WASHINGTON — Organized crime took a bigger bite out of retail profits this year, as criminals used increasingly brazen tactics to steal merchandise, the National Retail Federation (NRF) reported in its “2018 Organized Retail Crime Survey.”
Retailers attributed the increase to factors including the ease of selling stolen goods online, gift card fraud, in-store staffing shortages and consumer demand for certain brand name items or specific products, the NRF said. Findings are based on a survey of 66 loss prevention professionals representing department stores, big-box retailers, discounters, pharmacies, supermarkets and specialty retailers.
“Retailers continue to deal with increasing challenges and complications surrounding organized retail crime,” said Bob Moraca, NRF’s vice president of loss prevention. “These criminals find new ways to expand their networks and manipulate the retail supply chain every day. The retail industry is fighting this battle by upgrading technology, improving relationships with local law enforcement and taking steps such as tightening return policies, but it is a never-ending battle.”
Criminals typically target items that can be easily stolen and quickly resold, according to the report. Most commonly pilfered items range from low-cost merchandise such as laundry detergent, razors, deodorant, infant formula and blue jeans to high-end designer clothing and handbags, expensive liquor and cell phones.
“Stolen goods are recovered anywhere from flea markets and pawnshops to online, with gift cards often ending up on online gift card exchanges,” the report said. “While online fencing has increased over the years, retailers say 60% of recovered merchandise, on average, is found at physical locations.”
The report found that 92% of surveyed companies were victimized by organized retail crime over the past 12 months, and 71% said they experienced an increase in the number of incidents.
NRF said its survey suggests that 11% of holiday retail sales will be returned, on average, down from 13% last year, and that 10% of the returns will be fraudulent, down from 11% last year.
Reliance on technology solutions is the most common response to organized gangs, NRF reported. Staff increases are a close second.
More than two-thirds of the states have laws on the books aimed at deterring organized retail crime, NRF said. Nearly three-quarters of retailers favor federal legislation, however, as criminal gangs tend to operate across state lines.
Stealing merchandise and then returning it is the most prevalent form of retail crime, said NRF. The loss prevention specialists surveyed by NRF estimated that 12% of returns will not include a receipt, and 21% of those will be fraudulent. Thirty-eight percent of respondents observed that more merchandise purchased online is being returned to physical stores. Cargo theft, or hijacking merchandise out of the supply chain, is on the decline, although 30% of retailers were victimized in the past year.