WASHINGTON — The number of retailers victimized by organized retail crime groups and the level of criminal activity has increased significantly in the past year, the National Retail Federation said in its annual report.
The NRF’s 11th annual study, to be released today, revealed that of the 67 retailers surveyed, 97 percent said they had been the victim of organized retail crime in the past year, up from 88 percent last year.
The losses associated with crime perpetrated by organized gangs against retailers can be staggering. Retail respondents on average reported they have lost $453,940 per $1 billion in annual sales over the past year. Organized retail crime, including credit- and gift-card fraud, costs U.S. retailers about $30 billion a year, according to FBI estimates.
“Even with state-of-the-art technology available, trained employees on the ready, extensive partnerships with all levels of law enforcement and additional resources on hand, retailers continue to grapple with the challenges that come with fighting organized retail crime,” said Bob Moraca, vice president of loss prevention at the NRF. “Brazen and often dangerous criminals are finding new ways every day to manipulate the retail supply chain; from the docks where merchandise comes in to criminal flash mobs that involve several individuals running into a store at once, the methods used by crime gangs today run the gamut. These new criminal methods are making it even more crucial for retailers and law enforcement to work together to combat this crime.”
Moraca said in an interview with WWD that the 97 percent in the study represents the highest level in five years of respondents who have said they have been hit by organized retail crime.
“I think it is a pure profit motive. That’s why more groups are getting into it,” Moraca said. “These are criminal groups that are doing other things like human trafficking and narcotics and they have found that this is also profitable.”
Of those merchants victimized by criminal gangs in the past year, 84.9 percent said they had seen an increase in activity compared with 60.3 percent in last year’s survey.
Some 48.5 percent said they have experienced a “significant” increase in organized retail crime this year, while 36.4 percent said they experienced a slight increase in criminal activity.
Denim jeans and designer clothing and handbags continued to be among the top stolen items, according to retailers surveyed in the report.
The NRF’s survey was conducted from July 13 to August 6 and involved loss-prevention executives from department stores, large-box retailers, discounters, drugstores, groceries, restaurants and specialty retailers.
Two-thirds of those surveyed were affected by gift-card and store-credit schemes.
“Savvy criminals are also finding ways to manipulate well-intentioned store policies,” the report said. Some 66.7 percent of respondents said they have experienced thieves returning stolen merchandise for store credit and then selling the merchandise credit to secondary market buyers and sellers.
For the first time, the NRF survey asked retailers where they have recovered the stolen merchandise credit cards, with 54.5 percent saying they found them on websites; 24.2 percent at pawn shops, and 13.6 percent at check-cashing stores.
The percentage of respondents identifying or recovering stolen merchandise and/or gift cards from physical fencing locations, such as pawn shops, stores, swap meets or flea markets fell in the past year to 59.1 percent from 63.6 percent in 2014, the study found. Some 60 percent of the respondents said they had identified or recovered stolen merchandise and gift cards on websites, down from 68.2 percent last year.
Some 37.9 percent said they have seen increases in cargo theft, up from with 35.4 percent in 2014.
With the increase in the overall level of organized criminal activity, loss-prevention officials said more companies are investing in tools and resources to combat the problem. Loss prevention officials said the average approximate dollar value (salaries and wages) of company personnel allocated to combat organized retail crime is $434,032.
Moraca said retailers have seem some positives int he past year, particularly increased partnering with local law enforcement. Five states enacted their own laws targeting organized retail crime in 2015, bringing the total to 30 states. Retailers continue to press for federal legislation to address the issue.