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12/15/2020

NRF: Organized retail crime losses increase 60% in past five years

Dan Berthiaume
Senior Editor, Technology
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Organized retail crime is continuing to rise, both in terms of the cases and related losses.
  
The dollars lost to organized retail crime (ORC) topped the key $700,000 per $1 billion in sales threshold for the fifth year in a row, according to the newly released 16th annual ORC study from the National Retail Federation. Seventy-five percent of surveyed loss prevention executives at a cross-section of large and mid-sized retail companies said ORC activity had increased in the past year, up 10% from 68% in 2019.

The study also found that ORC losses averaged $719,548 per $1 billion in sales during 2020, up 2% from 2019 and up nearly 60% from the $453,940 per $1 billion average reported in 2015.  The top five cities for ORC in the past year in order were Los Angeles, Chicago, Miami, New York and San Francisco.

According to the NRF, many states have raised the threshold of what constitutes a felony, allowing criminals to steal more before being subject to stronger penalties than a misdemeanor. Among retailers surveyed, 64% have seen an increase in average ORC case values in states where that has happened, up 25% from 51% who said the same each of the past two years.

About six in 10 (61%) respondents said their companies are prioritizing ORC more than they were five years ago, with 52% allocating more technology to reducing risks such as ORC-related thefts and 36% increasing loss prevention budgets.

Retailers are looking for more support from law enforcement, with only 64% saying they were satisfied with help received from local police (down 24% from 84% in 2019), 55% with state authorities (down 27% from 75%) and 50% with federal agents (down 27% from 69%). 

In one improvement, cargo theft was reported by only 58% of respondents, down 20% from 73% in 2019. Cargo theft occurred most often en route from distribution centers to stores (45%), at distribution centers (40%), at stores (38%) and en route between stores (35%).

ORC gangs typically steal a mix of valuable high-end products and cheap but easier to fence everyday necessities. Some of the top items included designer clothing (reported by 34% of respondents), laundry detergent, (21%), razors (20%), designer handbags (16%), deodorant (15%) and laptops/tablets, high-end liquor, infant formula, pain killers and allergy medicine (tied at 13% each).

Other interesting findings include:

•    59% of respondents found their store gift cards for sale on websites, up 16% from 51% in 2019.
•    52% of respondents had tightened or were planning to tighten return policies.
•    45% of respondents had changed or were planning to change point-of-sale policies.
•    28% of respondents had changed or were planning to change how they handle employee screening.
•    27% of respondents had changed or were planning to change how they handle trespassing.

“Retailers are seeing more cases and higher losses as organized crime continues to target stores, warehouses and cargo,” said NRF VP for research development and industry analysis Mark Mathews. “Retailers are investing millions to fight these crimes, but they need more help from law enforcement and, most of all, they need tougher laws that recognize the difference between petty shoplifting and professional crime for profit.”

NRF conducted this survey before the full economic impact of the coronavirus pandemic was seen, and says it may not reflect the impact, if any, that the pandemic has had on organized retail crime.