In May 2023, the findings of a survey conducted by the National Retail Federation (NFR), a century-old retail trade organization, were published. The survey was primarily comprised of senior loss prevention and security executives throughout the industry. It found that shoplifting in this country has reached new highs, and "shrink," as it is called, now amounts to nearly $95 billion annually. The survey also reported more than a 26% increase in organized retail crime (ORC) in the U.S.
As most retailers know, ORC is a term used to describe the theft of merchandise from stores by organized groups or individuals. In other words, it's a business. And for the individuals involved, it's a career. In fact, some of these "organizations" involve one or more family members, potentially turning ORC into a mom-and-pop operation.
Over the years, ORC has become a growing problem. In 2015, it was estimated by the NFR that it cost retailers about $50 billion. By 2021, it had reached $76 billion. This means that retailers' loss to ORC has doubled in eight years. When others – referring to bad actors - see an industry such as ORC growing, more want to jump in. Call it a get-rich scheme. Could this mean retailers' loss to ORC might double again in another eight years, approaching $200 billion?
So, what are retailers doing now to address this unfortunate phenomenon?
Many are doing the following:
● Reducing the store’s points of ingress and egress.
● Installing delayed opening doors. These doors will open in an emergency, but only after a short delay, potentially allowing for the bad actor to be caught.
● Requiring shoppers to present receipts upon leaving the stores. This catches both intentional and honest mistakes by customers and checkout clerks.
● Placing frequently shoplifted items, such as razor blades, under lock and key, requiring store personnel to open the box.
● Adding tags and cables to merchandise to help make it difficult to take them off the shelf.
● Adding surveillance technologies.
This list of tactics tells us that retailers are trying to address the challenge. They are taking steps to protect their stores, customers, and merchandise. And new technologies are on the way, which should also help them address this growing problem.
However, retailers now face a hurdle many did not expect. States and district attorneys are reassessing how laws against shoplifting are enforced and how offenders are prosecuted; recent trends indicate that enforcement only occurs when thefts surpass a certain threshold value. This means a mom-and-pop ORC can walk away with goods on a regular basis valued at less than this threshold, expecting little if any prosecution. This turns many retail outlets into "freebie outlets."California: Sun, Fun, and a (Shoplifters’) Paradise
State, county, and city district attorneys around the country, especially in larger cities, are facing a significant increase in crime rates. While crime is decreasing in many parts of the country, this is not true in large metropolitan areas. According to a May 2023 report in SafeHome.org, we have witnessed a "recent surge in urban crime centered in major American cities. The nation has nearly 40 cities with populations exceeding one-half million people, and collectively their crime rates last year jumped almost 10X the national urban average."
With budgets and resources tight, district attorneys around the country sometimes must pick and choose which crimes to go after. In Cook County, IL, which includes Chicago, this became commonplace. For instance, if the offense was under a certain amount, or the DA opposed prosecution for whatever reason, the case never went to trial. (See Sidebar at the bottom of the page: Backlash)
Some states have even legalized this procedure. For instance, in Texas, one must steal more than $1500 to be charged with a felony. In South Carolina, the threshold is $2000. And while it is lower in California, $950 due to the passage of Prop 47, the proposition went one step further, creating an added prosecution safety net for those in the ORC business: the state's three-strikes law was eliminated. With three strikes and you're out, criminals could face 25 years to life in prison for committing a crime. (See Sidebar at the bottom of the page: What is Proposition 47?)
However, some argue that the law, which requires offenders who have committed three felonies to receive much longer prison sentences, was not working. It was not discouraging people from committing crimes, they say, and this includes shoplifters, so why lock up people for life?
However, in this case, those advocates may have been wrong. On April 2023, an article in the New York Post, quoted Rachel Michelin, president of the California Retailers Association. She stated that her members are complaining of an upswing of repeat shoplifting offenders since Prop 47 passed. "That's where there is a flaw in Prop 47 because Prop 47 was promised to say, 'Oh, we're gonna have safe schools and communities,'" she said. "Well, we don't."
"When they made the changes, particularly to the retail theft… they opened this huge loophole where there's zero consequence for the behavior because I'm [referring to shoplifters] not going to be held accountable for going in and stealing."
What Can Retailers Do Now?
Collaborating with retailers, large and small, for years now, my takeaway is that they are in one of the most difficult situations in decades when it comes to retail crime. However, they do have options that can prove successful. What must be done now is a combination of assessments, one for physical security and the other for potential risks.
A physical security assessment evaluates security countermeasures now in place in the store to protect store staff, customers, and merchandise. It involves such things as:
- Analyzing ingress and egress points in and around the store along with such things as parking lots, sidewalks, and other exterior surroundings.
- Inspect all current security measures currently in place.
- Interview security personnel to ensure they are aware of procedures to prevent shoplifting and manage such incidents safely.
The risk assessment goes much further. The goal of a risk assessment is to uncover what could happen, how to prevent it, and should it occur, safely mitigate the situation. It includes such things as the following:
Site Information -- Is the store located in a heavy crime area? If it is, it could be more vulnerable to break-ins, burglaries, vandalism, and shoplifting.
Site Location -- How easy or difficult is it for police to reach the store in an emergency?
Site Appearance -- The exteriors of stores that are not well-maintained tend to attract more crime. This is one reason many police departments recommend that building owners/managers remove graffiti as soon as it is discovered.
Management Policies -- The sad truth is that store owners and managers should now assume anything they hear of happening in a store could happen to theirs. Do they have adequate policies to protect themselves, their staff, and their customers?
Outdoor Security -- Are there hidden areas around the facility that might invite crime? Is the property adequately lit at night? Are high-definition "smart" cameras installed as well as "zero light" camera systems? Smart cameras are triggered by movement. Zero-light cameras can take clear images day or night.
Access Control -- How easy is it for staffers as well as vendors to enter the building, day, or night? Larger retailers in major cities often have several access control measures in place. All retailers, no matter their size, must follow suit.
Cybersecurity. Cyber security is always an issue and even more so today. Retailers must continually work with IT professionals, ensuring their cyber security programs are up to date.
With both assessments, a final report will be presented to retailers and key stakeholders. The next step is to work with these risk and security professionals to start implementing the findings. This is something retailers should do now – and repeat it on a regular basis.
