How to Mitigate the Rising Risk of Retail Theft

This article was originally published by Risk Management Magazine

Even as shoppers flock to stores this holiday season, retailers across the United States are facing a rising threat from organized retail crime (ORC). According to the National Retail Federation, ORC costs businesses $700,000 for every billion dollars in sales, with a majority of small businesses reporting an increase in shoplifting and organized theft in 2021. ORC typically involves a group of individuals whose ultimate purpose is to resell stolen goods for financial gains. ORC participants often move from store to store, across jurisdictions, stealing anything they can from everyday commodities to high-end merchandise. They sell their gains through traditional fences who act as a middleman between the thieves and the eventual buyers, who may not be aware that the goods are stolen. In recent years, neighborhood fences have been replaced by e-commerce with stolen items increasingly being sold online.

Disorganized retail crime has also become a problem. It occurs when individuals enter the same retail locations, sometimes multiple times a day, and grab high-end items and walk out. They taunt store staff and make no effort to hide their actions. They then sell the items on the street for cash.

Why the Sudden Upswing in Retail Crime?

In the past few years, the justice system has changed with many prosecutors electing to no longer prosecute low-level crimes. These prosecutorial strategies were well-intended to prevent individuals who were only stealing to feed and clothe their families from being charged in the criminal justice system.

Staffing shortages have also caused law enforcement agencies to no longer prioritize shoplifting or theft arrests, particularly if they know prosecutors are going to dismiss the cases. Adding to the issue, retail security teams have cut back significantly—many companies have adopted a hands-off policy for all members working at their retail locations, and e-commerce has allowed for an environment where thieves selling stolen goods can do so anonymously online with little chance of being caught.

Mitigating Retail Theft Risk

All these factors have emboldening criminals to steal without fear of repercussions for their actions. There are ways, however, to help mitigate the risk of retail theft.

• Train your staff to observe and identify the tell-tale signs of theft.
• Design your store to impede the opportunity for theft, such as limiting exits and assigning staff to provide more frequent customer service interactions.
• Adopt security technology such as non-discrete cameras with monitors showing that clear images are being recorded and that thieves are no longer anonymous. Cameras can be supported by artificial intelligence allowing for targeted active surveillance when needed.
• Use inventory control practices for highly targeted items, such as requiring an interaction with a staff member to access these products. Display locks, electronic locks, electronic article surveillance tags, RFID tags and locked display cases can also be used to mitigate risk.
• Report all instances of theft to law enforcement so they can understand the intensity and complexity of the problem while deciding where to deploy resources.
• Work collaboratively with other retail organizations to form task forces aimed at organized retail theft groups to gather evidence and information that can be easily handed off to police for targeted investigations. Although law enforcement agencies may be stretched thin and dissuaded from enforcing laws regarding retail theft due to a lack of prosecution by prosecutors, they still need to enforce the law. Being arrested, processed and held even if for a brief time is still a deterrent. Documenting an offender’s numerous offenses should also lead to enhanced penalties.
• Help support legislation to ensure prosecution for ORC offenses and to address repeat offenders. This includes legislation such as the INFORM Consumers ACT that requires online marketplaces to collect, verify and disclose certain information from high-volume third-party sellers, including bank account numbers, government-issued identification, tax identification numbers and contact information. Online marketplaces must verify this information and annually certify any changes to it. It allows consumers to report any suspicious activity on the marketplace.

According to a 2021 study by the Retail Industry Leaders Association, retail theft caused federal and state governments nearly $15 billion in personal and business tax revenue. This staggering number does not include the loss in sales tax revenue. If local businesses are not able to address rising retail theft issues, they will inevitably have to close stores, lay off staff and take their products elsewhere, which could ultimately affect the safety of the entire community.