Organized retail theft has grown to a nearly $100 billion problem in the U.S. — and retailers say consumers are paying the price.
Unlike shoplifting items for personal use, organized retail crime involves criminal networks of shoplifters who steal valuable items in bulk for resale. The phenomenon is a big part of inventory losses known as “retail shrink,” which grew from $91 billion to almost $95 billion between 2020 and 2021, according to a survey from the National Retail Federation. Retailers reported a more than 26% jump in organized retail crime in the past year and said employee theft is also posing significant challenges.
High-value items that are in demand, easy to conceal and resell quickly are among those most targeted by organized crime networks. Top categories for theft include apparel, health and beauty, electronics/appliances, accessories and housewares, according to the NRF.
While stores in Golden Triangle Mall haven’t noticed local increases in organized theft, some retailers with mall locations have seen thefts spike at urban storefronts, according to mall manager Aaron Ball. Those thefts, even when happening at other locations, can still impact local prices as companies take measures to mitigate losses.
At the Denton Police Department, officers have investigated two instances of organized retail crime in the past year, with most thefts involving isolated shoplifting incidents, spokesperson Amy Cunningham said.
Why organized retail crime has seen sharp national increases is unclear, but market watchers speculate the COVID-19 pandemic brought on changes that made stores easier targets and made identification more difficult with widespread mask use. While resales to pawn shops can be risky, the accelerated push to e-commerce has also made reselling goods directly to consumers easier.
What is certain, retailers report, is that the losses translate to higher prices for consumers in the long run. Increased security and digital technology measures aimed at theft prevention are on the rise, with more than half of retailers reporting redoubled investments in security and 60% increasing technology budgets in response to losses, according to the NRF survey.
“You’ll see a lot of focus on AI products — you know, cameras that can operate without an operator and recognize risks or capture license plates outside of a building in case someone runs in a car — technology that operates at the point of sale and the cash register that recognizes stolen cards or suspicious behavior,” said Mark Matthews, NRF vice president for research development and industry analysis. “It’s a major investment for retailers to ensure that shrink remains less of a problem than it could be.”
At least one mall retailer is planning to implement RFID (radio-frequency identification) technology in the next year, which will allow them to not only track inventory losses, but also gain insight into sales metrics for products, Ball said.
Even for stores that do not have the resources to invest in new tracking technology, high-quality cameras can make a difference in deterrence, Cunningham noted.
Combined with revenue losses from organized theft, security costs are prompting retailers in a low-profit-margin industry to make tough choices during an inflationary period.
“We have been very good about not raising our prices as a result of our shrink equation, but if it gets to a point where we cannot continue to do business this way, ultimately we will have to pass it along,” Scott Glenn, Home Depot’s vice president of asset protection, reporters.
Home Depot is investing in both physical security and product activation technology to try to combat the losses.
Retailers also report an uptick in violence associated with organized theft, with 81% of survey respondents seeing an increase in the past year.
“Reducing instances of violent crime, particularly those affiliated with [organized retail crime], is a key priority among retailers because it directly and immediately impacts employees in numerous capacities,” Cory Lowe, senior research scientist at the Loss Prevention Research Council, said in a news release about the survey.
“In many cases, it is difficult to measure the full extent of these crimes without being investigated internally and in coordination with law enforcement.”
NRF is advocating for more support in combating organized retail crime from lawmakers, such as the Combating Organized Retail Crime Act of 2022 introduced by the Senate this month. The law would establish an Organized Retail Crime Coordination Center to allow intelligence sharing, cross-agency investigations and training and technical expertise. The legislation is aimed at not only preventing organized thefts but also tracking just how much the phenomenon is affecting retailers at the national, state and local levels.
“This survey is one of the hardest surveys we do every year, because getting the information is difficult, and getting people to respond to the survey requires a lot of research on their part,” Matthews said.
“It’s hard enough to get data that’s representative at a national level, but at a state level, you might only have a few retailers who respond, so that doesn’t really give you an adequate picture of what crime looks like in that particular state. But what we’re hearing is this is a really significant and growing issue.”
Theft is out of control. Why are stores turning a blind eye to it? This wasn’t allowed in the 70s & 80s.
Not surprising with the Top USA Crime Lord stinking up our White House !!!
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