Organized Retail Crime - Security Tags

No slowdown in Organized Retail Crime

Kyle Hall — Wed, 13 Jan 2021 23:16:24 +0000

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.

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Organized Retail Crime continues to rise

Kyle Hall — Wed, 08 Jan 2020 23:07:46 +0000

An astounding 97 per cent of retailers say they were impacted by Organized Retail Crime (ORC) in 2019, losing over $700k per $1 billion in sales.

These are the findings of the National Retail Federation (NRF) in their 2019 Organized Retail Crime Survey, which also indicated the tactics used by ORC gangs are becoming more violent.

Here’s an insight into Organized Retail Crime in the past 12 months and how retailers can address the ongoing problem.

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.

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Top takeaways from NRF Protect

Kyle Hall — Mon, 17 Jun 2019 06:23:51 +0000

The National Retail Federation’s annual loss protection conference has concluded in California, with over 2500 visitors and retail representatives attending NRF Protect from June 11-13.

Considered one of the biggest events on the annual loss prevention calendar, this year’s conference looked at the most recent loss statistics along with a focus on Organized Retail Crime and an increased emphasis on cybersecurity.

Here are some of the key takeaways from the 2019 event…

Latest retail theft figures

Professor Robert Hanson of Northern Michigan University, and Asset Protection & Safety VP Dan Faketty of Southeastern Grocers took a walk through the latest National Retail Security Survey findings, noting the 28th annual survey revealed retail loss in the US now totalled 1.38 per cent of sales or $50.6 billion.

Within those figures there were “new threats and emerging areas of concern”, the pair reflected.

These included:

Identifying the cause of shrink

Combatting internal theft through mobile POS fraud

Combatting external theft through mobile POS fraud

Understanding the technology criminals use

In terms of employee theft, they explained the average dollar loss per incident had remained stead for the past four years, equating to $1264 in 2018.

Meanwhile, each shoplifting incident resulted in an average loss of $546.67.

When it came to robberies, the average loss per incident was $2885.15, which was a 65 per cent decline on 2015.

You can read more about the full findings of this report here.

Organized retail crime

In a panel discussion featuring security specialists and law enforcement professionals, attention turned to Organized Retail Crime (ORC).

They noted three in four retailers had seen a rise in ORC in the past year, with more than one third of those who had seen an increase noting it was significant. Almost half of retailers experiencing ORC also said they believed gangs were exhibiting more aggression.

The cybersecurity issue

Cybersecurity expert and CEO of LMG Security and BrightWise Training, Sherri Davidoff, explained the changing landscape of cyber threats and the risk it posed to retailers.

She noted a lack of security allowed customers and vendors to fall victim to hacking, resulting in retailers losing both money and their reputation.

In a bid to thwart hacking, retailers should ensure they have:

Phishing protection, including user training and technical controls

Strong authentication, including two-factor authentication and long passwords

Patch management

Proactive threat hunting

Outreach and education

Insider risk

Gap Inc Director Nathan Niese, and Petco Loss Prevention Manager Tina Ayo looked at insider risk in the digital age, noting there were three potential types of threats when it came to cybersecurity and the enemy within:

The negligent employee

The exploited employee

The malicious insider

Privilege, misuse and error by insiders account for 30 per cent of breaches, they explained. Combatting the problem came down to creating both a “physical firewall” and technology to protect against threat.

In terms of a physical firewall, retailers should look at:

Risk and compliance

Leveraged resources

Monitoring, incident response and reporting

Training education and awareness

Package theft and pickup fraud

In a rising era of internet shopping and home delivery, attention also turned to the growing incidents of package theft.

Bust Buy representatives Lisa Brock and Jim Behrend explained 30 per cent of Americans had experienced package theft, with the average value per item equaling $140.

They reflected the issue presented a unique challenge but ways of reducing the problem included documentation, and new technology.

Meanwhile, combating pickup fraud involved identity authentication at the time of sale and pickup, with new technologies allowing new identification methods.

In terms of shipping from store, the biggest challenge was issues like label fraud and theft, they reflected. And here, auditing, restricted access to the warehouse, strategic store set-up and reporting could all play a role in reducing loss.

Identify gaps in your processes and policies, they urged retailers. Also align all channels, including eCommerce, customer care, retail, supply channel, legal and real estate, while focusing on reporting.

The self-checkout

Technology offers the potential to save in labor costs, and one such innovation is the self-checkout, loss prevention researched Mike Giblin, and loss prevention professional Laura Lasko noted in their presentation.

First introduced in 1992, the self-checkout is now present in 59 per cent of stores. But it also poses a risk for retail shrink, accounting for approximately 21.7 per cent of loss.

Addressing the problem involved using attentive self-checkout attendants to oversee the area, they stated. These attendants should be trained in all areas of self-checkout misuse including failing to scan items, improper weighing, and incomplete payments.

“Enough self-checkout attendants should be scheduled to help monitor the area during busier hours. Attendants should avoid standing at the podium and regularly interact with customers,” they said.

Meanwhile, reporting also played a critical role in self-checkout loss.

NRF Protect is held annually and features a focus on cyber and digital crime, risk management, talent and culture, theft and fraud, and workplace violence.

Photo Source: NRF Protect 2019

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Retail shrink cost US retailers $50.6 billion in 2018

Kyle Hall — Tue, 11 Jun 2019 00:53:13 +0000

Retail shrink cost US retailers $50.6 billion last year, according to the National Retail Federation (NRF) which released its latest security survey last week.

While the figure represents a value rise on the year prior, the NRF notes the shrink rate is actually holding steady at 1.38 per cent and the increase in the monetary figure is also representative of an increase in sales.

Meanwhile, they note the retail risk landscape is rapidly shifting, with new threats requiring new strategies to combat loss.

Here’s an insight into what their latest security survey found…

The report

Compiled each year, the National Retail Security Survey gathers input from loss prevention professionals based on their experiences in the year prior, as well as their current situations and future plans.

This year’s results indicate a number of new trends are emerging, with an increased focus on organized retail crime, internal theft, cyber crime, and return fraud. Meanwhile, the shrink rate remains “stubbornly steady”.

The shrink rate

The total shrink rate remains at 1.38 per cent, and the NRF explains it has lingered around this point since 2014.

“While the lack of movement in shrink rate might sound like a positive, as LP professionals are well aware, it can mean billions of dollars in losses for the industry overall,” they note.

“Perhaps even more concerning is the spike in the highest levels of shrink: 36.3 per cent of retailers reported shrink rates of 1.5 per cent or higher, up from just under a third (32.7 per cent) in FY 2017. The amount with the highest shrink rate – 3 per cent or higher – has climbed steadily from 6.6 per cent in FY 2014 to 10.9 per cent in FY 2018.”

Shoplifting apprehensions down

In positive news, shoplifting apprehensions have decreased significantly. In 2018 apprehensions, prosecutions and civil demands equaled an average of 1248.9 in total, compared to 2377 in 2017, 2190 in 2016 and an astounding 7458.7 in 2015.

However, the average dollar loss per incident remains high. In 2018, the average cost per incident was $546.67, compared to $543.28 in 2017, $798.48 in 2016, $376.80 in 2015, and $317.84 in 2014.

Emerging threats

Cybercrime, organized retail crime and return fraud are among the emerging threats retailers are now looking to target.

The report noted: “Compared with the last five years, LP leaders say they see a greater urgency in combating various methods of crime. Organized retail crime and cybercrimes in particular are more of an issue. For retailers with fewer than 500 stores, organized retail crime has become much more of a priority. For retailers with more than 500 stores, e-commerce crime has become much more of a priority.”

In terms of statistics:

Organized retail crime – 28.6 per cent of all retailers said organized retail crime was becoming much more of a priority, while 36.5 per cent noted it was becoming somewhat more of a priority

Cyber crime – 26.5 per cent of all retailers stated cyber crime was becoming much more of a priority, while 42.9 per cent noted it was becoming somewhat more of a priority

Internal theft – 25.4 per cent of all retailers stated internal crime was becoming much more of a priority, while 34.9 per cent noted it was becoming somewhat more of a priority

E-commerce crime – 17.5 per cent of all retailers stated e-commerce crime was becoming much more of a priority, while 47.6 per cent noted it was becoming somewhat more of a priority

Return fraud – 12.7 per cent of all retailers stated return fraud was becoming much more of a priority, while 38.1 per cent noted it was becoming somewhat more of a priority

Strategies to combat loss

More and more retailers are investing in technology to combat loss. This year some of the biggest increases in adoption included security tags, database screening systems, POS analytics and digital video recording.

The report found:

46 per cent of retailers now use merchandise alarms/electronic security tags – an increase of 25.4 per cent since 2018.

9 per cent of retailers now use acousto magnetic/electronic security tags – an increase of 12.7 per cent on 2018

6 per cent of retailers now use check approval database screening systems – a rise of 11.1 per cent on 2018

1 per cent of retailers now use digital video recorders – a rise of 9.5 per cent since 2018

In addition, more than six in 10 retailers indicated they had implemented point of sale analytics, either fully or in pilot phase.

“Another 25.4 per cent say they will implement this technology in 2019 or 2020,” the report noted.

“However, other LP tech tools are much further behind. Fingerprint ID at the point of sale and facial recognition – while small – are gaining in adoption over last year, when roughly 90 per cent of respondents said they had no plans to implement either technology.”

Technology that is decreasing in use included:

Remote IP CCTV monitoring – used by 57.1 per cent of retailers but down 19.1 per cent on 2018

Theft deterrent devices like spiderwraps and keepers – used by 23.8 per cent of retailers but down 17.5 per cent on 2018

IP analytics – used by 22.2 per cent of retailers but down 9.5 per cent on 2018

The final word

The NRF security survey paints a picture of a complex loss prevention landscape. Many retailers are successfully harnessing technology to counter traditional problems like shoplifting. But even as they do new threats are emerging.

As always loss prevention remains a playing field where retailers are constantly kept on their toes, seeking new and innovative ways to combat loss.

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Organized Retail Crime on the NRF Protect agenda

Kyle Hall — Thu, 23 May 2019 04:19:28 +0000

With Organized Retail Crime (ORC) at an all-time high, the National Retail Federation is set to discuss the issue in depth at their NRF Protect conference, in June this year.

Hosted in Anaheim, California, the conference will shine a spotlight on all areas of retail loss prevention and asset protection, with a focus on cyber and digital crime, risk management, talent and culture, theft and fraud, and workplace violence.

The event is one of the biggest on the annual US loss prevention calendar, featuring 90 speakers on the agenda, with over 2500 visitors attending the three-day event.

And with ORC now costing retailers $777,877 per $1 billion in sales , this year’s event will also see a panel of experts discussing the impacts and best strategies to prevent Organized Retail Crime.

The ORC threat

In November last year the National Retail Federation released their annual report on Organized Retail Crime. They noted nearly three in four US retailers had seen an increase in ORC in the past year, and for over a third of survey participants that increase was “significant”.

Defined by the NRF as “the large-scale theft of retail merchandise with the intent to resell the merchandise for financial gain”, ORC contributes to the growing impact of shoplifting, which US retailers note is their top source of inventory shrink. In total shoplifting accounts for 35.7 per cent of retail loss.

The survey found ORC losses over the past year had risen seven per cent on 2017 to equal $777,877 per $1 billion in sales.

ORC in the news

In the past month alone the implications of ORC have been hitting the headlines. On May 8, the Orlando Sentinel reported six people were arrested in Polk County, suspected of stealing and selling an estimated $2 million worth of retail merchandise from across the state.

“The six are suspected to be responsible for 150 reported thefts in the state from Burlington, CVS, JC Penny, Publix, Walgreens and Winn-Dixie, acting between four and five nights a week and hitting eight to 10 businesses each day, according to the Sheriff’s Office.

The suspects were arrested after the PCSO Organized Retail Crime Unit conducted a large-scale undercover investigation with partners.

Meanwhile on May 17, the Manteca Bulletin reported three Stockton residents were arrested and charged with the felonies of conspiracy and grand theft after a tip-off from a suspicious retailer.

And that’s just the tip of the ORC iceberg, with the crime affecting retailers across the country.

An expert panel

It is incidents like these which an expert panel will discuss at the NRF Protect in a session on June 12 entitled “ORC: Aided and abetted with a little help from my friends”.

The session will feature law enforcement officers along with ORC specialists from the retail sphere.

“The sophistication and brazenness of organized retail thieves pose new challenges to retail investigators trying to track them down,” the NRF Protect agenda notes.

“With ORC rings working multi-state and multi-regional territories, it is imperative for retailers to enlist all the assistance they can, both from other retailers and from local law enforcement agencies.”

NRF Protect runs from June 11 to 13 and will be held at the Anaheim Convention Center.

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