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08/18/2021

NRF: COVID-19 boosts retail crime; organized crime threat grows

Dan Berthiaume
Senior Editor, Technology
Dan Berthiaume profile picture

Retailers attribute increases in criminal activity to the ongoing COVID-19 pandemic, according to a new survey from the National Retail Federation (NRF).

According to the 2021 NRF Retail Security Survey, the COVID-19 pandemic has impacted the risk environment for retailers on several fronts. While almost seven in 10 (69%) surveyed retail loss prevention and asset protection professionals said the pandemic has resulted in an increase in overall risk for their organization, respondents specifically mentioned the effect on workplace violence (61%) and organized retail crime (57%).

Mandated store shutdowns and other shopping restrictions that occurred throughout 2020 had an impact on where fraudulent activity occurred. Almost four in 10 (39%) respondents said they saw the greatest increase in fraud in omnichannel sales channels such as buy-online-pick-up-in-store (BOPIS), up from 19% the year before.

In contrast, just 28% of respondents said the greatest increase in fraud came from in-store-only sales, down from 49% the year before. The percent of those who pointed to online-only sales fraud remained flat.

The survey found that while the overall shrink rate remained relatively steady compared with 2019, it remains above the average of the last five years. Respondents reported an average shrink rate of 1.6%, unchanged from the high reported the previous year.

[Read more: Retail shrink at all-time high; rises more than $1 billion]

Apprehensions and prosecutions of dishonest employees are down compared with the previous year and with the five-year average. However, the cost per dishonest employee case is increasing. Half of respondents reported an average dollar loss of at least $1,000, compared with 29% in 2019.

Organized retail crime poses growing problem
Almost two-thirds of respondents (65%) agree that organized retail crime gangs are exhibiting higher levels of aggression and violence than they did the year before. Respondents cited COVID-19, policing and changes to sentencing guidelines, and the growth of online marketplaces as top reasons behind the increase in organized retail crime activity.

Organized retail gangs target a variety of stolen items including designer clothing (reported by 22% of respondents), 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). A large majority of respondents (78%) believe a federal organized retail crime law is needed to effectively combat these issues. 

The top five cities for organized retail crime in the past year in order were Los Angeles, San Francisco/ Oakland, Chicago, New York and Miami. In February 2021, John Pennisi, a former member of the New York-based Lucchese Mafia family, provided Chain Store Age with exclusive insight into how organized crime infiltrates legitimate retail enterprises. Read his first-hand analysis here

More than half (53%) of respondents 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.

“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 VP 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.”

The 2021 Retail Security Survey was conducted online among retail industry loss prevention and asset protection professionals, and sponsored by Appriss Retail. Click here to view the report.