Retail’s $30 billion problem

Organized crime is on the rise — and it’s taking a heavy financial toll on the nation’s retailers.



Retailers on average report they lost $453,940 per $1 billion in annual sales over the past year due to organized crime, according to the National Retail Federation’s 11th annual Organized Retail Crime Survey, which put a $30 billion price tag on the problem.



Additionally, on average retailers allocate approximately $434,032 to specific organized retail crime personnel in their company. The NRF survey are getting more aggressive in their efforts to fight the $30 billion problem



Nearly all (97%) retailers surveyed report that they have been a victim of ORC in the past year, up from 88.2% last year. Los Angeles ranked as the area that retailers said has the most criminal activity, followed by Miami, Chicago, New York and Houston (complete ranking at end of story.)



The survey noted that organized retail crime affects retailers in several ways, and one of the biggest problems happens before the product even reaches the store. Nearly 40% (37.9%) of those polled have experienced cargo theft in the past year, up from 35.4% last year.

In other findings:



•Two-thirds (66.7%) of respondents say they have experienced thieves returning stolen merchandise for store credit, to then sell that merchandise credit to secondary market buyers or sellers.



• Nearly six in 10 (59.1%) of retailers have recovered stolen merchandise from a physical fence location in the past 12 months.



• When criminals aren’t using actual locations to house their stolen goods and run their crime operation, many turn to the internet for the anonymity it offers. Over the past year, 59.7% of retailers surveyed say they have identified or recovered stolen merchandise from an e-fencing operation.



• More companies are investing in tools and resources to combat the growing problem. Overall, 47% of those surveyed say they are allocating additional resources of some kind, up from 41.3% last year.



Specifically, the survey found 31.8% of retailers are allocating additional resources to staffing, up from 22.7% year, and nearly one-quarter (24.2%) are adding additional budget resources.



The top 10 locations that retailers say have the most criminal activity are (by rank):



• Los Angeles

• Miami

• Chicago

• New York

• Houston

• Arlington/Dallas/Ft.Worth

• San Francisco/Oakland

• Baltimore

• Orange County, Calif.



The NRF Organized Retail Crime survey was conducted July 13 – August 6, 2015. Senior loss prevention executives at 67 retail companies completed the survey with the purpose of identifying the depth of organized retail crime throughout the entire industry. This year’s survey features responses from executives representing department/big-box stores, discount, drug, grocery, restaurant and specialty retailers.