A decade has passed since NRF first surveyed its community of loss prevention and security executives about the impact organized retail crime has on their company, and with the release of the 2014 survey, it’s evident that the $30 billion a year problem still poses serious threats to retailers of all sizes throughout the country.
According to the National Retail Federation’s 10th annual Organized Retail Crime Survey, which polled 76 senior retail loss prevention executives, eight in 10 retailers report that they have been a victim of ORC in the past year, down slightly from 93.5 percent last year.
Although retail stores take most of the brunt of ORC activity, criminals are now finding ways to manipulate retailers’ online operations. For the first time, NRF asked about the impact organized retail crime has on their online operations: and nearly half say their online operations are affected.
“Few retail crimes reach the level of concern among retailers that organized retail crime does,” said Senior Advisor, Asset Protection Rich Mellor. “For the better part of 15 years, savvy criminals and the enterprises they’re a part of have forced retailers to change how they deal with fraud, including maximizing efforts to partner with and educate law enforcement. These partnerships have become a crucial part of the fight against retail crime gangs, and while those invested in tracking down retail criminal enterprises can point to some success, it’s evident there’s still a big fight ahead of us.”
Retailers investing more in combating organized retail crime
Thanks to increasing support from the C-suite and other senior executives at retail companies many loss prevention executives say they are allocating additional resources to combat ORC. Overall, three-quarters (74.7%) of those surveyed say they are allocating resources. Of that group, one in five (22.7%) are adding staff resources, 34.7 percent are adding technology resources and 17.3 percent are adding budget resources. Additionally, when it comes to personnel, a number of retailers report investing more than 1 million dollars annually on staffing ORC investigation teams.
When asked about their company’s overall ORC case value for the past 12 months, 13.2 percent of retailers estimate the value to be more than $5 million; the average case value for those who have lost money to organized retail crime is $2.8 million.
“Tighter budgets in retail have made it taxing on some retail companies to adequately prepare for and even prevent organized retail crime from happening in their stores, however, more and more retailers are seeing the value of investing in loss prevention to combat this multi-billion dollar problem that continues to evolve in terms of its scope and sophistication,” said Mellor.
State laws helping, but Federal legislation would go a long way in fight against organized retail crime
As of May 2014, 24 states have enacted laws against criminals who are found to be associated with an organized retail crime gang, a significant feat that states and retailers have worked diligently on for more than 10 years.
In an effort to gauge the level of impact these laws have had on retailers’ ability to prosecute criminals associated with ORC and the level of support they receive from law enforcement, NRF asked retailers this year if they felt state organized retail crime laws were having any impact on their efforts to curb ORC activity.
According to the survey, three in 10 of those polled said they have noticed a reduction in ORC activity in states where laws are present. Additionally, of those retailers who have a presence in states with existing ORC laws, more than half noticed a positive impact on their ability to prosecute ORC offenders more effectively; nine in 10 said they have noticed an increase in support from law enforcement agencies when actively investigating organized retail crime cases. Specifically, 51.9 percent said they’ve noticed an increase in support from local/county law enforcement, 26.9 percent said state law enforcement and 9.6 percent said federal law enforcement.
In states without ORC laws and where retailers have a presence, six in 10 say they haven’t noticed any changes in support from law enforcement.
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. According to the survey, one in five respondents say they know of instances where stolen products have been illegally exported outside the United States.
“We commend the retailers and states who have dedicated significant attention and resources to put retail crime laws in place, and we are hopeful that these state laws will lead to even greater success with prosecuting retail crime gangs in the future,” said NRF Vice President, Supply Chain and Customs Policy Jon Gold. “And while state laws are putting a dent in the level of ORC cases each year, we believe Federal ORC legislation is still needed to help support the effective efforts at the state level since the criminals tend to operate across multiple states.”