victim. In addition, 83% said ORC had grown: The average loss was $700,259 per $1 billion in sales, a significant increase from $453,940 last year.
With the problem growing, 71% of loss prevention executives said they now believe their top management understands the severity and complexity of the crimes, up from 63% last year.
ORC gangs often use storefronts, pawn shops, flea markets and kiosks to fence stolen goods, and 63% of those surveyed said they had recovered merchandise from a physical location. But many criminals turn to the internet for the anonymity it offers — 58% of retailers said they had identified stolen merchandise from an e-fencing operation.
Criminals are also finding ways to manipulate store return policies. According to the survey, 68% of respondents said they had experienced thieves returning stolen merchandise for store credit, which is often resold to secondary-market buyers.
Four new states — New Mexico, Oregon, New York and Vermont — have enacted ORC laws in the past year, bringing the total nationwide to 34. But the survey found that 56% of retailers in states with ORC laws said they had seen no increase in support from law enforcement, the highest in the survey’s history. Retailers continue to support creation of a federal ORC law, which is backed by 79.7% of those surveyed.
“Organized retail crime continues to impact retailers at a larger scale now more than ever before,” said NRF Vice President for Supply Chain and Custom Policy Jonathan Gold, who heads NRF’s lobbying efforts on ORC. “ORC also poses a threat to unwitting consumers who may purchase stolen merchandise that is not stored properly or may have expired. It is critical for our industry to continue pushing for strong federal legislation that would properly define ORC and make it a federal crime. Until there is a federal ORC law to counter this increasing criminal activity and the ability to transport stolen products across state lines, it will be nearly impossible to put a dent in this $30 billion-a-year problem that threatens retailers, the economy and consumers across the country.”
Cargo theft continued to impact retailers, cited by 44% of those surveyed, up from 38% last year. The most common place for cargo theft to occur is when merchandise is en route from the manufacturer to a retailer’s warehouse or from the warehouse to a store, followed by on-site at the warehouse.
Los Angeles continued to be the hardest hit area for ORC in the nation, a position it has held since 2012. Following in order were New York City, Chicago, Miami, Houston, San Francisco/Oakland, Arlington/Dallas/Fort Worth in Texas, Atlanta, Philadelphia and Orange County, Calif.
The survey of 59 executives representing department, big-box, discount, drug, grocery and specialty retailers was conducted July 20 to Aug. 19, 2016.