News Feature | July 2, 2014

NRF Study Shows Change In Organized Retail Crime Concerns

By Ally Orlando, contributing writer

NRF Organized Retail Crime

Organized retail crime (ORC) isn’t just a brick-and-mortar issue anymore. Nearly half of respondents say their online operations are affected by ORC, a study released last month reports.

Conducted by the National Retail Federation (NRF), the 10th annual Organized Retail Crime Survey polled 76 senior retail loss prevention executives. For the first time, the federation asked retailers about the impact ORC has had on online operations.

In the last year, ORC affected 8 in 10 retailers and cost the industry $30 billion — the average case value is $2.8 million. Specifically, criminal “fence” operations are impacting 6 in 10 retailers, but e-fencing has surpassed physical fencing.

Fence Operations

The survey reports that 63.6 percent of respondents have identified or recovered stolen merchandise from physical fences like pawn shops, flea markets, or temporary stores, while 68.2 percent have recovered merchandise from e-fencing locations like third-party websites, auction sites, or blogs.

More than half say they have seen an increase in e-fencing operations. In fact, retailers believe that more than one-third of items listed as “new in box” or “new with tags” in these locations were stolen or fraudulently obtained.

Cargo Theft

Another problem is cargo theft instances. Retailers say they’re beginning to occur more in the store. More than one-third of retailers say they were victims of cargo theft in the past year and one-quarter say they’ve experienced cargo theft at the store.

Fighting Back

In response to these concerns, retailers are investing more to fight back. Loss prevention executives are allocating additional resources, with support from senior executives at retail companies, to help retailers with ORC.

“Tighter budgets in retail have made it taxing on some retail companies to adequately prepare for and even prevent organized retail crime from happening in their stores; however, more and more retailers are seeing the value of investing in loss prevention to combat this multi-billion dollar problem that continues to evolve in terms of its scope and sophistication,” says Rich Mellor, NRF senior advisor of asset protection.

Approximately 75 percent of respondents say they are allocating resources — 22.7 percent are doing so with staff, 34.7 percent with technology and 17.3 percent with budget. Some retailers even report investing more than $1 million on staffing ORC investigation teams. For the past year, 13.2 percent estimate their company’s overall ORC case value to be more than $5 million.

Looking Forward

“Few retail crimes reach the level of concern among retailers that organized retail crime does,” Mellor says. “For the better part of 15 years, savvy criminals and the enterprises they’re a part of have forced retailers to change how they deal with fraud, including maximizing efforts to partner with and educate law enforcement. These partnerships have become a crucial part of the fight against retail crime gangs, and while those invested in tracking down retail criminal enterprises can point to some success, it’s evident there’s still a big fight ahead of us.”