By Dr. Cynthia Silvia, DHA
Faculty Member, School of Business
As the holiday shopping season begins, many retailers across the country have noticed an increase in blatant shoplifting schemes by organized crime networks. These thefts create a traumatic experience for team members working in brick-and-mortar retail stores.
According to Illinois Attorney General Kwame Raoul, organized shoplifting has dramatically increased over the past two years. Home Depot experienced an 86% increase in organized crime investigations, CVS experienced a 30% increase in theft and Lowe’s reported $1.3 million in losses due to shoplifting crimes committed in 2020.
The Effects of Shoplifting on Retailers
Organized retail crime continues to impact retailers across the country this holiday season. According to a 2020 National Retail Federation (NRF) survey, organized retail crime (ORC) costs retailers an average of $719,548 for every $1 billion in sales.
These organized retail crime gangs are becoming more aggressive and violent than in past years. Retail organized crime thefts have received the bulk of public attention due to the string of videos posted on social media.
A recent incident in San Francisco’s Neiman Marcus resulted in the loss of many handbags at the hands of thieves wearing masks and hoodies. This incident is only one of many recently captured on video as thieves ran to waiting vehicles, then fled the scene.
These organized retail crime rings frequently return the stolen merchandise for merchandise credit or gift cards. The merchandise credits or gift cards are then resold to buyers and sellers on the secondary market for cash.
Last June, Seattle police made 50 arrests linked to organized retail crime rings at nine large retailers and grocery stores in the area. Many retailers have resorted to placing high-end items and highly desired items in locked showcases to prevent theft. Six Target stores in San Francisco began closing four hours earlier, due to a significant increase in organized crime thefts at those locations.
California’s Attorney General recently broke up a major organized crime ring that resulted in $8 million in merchandise stolen from Target, CVS, and Walgreens. The products were sold in other countries, and the money was laundered back into the United States.
Prevention of Crowd-Based Shoplifting
The National Retail Federation’s 2021 National Retail Security Survey reported that organized retail crime rose by 57% in 2021. Organized retail crime has become an increasing concern for many retailers since the pandemic began. Store closings and changes in the way consumers shop changed the way criminals operated.
The most significant increase in theft occurred in multichannel retailing, according to the 2020 survey by the National Retail Federation. Criminals have turned omnichannel retailing to their advantage to commit their crimes.
Buying online and picking up in-store has made it possible for thieves to create a “card not present” transaction, then pick up the merchandise without even going into the store. Organized retail crime teams now track data and incidents. They act as quasi-law enforcement officials working with law enforcement teams to apprehend and prosecute these criminals.
Technological advances and security equipment are helping retailers fight back against organized crime. New technology is using facial recognition features to identify criminals.
It would be wise for retailers to invest in digital closed-circuit TV systems with multiple cameras and views to fight retail crime. Having the right security system can often help identify thieves and result in their apprehension.
In the End, Who Pays for the Stolen Merchandise?
Often, these criminal theft rings are well organized from top to bottom. Thetheft starts with a booster who goes into the store and shops for specific lists of items in high demand, such as clothing, baby formula, tools, TVs, and appliances. The items are then passed off to a fence who resells the items over the internet.
Ultimately, someone must end up paying higher prices for the billions of dollars in merchandise that is lost every year to organized crime. Usually, the burden falls upon consumers, who end up paying higher prices.
Law enforcement agencies have been working with retailers across the country to combat these organized crime networks that are focused on making this type of crime profitable. Most retailers believe that a federal law would impose higher penalties, reducing the incentives to commit these types of crimes. Also, the State of California recently enacted Assembly Bill No. 331in efforts to stop retail organized crime.