NRF: Criminals View Recession as Chance to Abuse Retailers, Consumers

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NRF: Criminals View Recession as Chance to Abuse Retailers, Consumers

WASHINGTON -- Retailers and consumers are increasingly being victimized by organized retail crime groups, as nine out of 10 retailers report their companies were victims of organized retail crime during the past year, up 8 percent from 2008, according to the National Retail Federation's (NRF) fifth annual Organized Retail Crime survey.

Nearly three-fourths (73 percent) of retailers reported the level of organized retail crime activity increased over the past 12 months, up 11 percent from 2008. Loss prevention executives from 115 companies, including department, discount, drug, grocery, restaurant and specialty retailers, completed the survey last month.

"The unfortunate economic events of the past year have played an intricate role in how criminals continue to rip off the retail industry," said Joe LaRocca, NRF senior asset protection advisor. "Organized retail crime rings have realized that tough economic times present new business opportunities by stealing valuable items from retailers and turning around to sell the merchandise to consumers looking for bargains."

Even with the recession forcing retailers to cut staff and do more with less, 42 percent of retailers said their company is allocating additional resources to address organized retail crime. The average retailer is spending approximately $215,000 annually just on labor costs to fight organized retail crime, according to the survey. Some retailers surveyed spend far more, with 6 percent of respondents spending more than $1 million dollars a year to employ loss prevention executives devoted to organized retail crime.

The fight against organized retail crime would be futile without the support of top management, NRF noted. Nearly half of respondents said senior management in their company understands the seriousness of the issue. For the first time in the survey’s history, NRF also asked loss prevention executives whether they felt law enforcement had a firm grasp on the issue: 38 percent agreed police officers, detectives and federal law enforcement understood the complexity and severity of organized retail crime.

Thanks to the new partnerships formed with federal and local law enforcement officials, retailers have seen some success identifying stolen merchandise or gift cards at physical fence locations such as pawn shops and temporary stores (60 percent) and through online e-fencing operations (60 percent), where stolen merchandise is sold through online auction sites.

Organized retail crime is not only an isolated problem in a handful of areas across the country. According to the survey, a staggering 72 percent of retailers have identified organized retail crime syndicates who are exporting goods outside of the United States or across state lines. Additionally, 28 percent found that criminal groups under current investigation have connections to street gangs with international connections.

When asked how they would rank organized retail crime as a threat to their company, nearly one-third (29 percent) of retailers gave organized retail crime a "four" or "five" rating, identifying the problem as severe or significant. On average, retailers gave organized retail crime a rating of 2.87 on a five-point scale.

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