Thu, Sep 15, 2022

Kroll's Security Concepts Podcast

Kroll’s Enterprise Security Risk Management subject matter experts have come together, alongside special client guests, to host a podcast series discussing the world’s most pressing security challenges.
Episode 19
Retail Theft

In this episode, Daniel Linskey and Steve Powers of Kroll's Security Risk Management team and Steve Palumbo, Senior Director of Security Operations at Bed, Bath & Beyond, discuss the recent increase in retail theft around the country and steps that can be taken to mitigate risk at your business.

Passages from the Episode

Increase in Retail Theft

“Today's podcast is one that we think is going to be of great importance to a lot of our business clients. This one's going to cover the great increase in retail theft that we've seen all over the news and we're hearing about every day. To cover this, we brought in three experts: two are lifelong retail security experts, and one is a former chief of police at the Boston Police Department. We will cover aspects from both elements, and we're really looking at what some of the causes are and some of the things that could be done to mitigate some of this risk.

Brought along a podcast regular Dan Linskey, and Steve Palumbo and Steve Powers who both have been in retail at the highest level, managing security of all aspects, and are here to kind of share some of their information with us. I'm going to go ahead and start with a question for Steve Powers because he lives in a market that is heavily impacted by a lot of this retail theft. And he came from one of the highest profile retailers in the world that has had a lot of issues with this type of theft at their spaces. Steve, can you give us just a little bit of background on some of the data, some of what we're seeing now with this great increase in retail theft?” – Jeff Kernohan

“As you noted, I'm based in the Pacific Northwest and there's been a huge issue with retail theft crime and is specifically coming out of organized retail crime theft rings. There's been a lot of good research by a number of organizations to include the National Retail Foundation and the Retail Industry Leaders Association. And the Retail Industry Leaders Association report that really has the most recent data that came out in 2021 noted some very staggering and sobering statistics. There were nearly $69 billion (bn) worth of products stolen from retailers in 2019 alone. They estimate that U.S. retail crime results in approximately $125.7 bn in lost economic activity.

On top of that, the federal and state governments view their impact as at least $15 bn in lost personal business tax revenues, such as lost sales taxes. So, it's a huge problem. More recently, the National Retail Foundation in 2022 reported that retail crime now costs retailers an average of $700,000 per $1 bn in sales. And that's huge. And quite honestly, the smaller retailers have not been able to absorb those losses, and many small businesses have had to close.” - Steve Powers

Law Enforcement and Prosecutorial Response to Retail Thefts

“With those startling figures in mind, why don't we bring in Danny and the other Steve to talk a little bit about some of the law enforcement response, the prosecutorial response and really the retail providers’ security department's responses to this type of increase in retail thefts?” – Jeff Kernohan

“I think it starts with a change in the justice system. A couple years ago when we were looking at disparate impacts in the justice system, prosecutors were running for office, and they were saying as part of their agenda that they were no longer going to prosecute low-level crimes. And it seemed like, well intentioned. Right. The mother who is shoplifting for her children to get food; that's probably not what we need to put police resources towards and someone we shouldn't be putting into the justice system. Right. That's somebody we should be wrapping services around and trying to make sure that she doesn't have to steal for food for her kids. I think everyone agreed that would be a good thing.

However, the baby gets thrown out with the bath water. We've got people who are drug addicted and need to get several hundred dollars a day to take care of their habit instead of getting treatment. Since they're not getting treatment, they're utilizing these retail thefts to supplement their drug habits. And they're going to continue to do that until they either get sober or they're held in consequences for legal actions. There are now retail groups that are targeting. It's not that they need them, but they're going in there smashing retail store windows and taking high-end jewelry, high-end handbags, high-end shoes, coats, whatever it is, and selling them on the black market. Sometimes taking orders beforehand as to what exactly people want and going out and stealing. So, I think the justice system and the tenor and tone wanting to not prosecute individuals for small petty crimes has emboldened. Take whatever you want and sell it. There are no consequences to my action. So, why wouldn't I?” – Dan Linskey

“There are a couple of other things on the other side of the aisle here, that's kind of also feeding into this. One, crime for a very long time was on the decline. Retailers were not seeing the level of theft that they had seen in years past. As a result of that when running their businesses, they cut back on their security department. So, they're not staffed to the levels they were say a decade ago. They're much smaller security teams now. Also due to liability concerns, they've issued what they basically call hands- off policies on shoplifting. They're not as aggressively enforcing apprehending shoplifters at the store level as they used to as well. If you combine the cutback in staffing with the kind of less aggressive posture in terms of apprehending shoplifters with what's going on, on the legal side of the coin. That's where you have this sort of perfect storm, and you're seeing what you're seeing happening now.” – Steve Palumbo

“Going back to the corporate policies of disengaging and basically observing and reporting only, part of that resulted from the perpetrators using greater levels of violence and aggression that had not been seen before. So that kind of led to the problem just getting worse and magnified.” – Steve Powers

“As a former law enforcement officer, police have to take some of this on as well. I've dealt with clients who are trying to deal with these issues, and they're trying to hire police officers on overtime to come in and secure the stores. And basically, some of the messaging from the police officers is that we can't arrest anyone anymore because the prosecutors won't prosecute them. Well, that's not the case. The laws are still in the books. If people want to change the law, then they can do that. Right. But the reason shoplifting laws actually came into effect is because retailers got together and said, hey, we have to do something otherwise we can't stay in business and we can't keep people employed if this is the business model, if anyone can come in here and steal and there are no consequences.

So, that's why we have these shoplifting laws with arrest as an option in the first place because retailers were getting killed and police officers have to still do their job. They may not like it that the prosecutor is not prosecuting the case and the person is going to walk out the court the next day. However, you taking that person, putting them in custody, having go through the booking process, creating a record that when people say what's going on and why is this the problem? Why are we having all these issues of disorder and concern in this neighborhood? Well, it might be the fact that we arrest these people. They've been in the justice system 40, 50 times, and there's been no consequences and that has emboldened them to continue their actions.

If nothing else, if I know I'm going to get arrested in sector A, where officer Linskey is working, but I'm not going to get arrested in sector B, where officer Jones is working. Well, guess what? I'm probably going to avoid getting arrested if I can and go to the place where they aren't taking enforcement action. So, police have to continue to hold the prosecutor's feet to the fire if they don't want to do their job and coordinate with the merchants to make sure that they're taking good steps to try and prevent this when they can and report it. Let's get a handle on exactly how big the problem is.” – Dan Linskey

How Can You Mitigate Risk?

“It's fascinating stuff. So we're basically at the point where we have this perfect storm of lack of retail staffing, lack of retail desire to enforce their own policies that may be on shoplifting, lack of prosecutorial agenda to actually prosecute these people for shoplifting and really the lack of the law enforcement being able to one, staff the positions, and also arrest these people because they've seen the same things over and over and over again. So, we're at the position now where these retailers have spent three years now trying to live through some of the hardest times they've seen, and now they're getting impacted by yet another issue where they can't really keep their doors open because their product keeps walking off the shelves. Any other items you guys might have to impart on our people about what they can do, what they should be doing outside of trying to get some more government help with these types of things? What do those retail people really need to do right now to try to tighten up this whole situation?” – Jeff Kernohan

“Most major retailers now have organized retail crime units within their departments. Those units are all communicating with each other. So, there is a lot of information sharing going on right now. What it's also doing is driving some of the pressure towards the local governments to say, look, you need to start enforcing these laws because they're all gathering this information. So, if five or six retailers can get together and show the amount of loss they're experiencing because of this, and they're gathering this information mostly through these OSC groups that work within the companies, they gather that information and they go forward with that with their local officials and say, look, something needs to be done because we're constituents as well. We're being victimized here on a regular basis and no one's doing anything about it. That seems to be helping as well.” – Steve Palumbo

“More locally, as recent as June 21 in 2022, the stated attorney general in the state of Washington, Bob Ferguson, revealed the following statistic and stated that retailers statewide lost a combined total of $2.7 bn worth of goods to organized retail theft in 2021 alone. And upon releasing that statistic, he announced that the state would be establishing an organized retail theft task force that involved not only local law enforcement, but private security, state law enforcement, the Washington state patrol, and to include resources from the federal government.” – Steve Powers

“I think the retailers too need to put some pressure on these elected officials in these areas where this is happening a lot because you're seeing what's happening. I mean, there are retailers that are just pulling out of certain cities, just because of this issue, and that's less tax dollars, less jobs, less everything. That hurts everybody. That's the message I think that the retailers need to bring to their elected officials in these areas that are being decimated by this problem is we're just not going to do business here if you don't help us. We're just going to pull up stakes and leave—and that doesn't help anybody.

And who really suffers unfortunately, is the people in those neighborhoods who need those services. If a food store or a drug store is pulling out of a neighborhood and people now have to travel even farther to get their food or their medicine, that's not good for anyone. That's the message I think these retailers need to bring to these government officials and say, look, you need to help us. We need to do something. We need to work together because if not, we're just going to leave because that's what they're doing.” – Steve Palumbo

“I think another thing we could ask the community to do, to ask our customers to do is to put some messaging up, put some signage, maybe even give them a flyer or go on the back of their seat. Hey, if you're seeing somebody who's stealing from my store, can you please alert one of our customer care folks so that we can address it, right? And that way you've got more eyes in the store. People will realize that's the program that people, I don't know if there's a way you can incentivize that to customers who help you recover items that was stolen or someone was targeting your store for theft. But changing that environment where people feel like the whole world is looking at them in a negative manner if they're doing negative things and stealing might be one way to kind of address this issue as well.” – Dan Linskey

“More of a training aspect too. Yeah. There's a hands-off policy from liability reasons which probably there should be, but you train your staffs on different methods of deterring this type of theft and apprehending in a safe manner. Training your retail staff, the people in the store, how to spot this kind of stuff and how to deter it in a safe way. Stuff we talked about previously. Good customer service is your best deterrent, always. So, invest more in training, not only to your security teams, but into your staffs as a whole.” – Steve Palumbo

“To further expand on what my colleague, Steve Palumbo, referenced in the areas of training, I believe there's a huge opportunity for personal safety and awareness training for employees. Kind of one of the silent victims of all this activity have been the employees that have not only witnessed these actions by organized crime gangs as well as the day-to-day daily incidents, every hour, something happened where they're either a customer's reporting or they're observing and witnessing the activity themselves takes a tremendous emotional toll on employees and causes a tremendous amount of anxiety, fear, probably leading to potentially post-traumatic stress.

One of the things beyond many of the employee assistant programs that are out there that almost every employer has to some degree is actually focused training on how to potentially address these issues from a personal safety standpoint. What I mean by that is how to disengage, how to remain safe potentially in those cases where they might be forced to deescalate a situation. There's a variety of programs that are offered by a lot of companies and specifically by Kroll in terms of how an employee should behave and act during a situation that is high risk, highly emotionally charged and how to remain successful. It goes well beyond the traditional training of just customer service. So, they're very targeted programs that deal specifically with crime type issues in making sure that employees and customers remain safe. That's always at the forefront of everything we want to do and teach.” – Steve Powers

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