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U.S. Retailers Lose More Than $37B a Year to Retail Theft

Last updated on September 6th, 2012 at 12:03 pm

Retailers lost more than $37 billion to theft last year, according to an annual survey conducted by the University of Florida with a funding grant from security systems integrator ADT Commercial.

The National Retail Security Survey (NRSS) preliminary results show an increase in theft by nearly $4 billion, from $33.5 billion in 2009 to $37.1 billion in 2010. Retail theft includes shoplifting, employee theft, administrative error and vendor fraud.

As in years past, employee theft made up the largest portion with $16.2 billion in losses or more than 43 percent of the total. The second biggest category was shoplifting and organized retail crime (ORC) with a loss of $12.1 billion or almost 33 percent of the total losses.

ORC isn’t only costly for businesses, it’s dangerous, and the problem extends far beyond stores, according to the seventh annual Organized Retail Crime survey released June 8 by the National Retail Federation (NRF). Of the 129 retail companies surveyed this year, nearly all (94.5 percent) have been the victims of organized retail crime in the past 12 months. That is not only an increase over last year, but also the most in the survey’s history.

The survey also asked retailers what cities were the most problematic for organized retail crime rings. The top cities, in alphabetical order, are: Atlanta, Chicago, Dallas, Houston, Las Vegas, Los Angeles, Miami, New York, New York/northern New Jersey, Philadelphia and Phoenix.

An increasing number of retailers said thieves are becoming more brazen and that, on average, more than one in 10 organized retail crime apprehensions (13 percent) lead to some level of violence, such as physical assault and/or battery.

“As criminals become more brazen, retailers are working fervently to cut down on organized retail crime activity in order to ensure the safety of their associates and shoppers,” said NRF senior asset protection advisor Joe LaRocca.

Not only are criminals becoming more violent, members of these crime rings are often engaged in other illegal activities. According to the survey, retailers estimate that 41 percent of apprehended offenders are involved in “gateway” crimes including drugs, weapons and gang activity.

Additionally, retailers report that, on average, 12 percent of their organized retail crime cases involve collusion between internal and external actors, shedding light on the substantial role a handful of corrupt employees can play in organized retail crime.

The level of organized retail crime activity has continued to increase, too. According to the survey, 84.8 percent of retailers believe organized retail crime activity has increased within the last three years.

Loss prevention executives say senior leadership is more likely to understand how organized retail crime impacts the company’s bottom line as they zoom in on controlling costs in these challenging economic times.

Over half of survey respondents (58.3 percent) believe their top management understands organized retail crime, a 16 percent increase over last year. As a result, many companies are allocating additional resources—including more personnel and greater investment in technology—to combat the problem.

There are a number of technologies available to help retailers combat retail theft, according to the ADT Commercial/NRSS survey. Smart camera systems can help pick up unusual behavior such as a shelf of over-the-counter pain medication disappearing into the coat of a shoplifter. These intelligent camera systems can help follow a suspected shoplifter throughout the store recording movements and alerting store management.

High definition and megapixel cameras allow retailers to capture top quality images of shoplifters or ORC gang members and match up those images with law enforcement photos.

Advances in network technology allow more retailers to take advantage of cameras and recorded video. Retailers have the option of using cloud computing to simplify systems and maximize their technology investment by outsourcing the collection and storage of video while still having 24/7 access to view it from almost any location with an Internet connection.

Retailers also are turning toward new and more efficient inventory technologies. Radio frequency identification (RFID) tags are helping retailers complete inventory tasks in hours as compared to the days it previously took. Knowing what merchandise they have and where it is located is key in detecting retail theft. It can help a retailer sort out what merchandise is being lost to vendor fraud, administrative error or to employee theft and shoplifting. Once the retailer knows what is causing the losses, action can be taken to stop or limit it.

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