Organized retail crime (ORC) continues to significantly impact the bottom line of stores across the country, according to the findings of the 16th annual ORC study released by the National Retail Federation (NRF) on Tuesday.
The study, which polled loss prevention executives at 61 companies, found that 75% of retailers had experienced an increase in ORC activity in the past year, up from 68% last year. Additionally, losses from ORC averaged nearly $720,000 per $1 billion in sales, a 2% increase from last year.
This is the fifth year in a row that the figure has topped the $700,000 mark in the study. In 2015, ORC losses averaged about $454,000 per $1 billion in sales.
This nearly 60% percent increase in losses comes as many states have raised the threshold of what constitutes a felony, allowing criminals to steal before facing stronger penalties than those posed by a misdemeanor conviction. Among those surveyed, 64% said they have seen an increase in average ORC case values in states where this has happened, which is up from 51% who said the same each of the past two years.
“Retailers are seeing more cases and higher losses as organized crime continues to target stores, warehouses and cargo,” NRF Vice President for Research Development and Industry Analysis Mark Mathews said. “Retailers are investing millions to fight these crimes, but they need more help from law enforcement and, most of all, they need tougher laws that recognize the difference between petty shoplifting and professional crime for profit.”
Aside from changes in felony thresholds, loss prevention professionals cited relaxed law enforcement guidelines, changes in shoplifting laws and decreased penalties for shoplifting among the causes for increased ORC activity.
Stolen merchandise is sometimes returned for store credit, usually in the form of gift cards. Those cards can then be sold for cash, and 59% of retailers had found them for sale on websites, up from 51% last year. To help fight return fraud, 52% of retailers had tightened or were planning to tighten return policies.
Among other steps taken to fight ORC, 45% had changed or were planning to change point-of-sale policies, while 28% were doing the same with employee screening and 27% with the way they handle trespassing.
In one improvement, cargo theft was reported by only 58% of those surveyed, down significantly from 73% last year. Cargo theft occurred most often en route from distribution centers to stores (45%), at distribution centers (40%), at stores (38%) and en route between stores (35%).
ORC gangs typically steal a mix of valuable high-end products and cheap but easier to fence everyday necessities. Some of the top items included designer clothing (reported by 34%), laundry detergent, (21%), razors (20%), designer handbags (16%), deodorant (15%) and laptops/tablets, high-end liquor, infant formula, pain killers and allergy medicine (tied at 13% each).
The top five cities for ORC in the past year in order were Los Angeles, Chicago, Miami, New York and San Francisco.
The NRF noted that the survey was conducted before the full economic impact of the coronavirus pandemic was seen, and may not reflect the impact, if any, that the pandemic has had on ORC.
For more information or to download a full copy of the study, click here.
