Organized Retail Crime (ORC) continues to be a major problem for the retail sector, with the latest survey from the National Retail Federation finding losses increased in 2020 and perpetrator aggression was also higher than the year prior.

Released in mid-December, the Organized Retail Crime Survey 2020 found Organized Retail Crime cost retailers an average of $719,548 per $1 billion in sales, which was up from $703,320 in 2019. Meanwhile, many retailers have changed or are looking to change their store policies as a result.

Here’s an insight into what the annual ORC survey revealed.

Organized Retail Crime continuing to rise

Last year marked the fifth consecutive year that retailers reported Organized Retail Crime had topped $700,000 per billion in sales.

In 2020, they noted the figure was on average $719,548, which was an increase of over $16 million in 2019 and significantly greater than in 2015 when the figure was just $453,940.

In fact, three in four retailers said ORC had increased in the past year with almost a third noting that increase was significant, and many attributed the rise to changes in legislation that raised the threshold of what constitutes a felony.

Retail response

In response to the increased threat, the report most retailers were turning their attention to theft prevention.

In the past 12 months:

• 33 per cent of retailers surveyed had changed their return policy, while 19 per cent intended to

• 29 per cent had changed their Point of Sale policy, while 16 per cent intended to

• 20 per cent had altered their trespass policy, while 7 per cent intended to

• 14 per cent had changed their employee screening policy, while 14 per cent intended to

Meanwhile, 61 per cent of retailers noted their company was now prioritising Organized Retail Crime more than they did five years ago, 52 per cent said their company was allocating additional technology resources to address risk, and 36 per cent said their company was increasing its annual loss prevention budget.

More aggression

The majority of retailers also reported Organized Retail Crime involved more violence in 2020 than it did in 2019.

Almost a third of respondents (31 per cent) said perpetrators were much more aggressive, 26 per cent said they were somewhat more aggressive, 41 per cent reported the aggression was the same as the year prior and just two per cent said perpetrators were less aggressive.

Top items stolen

When it came to the products commonly targeted by perpetrators of retail crime, the report found designer clothes well and truly topped the list, accounting for 34 per cent of thefts.

Designer clothes were followed by:

• Laundry detergent (21 per cent)
• Designer handbags (16 per cent)
• Deodorant (15 per cent)
• Laptops/tablets (13 per cent)
• High-end liquor (13 per cent)
• Allergy medication (13 per cent)
• Pain relievers (13 per cent)
• Infant formula (13 per cent)
• Denim pants (11 per cent)
• Cigarettes (10 per cent)
• Contraceptives (10 per cent)
• Teeth whitening strips (10 per cent)
• Cell phones (8 per cent)
• Energy drinks (7 per cent)
• High-end vacuums (5 per cent)
• High-end appliances (5 per cent)

Should these items then be located or recovered, they were most likely found on other websites (59 per cent), in pawnshops (20 per cent), in check cashing stores (6 per cent), or at other venues (9 per cent).

About the survey

The NRF Organized Retail Crime Survey 2020 involved 61 anonymous retailers and was conducted between February and April 2020. Survey authors note it took place during the Covid-19 shutdowns and may reflect that uncertainty.

The full NRF report is available here, while retailers can gain further insight into strategies to mitigate ORC here.

Widely used by high-volume retailers including drug stores, hardware retailers, grocery stores and book stores, security labels are a highly affordable and effective way of employing electronic article surveillance.

Just like security tags, labels are affixed to items and guard them against theft by causing an alarm to sound when a product is being taken from the store.

Here are 15 facts you should know about security labels …

Part of EAS

Security labels are another component of the loss prevention strategy known as electronic article surveillance. Like security tags, these labels are affixed to products and guard them against theft. Labels are highly affordable, quickly applied and deactivated rather than removed at the Point of Sale.

Widely used

Mid last year, the National Retail Security Survey found 80.9 per cent of US retailers used EAS, with 46 per cent of retailers utilizing merchandise alarms/electronic security tags, and 34.9 per cent of retailers using acousto magnetic/electronic security tags

Highly effective

Electronic Article Surveillance (EAS) is considered the most successful, effective and scalable anti-shoplifting system available. After implementing an EAS system, retailers can expect an estimated 60-80 per cent decrease in external theft.

How labels work

Security labels house a small receiver within an adhesive sticker that can easily be affixed to products.

This receiver remains in constant communication with an EAS antenna, and when that label comes too close, an alarm sounds, alerting staff that an item is passing through the entryway.

Label uses

Security labels are used extensively by high-volume retailers due to their affordable nature and quick application. Labels are best suited to products which cannot feasibly or cost-effectively be protected by tags.

Two frequencies

EAS and its accompanying security labels are available in two frequencies – acousto magnetic AM and radio frequency (RF).

AM (Acousto Magnetic) systems operate at 58 kHz, which means a signal is sent out in pulses or bursts between 50 and 90 times a second while (RF) Radio Frequency or RF operates in a sweep at 8.2 MHz.

When to use AM labels

AM labels are commonly found in:

• Drug stores
• Cosmetic stores
• Electronics retailers
• Hardware outlets

When to use RF labels

RF labels are commonly found in:

• Grocery stores
• Video stores
• Book stores
• Discount stores

Source tagging

Labels can be applied at the point of manufacture. This offers efficiency for the retailer.

Labels can be printed on

RF labels can be printed on, allowing retailers to maintain security in addition to offering information such as barcodes and branding.

Labels can be printed on

RF labels can be printed on, allowing retailers to maintain security in addition to offering information such as barcodes and branding.

Barcodes incorporated

In a bid to offer greater efficiency at the Point of Sale, security labels are also available with the barcode pre-printed, so product information and security is catered to easily in a single label.

Different shapes and sizes

Security labels are available in a wide range of colours, sizes and shapes, with semi-transparent options also available to ensure they do not obscure vital information on the packaging.

Deactivation

Labels are deactivated by breaking the circuit in the receiver, so they no longer communicate with the antenna. Deactivators can be installed beneath the counter at the Point of Sale or incorporated with the barcode scanner so they deactivate at the same time a product is scanned.

Products can then pass an antenna without sounding an alarm.

More information about security labels is available here. Meanwhile, our complete range of security labels is available here.

Return fraud increased by an astounding 35 per cent in 2019, costing both online and bricks and mortar retailers an estimated $27 billion, according to a recent report by APPRISS Retail.

Their latest study indicates return fraud is just part of a burgeoning return trend, equating to $309 billion in lost sales for the retail sector.

Here’s an insight into the APPRISS findings and how retailers can stem the loss.

An increasing trend

According to APRISS Retail’s Consumer Returns in the Retail Industry 2019 report, 8.1 per cent of all sales were returned last year, equating to $309 billion in lost sales.

Of that, 8.8 per cent were considered fraudulent, representing a loss of $27 billion.

For online retailers that percentage was even higher, with $427 billion in online sales resulting in $41 billion worth of returns.

Within online retail, the highest potential for return fraud occurred during buy online return instore (BORIS) transactions. Of the $20 billion worth of BORIS returns in 2019, $1.6 billion were found to be fraudulent.

Last year APPRISS also recognised this trend, explaining: “The increase in buy-online-return-in-store (BORIS) returns is driving new demands—such as offering ‘frictionless’ returns. The ability to offer more flexible and lenient returns, while still mitigating the risk of fraud and abuse, is ever more critical.”

Meanwhile, a further $17 billion worth of returns was made to non-store locations like warehouses, call centers and manufacturers, and of these $0.4 billion were fraudulent.

In addition, non-receipted returns resulted in the highest risk, with 21.1 per cent of all non-receipted returns considered fraudulent.

A receipt didn’t guarantee authenticity, however. The report further found 7.2 per cent of all receipted returns were also fraudulent and overall the sheer volume meant they came at a higher cost.

“Receipted returns are a hidden risk,” the report stated.

“Applying data from the 2018 survey, receipted return fraud accounts for $19 billion (more than seven per cent of all receipted returns) compared to $7.6 billion for non-receipted. This risk comes from behaviors like shoplifting, double-dipping, employee collusion, tender switching, wardrobing/renting, and more.”

The return challenge

APPRISS Retail goes on to note returns present both risk and reward for retailers.

On one hand returns are part of the new customer experience where the process can be used to convert shoppers into loyal advocates, cross sell or upsell.

“Returns are good,” the report states. “Your best shoppers often make the most returns.”

Meanwhile, they note the point-of-return is a real customer service “moment of truth”, in-store returns are a chance to meet and convert an online buyer, they provide an opportunity to cross-sell or up-sell a known customer, and how they are handled impacts customer perceptions.

On the flipside, however the push to offer a frictionless experience needs to be weighed against a very costly risk.

Strategies to reduce return fraud

Due to the fact shoplifting and return fraud are closely linked, combatting the trend involves limiting the potential for shoplifting in the first place and then implementing clear store policy when it comes to managing returns.

Anti-theft strategies include:

• Protecting merchandise with electronic article surveillance including security labelsand security tags
• Monitoring the store using loss prevention professionals and/or CCTV
• Training staff in customer service and the signs of shoplifting
• Good store layout, including adequate lighting to reduce hidden or out of sight areas
• Monitoring potential theft areas like the fitting room

Meanwhile, retailers also need to be clear in their return policy and vigilant when refunding items for gift cards or cash. Importantly staff should also be educated in these policies, and return numbers and instances should be regularly reviewed.

You can read more about the link between return fraud and shoplifting here.

The key findings

Now in its 15^th year, the NRF Organized Retail Crime survey involved 63 of the nation’s retailers in a bid to help measure the impact of ORC and understand evolving tactics to fight the ongoing challenge.

Released on December 11, 2019, the most recent survey found 97 per cent of retailers had been victimized by ORC in the 12 months prior, with respondents indicating they lost $703,320 per $1 billion in annual sales volume due to ORC activity.

This is the fourth consecutive year the cost of ORC has topped $700k, with over two thirds (68 per cent) of the retailers surveyed also noting they had seen a rise in ORC activity during 2019.

A quarter of those responding further indicated that rise had been “significant”, and 68 per cent felt gangs had become more violent and aggressive in the past year.

Announcing the findings, NRF Vice President of Loss Prevention Bob Moraca noted Organized retail crime continued to present a serious challenge to the retail industry.

“These criminal gangs are sophisticated, but so are retail loss prevention teams. Retailers are committing more resources and constantly evolving their tactics to fight this ongoing challenge,” he said.

Types of ORC

Organized Retail Crime occurs both in-store as shoplifting and in the supply chain.

The report noted popular strategies used by ORC gangs included stealing merchandise in-store and then returning it for a refund of merchandise credit or gift cards. These credits are then sold for cash in a variety of venues.

Loss prevention teams most often recover these stolen credits from websites, but also found them in pawn shops, check cashing stores and other venues.

Meanwhile, the supply chain is also commonly targeted for theft, offering ORC gangs the opportunity to steal a larger quantity of items for a greater return.

Almost three quarters (73 per cent) of retailers indicated they’d been a victim of cargo theft in the past 12 months.

• 59 per cent said the crime occurred en route from the distribution center to the store
• 33 per cent indicated it happened at the distribution center
• 30 per cent indicated it occurred en route from one store to another
• 24 per cent said it happened at the store
• 22 per cent said it happened on route from the manufacturer to the distribution center

Merchandise commonly targeted

Designer clothing topped the list as the merchandise most commonly targeted by ORC gangs, but there was also a mix of other high value and low value items.

The most frequently stolen items were:

• Designer clothes – 25 per cent
• Infant formula – 16 per cent
• Razors – 16 per cent
• Designer handbags – 15 per cent
• Laundry detergent – 15 per cent
• Denim pants – 13 per cent
• Energy drinks – 11 per cent
• Allergy medication – 10 per cent
• High end liquor – 10 per cent
• Teeth whitening strips – 8 per cent
• Pain relievers – 8 per cent
• Cigarettes – 7 per cent
• Deodorant – 7 per cent
• Laptops/tablets – 7 per cent
• Weight loss pill – 7 per cent

The response

Retailers are responding to the ORC rise in a number of ways, with 65 per cent of respondents indicating they prioritized ORC more than they did five years ago.

Over half (56 per cent) said they were allocating additional technology to fight the trend while 44 per cent noted they are increasing their loss prevention budgets.

Their prime strategies also included changing the store policy. Almost a third (30 per cent) have revised their return policy, and a further 8 per cent plan to alter it in the future.

Sixteen per cent have changed their Point of Sale policy, while 21 per cent plan to amend this in the future.

Sixteen per cent have also altered their staff screening procedure, and 11 per cent plan to change this in the future.

A further 16 per cent have revised their trespass policy, with eight per cent plan to amend it in the future.

You can learn more about the top tips for combatting Organized Retail Crime here, while the full copy of the NRF 2019 Organized Retail Crime study is available here.

Know your loss

To devise the most effective anti-theft strategies, retailers need to know exactly where theft and loss is occurring.

For most retailers, the major cause of loss is shoplifting, which means understanding exactly which products are most likely to be targeted and using suitable techniques to mitigate the opportunity for theft.

Ascertaining this generally involves a deep-dive into both analytics and anecdotal evidence. In involves asking: which products most frequently encounter unexplained out of stocks? Which items generally attract shoplifter interest according to research? And which items are usually found on the shoplifters apprehended in your store?

While shoplifting currently ranks as the greatest contributor to loss throughout the sector, employee theft, supplier fraud and administration error also play a role. Combatting each of these also involves examining where and when shrink is happening and altering policies and procedures to address the issue or employing technology such as RFID to assist.

Protect at a product level

Product-based protection such as security tags, security labels, spider wraps and lockable cabinets are considered the most effective ways of protecting individual items against theft.

In fact, electronic article surveillance, involving the use of antenna, and security tags and labels, is one of the most comprehensive and popular anti-theft strategies available to the sector.

Now is the time to reflect on whether you are using this technology to its best effect, whether the tag or label suits the product in question and whether your EAS still meets your retail requirements.

Consider the vulnerable areas of your store

In addition to knowing what products are likely to be stolen, retailers should be looking at which areas are vulnerable within their store and addressing this through better layout, better lighting and available technology.

The shop floor, the fitting room, the Point of Sale, the storeroom and the supply chain are all key areas to look at, with technology available to assist in protecting each.

You can learn more about protecting the five vulnerable areas of a retail outlet here, but technology to consider includes security tags and labels, fitting room EAS protection, POS analytics, CCTV, RFID product tracking, and smart locks.

Screen and train staff

Staff play an integral role in deterring both shoplifting and employee theft. That means every employee should be adequately screened before gaining employment, then trained accordingly in the art of customer service and the signs to watch for when it comes to shoplifting.

Research indicates the simple act of meeting and greeting customers and being attentive to their needs combats customer theft, while staff who feel valued and are adequately compensated for their work are also less likely to steal.

Upgrade where required

As retailers consider which products are likely to be stolen and where in their store loss is occurring, it’s also the opportunity to gauge whether there are better, more effective systems and tools available and whether the current technology they employ needs upgrading.

Recent years have seen the retail anti-theft arena come on in leaps and bounds. In terms of electronic article surveillance, there are now high-strength tags available, magnet-resistant tags, all-in-one tags like the Alligator Tag, and also more intuitive antenna systems.

New innovations like the Apparel Guard make protecting the fitting room easier, improved analytics at the mobile Point of Sale make recognizing shoplifting trends simpler, and technology like RFID means products can be tracked and accounted for from the point of manufacture right through to the retail floor.

For more advice on anti-theft strategies for your store, see here, or shop our extensive range of security tags and security labels directly.