Organized Retail Crime, Not Just a Burden for Retailers

Walk into any big box retailer selling electronics or home goods and there’s a high likelihood that what you’re looking to purchase is locked up behind a case or behind the cash register. It’s a whole new world for retailers as they try to protect their inventory from organized retail crime (ORC), where, everyday goods like shampoos, deodorants, and body washes have joined more high-ticket targets like electronics, power tools, and luxury goods as the latest objects of criminal affection.

According to the latest 2022 study by the National Retail Federation, organized retail crime surged by 26% in 2021 from the year prior. The result was a whopping $94.5 billion in losses.

As a case in point, earlier this year, dramatic surveillance video from a Home Depot in New York captured just how brazen these thefts can be. The footage shows four masked men entering the store, loading up several carts full of merchandise, and then proceeding to walk out the door briskly but calmly with their stolen bounty.

It’s a scene that’s being played out across the country from big box retailers to smaller mom and pop shops. The list of victims is varied and includes a who’s who of big brand names such as Target, Walmart, CVS, Home Depot, Ulta Beauty, and Gap Inc. amongst many others.

While shoplifting has traditionally always been a problem for retailers, ORC is something entirely different. The Department of Homeland Security, the primary federal agency that deals with ORC, defines it as “the association of two or more persons engaged in illegally obtaining items of value from retail establishments, through theft and/or fraud, as part of a criminal enterprise.”

Typically, it involves two components—boosting and fencing. Boosting is the act of illegally acquiring the goods by walking into a store and stealing the items in large quantities. Often this is a coordinated event with potential lookouts, escape routes, and advanced scouting involved. The boosters will then sell their stolen goods to “fencers” who will pay them below market prices and turn the merchandise around and sell it for a profit. The distribution channels in which the fencers sell the items are varied and numerous but include flea markets and storefronts with a vast majority of the goods being moved online.

“With the internet, shopping and obtaining goods has made things easier for consumers with one click,” says Brian Hale, a former senior level official at the Department of Homeland Security, “but it also has democratized criminal activity.”

And while big ticket items have always been the focus of retail theft, much of these organized retail crime heists target common household goods such as food, cleansers, and medicine. Inflation and the rising costs of everyday items have made these goods more attractive and much more profitable since they are in such broad demand.

Couple that with what many consider a lack of harsh penalties, and it’s no wonder why many criminals feel emboldened. “Many organized crime syndicates are looking to diversify their portfolios—not unlike most regular investors—they are looking to fund their organization with high reward, low risk activities,” Hale adds.

In fact, organized retail crime has become so brazen and increasingly aggressive that many companies have instituted a “zero-tolerance policy” when it comes to employees interfering with shoplifters.  

Just last month, athletic retailer, Lululemon made headlines for firing two workers who engaged with robbers who snatched armfuls of clothing from a Peachtree Corners, GA store and ran out. Lululemon claimed that by interacting with the thieves, the employees potentially put themselves and other customers in danger. Many retailers and law enforcement experts emphasize that ORC hurts more than just the profit margins of retailers. When organized retail theft is successful, everyone pays a price.

WHO ELSE IS VICTIMIZED?

1. ‍EMPLOYEES—Even with zero-tolerance policies in place for many companies, employees are still on the frontlines of organized retail theft. As the number of thefts have gone up, so have the incidents of aggressive behavior towards employees. The National Retail Federation reports that 8 out of 10 retailers cite increased incidents of violence or aggression from the year prior.‍
2. CONSUMERS—Increased violence during these thefts are not isolated to just employees. Customers can become victims during these chaotic events as well. Many consumers will also feel the financial sting as retailers offset their losses by increasing prices on goods. According to a Homeland Security Investigation Report, the estimated added cost to consumers from ORC is $500 per family annually. In addition, the convenience factor for shoppers declines as well, as inventory and accessibility to products can be diminished as stores either lock up their goods or have their inventory wiped clean.‍
3. COMMUNITIES—As more stores are hit with increasing losses, retailers are being forced to close stores. The result is less access to goods for communities which can lead to less competition and even higher prices. Also, with each store that shuts their doors, it conversely shuts down employment opportunities in the neighborhood.‍
4. LAW ENFORCEMENT—ORC is a strain on local law enforcement agencies that need to keep up with the sheer number of crime and ORC cases. However, law enforcement at the state and national levels are being challenged too. According to security experts many of the profits orchestrated by ORC can run much deeper and potentially are funding terrorist organizations or drug cartels across state lines or even internationally.
   
   

With so much at stake, retailers are taking more proactive steps to combat ORC. Many companies are re-evaluating and reinforcing their own security systems and protocols in the following areas.  

SURVEILLANCE

Many retailers have made an investment in more sophisticated equipment. This includes adding more advanced surveillance cameras and even utilizing artificial intelligence software to trigger alerts and gather evidence.

ENGAGED CUSTOMER SERVICE

While many companies discourage employees from intervening or confronting theft while it is happening, law enforcement experts say that being proactive with customer service can be a deterrent. Greeting customers when they arrive and offering them assistance can psychologically make a difference in thwarting robberies. Thieves want to fly under the radar and without detection. By acknowledging the would-be thieves, it breaks that sense of anonymity.

SECURITY GUARDS

Some retailers have taken to hiring security guards on-premises. Having personnel onsite that is dedicated to monitoring and recovering theft can be an added deterrent.

LOCKS AND SENSORS

More and more retailers are making the decision to put their products behind locked cabinets or shelves. It can potentially turn off impatient customers and detract from the overall shopping experience, but some say it’s a necessary trade-off.

Other retailers have begun to rely more on hidden sensors attached to merchandise to sound an alarm if not properly removed by store employees. This alarm instantly notifies everyone that a theft is taking place. More importantly, some sensors are now embedded with tracking technology which allows law enforcement to follow and apprehend the thieves.

At the end of the day, Hale says that ORC is not a victimless crime and can’t be seen as just a story of large profitable companies who will end up making less money. “It’s not just a retailer issue or law enforcement issue or a consumer issue. It’s going to take a holistic approach of multiple channels working together and sharing information to combat this. This affects everyone.”