NRF’s annual survey finds all respondents were victimized in the past year
For the first time in the 12-year history of the National Retail Federation’s organized retail crime survey, every responding retail company — 59 in total — said it had been a victim of ORC in the past 12 months.
In addition, 83 percent of respondents, all top-level loss prevention executives, reported that ORC activity had increased in the past 12 months: 44 percent reported a “significant increase” while 39 percent reported a “slight increase.”
The survey also uncovered a trend of ORC criminals and shoplifters becoming “more aggressive and brazen;” 97 percent reported an increase in the levels of aggression, and one in six felt the level of aggression was much higher than the previous year.
“Shoplifters are more confrontational with our LP officers,” one respondent said. “Even if we do catch them, it’s just a slap on the wrist. Short of pulling a gun on our LP team, they will always be cited and released by the police. Even if they attack our team, they are not charged with a battery or robbery anymore. It’s all just considered part of theft crime.”
Survey respondents elaborated on increases in online fraud. One retailer said its online fraud rate had tripled, even as it has stopped more than $350,000 in merchandise from being shipped through the use of software that flags “risky transactions for loss prevention review prior to shipping.”
Another respondent noted that their company has seen “more and more” gift cards sold online that are later traced to “no-receipt” returns in stores.
The average loss attributable to ORC was $700,259 per $1 billion in retail sales.
The average loss attributable to ORC was $700,259 per $1 billion in retail sales, up significantly from 2015’s average of $453,940.
Even though the survey found that the average dollar amount of retail personnel dedicated to combating ORC reached an all-time high of $545,694, more than half of responding companies had “not allocated additional resources in personnel or technology” in the past 12 months.
Noting that ORC activity has increased over the past three years, Robert Moraca, vice president of loss prevention for NRF, says that loss prevention in retail is “a cost center, and retailers across the board have been struggling from a financial perspective, so the fact that LP budgets are remaining flat is not uncommon.
“I think they all would like to do more, but you just have limited financial resources competing for a return on investment.”
Moraca says there are steps that retailers can take that don’t cost anything. “They won’t increase the budget but they will still be proactive steps.”
For example, he says, “Most employers have computer-based training modules on topics like loss prevention. They can enhance that and develop incentives for their associates to review those training modules frequently.”
Some companies are adding another level to digital closed circuit TV camera surveillance systems. Overlaid on CCTV systems, video analytics “can help identify problems,” Moraca says. “Some of these video analytic systems can even send messages via email to loss prevention professionals. These systems self-learn — they are a minimal form of artificial intelligence.”
In another negative trend, 56 percent of respondents haven’t seen any additional support from law enforcement for combating ORC in the past 12 months. That could be due in large part to shoplifting being downgraded to misdemeanor offense in many jurisdictions.
One respondent said that the change in status has led to a “higher theft per ORC incident. The felony limit used to be $500, so they would steal $490 per store. Now, with many states having increased the felony limit to $1,500, they steal $1,490 per store.”
Nearly 80 percent of respondents said a federal law is needed to combat ORC, with stronger penalties acting as a deterrent. A federal law would remove jurisdictional issues in what increasingly is becoming an interstate crime.
Moraca says that in states with strong anti-ORC crime legislation, “it is easier to get prosecution.
“However, decriminalization is now a trend all over the country. Legislators are raising the standard for what constitutes a felony.”
To try to reverse this trend, Moraca urges retailers to be proactive in building relationships with local law enforcement.
“The rubber meets the road in the communities you live in,” he says. “Corporate LP policies are not enough. LP personnel on the local level have to meet with their local police departments as a part of community policing/crime prevention programs.
“Engage with the local police … so they can come to really understand your problems and come to see you as part of the community and not just a big retailer with all these assets,” he says.
“You should never be meeting your law enforcement, your first responders, for the first time during an emergency.”
“At the end of the day, you should never be meeting your law enforcement, your first responders, for the first time during an emergency. If that’s the case, you’re already behind the eight ball.”
Some success stories did emerge from retailers that have developed new tactics to fight ORC.
One retailer reported “having some issues with online fraud involving third-party gift cards. However, where we make the deliveries ourselves, losses are limited.”
Another noted that “aggressive refund management and POS policies have limited the impact in these areas.”
And one said their company was successful in reducing ORC by “lessening the allowable timeframe for returns [to 60 days] and eliminating cash returns for no receipts and e-commerce.” The company also “increased its aggressiveness with return management to include receipted returns.”
December 14, 2016
National Retail Federation |
This article was published in the December 2016 issue of STORES Magazine.