Trends & ForecastsDecember 16, 2019

Mob Loss: Organized Retail Crime on the Rise

The epidemic of the thief has hit an all-time high in the retail business

By BRANDON SAMS | Contributing Writer‍

[RETHINK Retail] — The epidemic of the thief has hit an all-time high in the retail business. From Sephora busts to Walmart crawlers, no retailer is safe when anyone can sell in the digital space.

Over the past year, several videos have gone viral from patrons and security camera footage depicting organized retail crime in action. These videos usually show groups of two or more people aimlessly invading a storefront, usually a multinational conglomerate like Sears or Sephora, and indiscriminately picking items from the shelves, stuffing them in large totes and running out while the alarm bells toll. Knowing retail employees are advised to not engage with shoplifters but instead wait for law enforcement to arrive, these coordinated thieves are well aware of their heightened chance for success.

According to an annual report published by the National Retail Federation, over 11 years, the impact of organized retail crime had grown from affecting 79 percent of retailers to over 90 percent. The average monetary deficit reached an apex of approximately $778,000 loss for every $1 billion in revenue earned. In total, the retail industry loses about $30 billion from organized retail crime.

The report included interviews with various retail managers and executives who found organized retail crime as an increasingly aggressive, bold act. As shown in the videos embedded above, these criminals are shameless. It’s not just the kleptomaniac patrons that may cause trouble for retail managers: In a lot of cases, employees aid in these sticky finger operations. Another axis of organized crime is the perpetrator on the inside: the double agent. From five-finger discounts and the misuse of discount codes to outright theft of inventory, there are actions to address with employees in these operations as well. It can even be as simple as looking the other way during thefts or a lack of adequate verification of packing info.

A survey conducted by the National Retail Federation found that inventory shrinkage costs the industry upwards of $47 billion per year. Over 4 in 10 retailers reported inventory shrinkage has exploded in recent years. This shrinkage is based not only on patron larceny but also on internal theft from employees or vendors.

Of course, it has inevitably crept into the digital spaces through online marketplaces such as Facebook, eBay and Amazon, which allow for the sale of stolen goods to be conducted on a much grander scale. Theft schemes aren’t only relegated to the physical shop. Gone are the days of pawnshops and flea markets with traceable sellers.

Organized retail crime is at an all-time high because the potential for profit has increased drastically compared to the days before the digital market square arose in all its nuance and complicated glory. Items that previously proved to be worthless – toiletries and food items – now have a whole new clientele thanks to the internet where people are sometimes tricked into buying stolen goods through pop-up shops or other seller-based websites thinking they’ve struck gold with an impossible deal or discount.

This emboldens opportunistic theft. Operations are incredibly sophisticated, and the perpetrators are more daring than ever. A multi-disciplinary approach is necessary with loss prevention serving as an important function of the greater business apparatus. Remaining vigilant and hyper-focused on mitigating losses should incorporate a standardized process that requires navigating not only the business-side response but also the role of law enforcement agents and professionals in the space of loss prevention.

So, before the alarms sound and people casually collect items before leaving the establishment clad in hoodies and other attire to obscure their face and other forms of identification be aware of the scourge of organized retail crime and it’s omnipresent rise looming over the retail industry as we know it. But also, be aware of the workers and vendors who may be in on a heist. Check your inventory, check your vendors, and check packing information. Make sure everything is accounted for or it could cost your business thousands.