Retail organized crime activity slightly decreased between 2009 and 2010, according to [pdf] a new study from the National Retail Federation (NRF).
Nine in 10 Retailers Report Organized Crime
According to the NRF’s sixth annual “Organized Retail Crime” survey, 89.5% of retailers polled say their company has been a victim of organized retail crime in the past 12 months, down from the 92.2% last year. The decrease in organized criminal activity is encouraging news for retailers, but understandable given the economic US economic downturn last year and rebound this year. In addition, nine of 10 retailers still report victimization by organized crime.
The NRF cites several other factors driving this decrease in reported organized retail crime activity. These include retailers heightening awareness of organized crime among store-level associates, as well as industry partnerships that facilitate the sharing of information and resources to combat the problem.
For purposes of this study, the NRF defines organized retail crime as groups, gangs and sometimes individuals who are engaged in illegally obtaining retail merchandise through both theft and fraud in substantial quantities as part of a criminal enterprise. Methods used can include, but are not limited to, stealing and fencing goods from stores, switching UPC barcodes, and using stolen or “cloned” credit and debit cards.
More than Half of Retailers Report Increased Activity
Despite the slight decline in the percentage of retailers reporting organized crime activity, more than half of retailers (58.9%) of retailers reported seeing increased organized crime in the past 12 months. In one piece of good news, this is a substantial reduction from the 73% who reported increased activity in 2009.
Regarding their knowledge of organized retail crime activity throughout the US, NRF asked retailers what they thought about the pattern of criminal activity in general over the last three years. The largest group of retailers (26.8%) replied that they believed ORC activity had increased by more than one-quarter, which is close to last year’s 27.9 percent. More retailers this year (17.1% compared to 10.8% last year) feel like ORC activity in general has stayed the same.
Most Retailers See Organized Crime as Medium Threat
When asked how organized retail crime ranks as a threat to their company on a scale of 1 to 5 (with one representing the lowest threat and five the highest), 38% of retailers ranked the threat as a 2, meaning they are “concerned.” Only 10% ranked it as a 1, meaning it is a “non-issue.” Interestingly, the smallest percentage (3%) ranked organized crime as a 5, or a “severe” threat.
The second-highest percentage of retailers (28%) ranked the threat of organized crime as a 3, or “important,” with 20% rating it as a 4, or “significant.” On average, retailers ranked the threat level of organized retail crime threat as 2.67, which is slightly down from last year’s 2.87 ranking and virtually right in the middle of possible ranking scores.
More Retailers Recover Fenced Goods
Retailers this year say they have recovered more stolen merchandise from physical
and e-fencing locations. According to the survey, 62.5% of retailers say they have found stolen merchandise or gift cards at physical fence locations, and 66.1% through e-fencing activities. This is up from last year, when 60.5% of respondents reported recovering merchandise from physical locations and 60% from e-fencing locations.
NRF analysis suggests the increase in identifying or recovering stolen merchandise could be the result of retailers’ continued efforts and their work with law enforcement agencies to thwart the efforts of professional crime rings.
Recession Increases Retail Shrink Threats
The ongoing economic recession has caused many retailers to both experience higher levels of shrink and make combating shrink a higher priority, according to “Loss Prevention 2010: Retailers Battling Shrink in Tough Times,” a recent study developed in partnership by Retail Systems Research and the Retail Industry Leaders Association (RILA).
According to the study, 44% of retailers said the economy caused shrink to rise in 2009, and another 37% said it stayed about the same. Only 20% said it fell. Not surprisingly, 68% of retailers said the priority of shrink increased between 2007 and 2009, and another 25% said it stayed about the same, with 7% saying shrink became a less critical priority.
Despite these percentages, almost half of retailers said their shrink levels are better than the industry average of 1.6% of sales. Forty-seven percent said their shrink levels are better, 30% said they are about the same, and 22% said they are worse.
About the Data: The NRF’s 2010 Organized Retail Crime survey features responses from 124 executives representing department/large box stores, discount, drug, grocery, restaurant and specialty retailers. It was conducted from April 20 – May 18, 2010.
