Retail has obviously been among the hardest hit industries by the Covid-19 pandemic given the various lockdown policies enacted across the nation to stem the spread of the virus. Simultaneously, retailers have also had to contend with an evolving security landscape that has seen both changing threat dynamics and the utilization of new tactics by organized retail crime (ORC) gangs.
In fact, according to the results of the 2021 National Retail Security Survey released by the National Retail Federation (NRF) on Wednesday, many retailers are facing increased risk to their organizations due to the pandemic. More than two-thirds (69%) of respondents to the survey, which was sponsored by Appriss Retail and polled loss prevention and asset protection professionals from 55 retailers, reported seeing an increase in fraud, crime, and overall risk to their organization as a result of Covid-19. Specifically, 61.1% noted a slight or significant increase in the threat of workplace violence, which was followed by ORC (56.9%), shoplifting (50%), employee theft (44.4%), and cargo theft (20.8%). Over the last five years, a majority of retailers (82%) said that mall or store violence/shooting incidents had become more of a priority for their organization, which was followed closely by cyber-related incidents (76%) and ORC (64%).
The average rate of shrink for retailers remained flat in 2020 at 1.6%, however; the survey noted that that figure is still above the five-year average of 1.46%. Additionally, just under 16% of retailers reported experiencing a shrink rate of 3% or higher last year, which is down slightly from 2019 (18.2%) but still well above the 9% of organizations that reported having a similar shrink rate in 2016.
Fraudsters have also changed their methods to address the challenges presented by Covid-19. For example, 38.9% of retailers reported seeing their greatest fraud increase in multichannel sales (e.g., buy online, pick up in store) last year, which is a more than 20-point increase versus 2019. By way of comparison, only 27.8 percent of those polled said they saw a greater increase in fraud for in-store only sales in 2020, a more than 20-point drop versus the prior year, while fraud in online only sales remained flat (26.4% in 2020 compared to 26.1% in 2019).
“Retailers have continuously pivoted throughout the pandemic to ensure their employees can work within a safe environment and their customers can shop safely, whether in stores, online or through avenues like buy online, pick up in store,” NRF Vice President for Research Development and Industry Analysis Mark Mathews said. “But new ways of shopping have also opened up new avenues for criminal activity. As retailers adapt to address these new security threats, the need for federal support is even greater to combat these dangerous and harmful activities.”
Internal and External Theft Trends
Employee-related crimes trended downwards last year as the average number of apprehensions (361.6), terminations (527.3), prosecutions (83.0) and civil demands (150.2) all declined compared to the previous year. Despite this, the average dollar loss per dishonest employee case increased in 2020 to 1,551.66, which is the second highest figure recorded over the past six years. What’s more, half of retailers were more likely to report an average dollar loss of $1,000 or higher in 2020, which is more than 30 points higher than the previous year’s survey.
As to be expected with the impact of the lockdowns, shoplifting fell off sharply last year as average apprehensions (507.8), prosecutions (323.3), and civil demands (42.6) all declined compared to 2019. However, the average dollar loss per incident actually increased to an average of $461.86 per incident, compared to $270.06 the year prior. Perhaps more surprisingly, the average dollar loss per robbery incident skyrocketed to $7,594.48 per incident last year, compared to just $828.94 per incident in 2019 and the highest figure seen in the report since 2015 when it was $8,170.17.
ORC Impact
In addition to aforementioned increase in ORC activity reported by those polled, retailers also say these gangs are becoming more aggressive and violent. Approximately 65% of retailers noted the increase in violence and 37% said that ORC gangs were much more aggressive than in the past. In 2019, just 57% said ORC gangs were more aggressive, while 31% said they were much more aggressive.
Among the most frequently targeted merchandise by ORC gangs, according to those surveyed, include designer clothing (22%), laundry detergent (17%), designer handbags, allergy medicine, razors, and high-end liquor (tied at 15% each), pain relievers (13%) and infant formula and teeth whitening strips (tied at 11% each).
The top five cities for ORC in the past year in order were Los Angeles, San Francisco/ Oakland, Chicago, New York, and Miami.
To better protect their customers, employees, and operation, just over half (53%) of retailers said their companies are allocating additional technology resources and another 50% said they are allocating additional capital specific to loss prevention equipment. In a shift from the last few years, there was a significant increase in those reporting they would dedicate additional staffing resources.
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