Organized Retail Crime On the Rise

Organized retail crime is continuing to grow, with 67 percent of retailers surveyed reporting an increase in the past year, according to the 13th annual ORC study by the National Retail Federation.

The survey of retail loss prevention employees found that 96 percent of responding companies had experienced ORC in the past year. Losses averaged $726,351 per $1 billion in sales, an increase from $700,259 last year. 

Los Angeles continued to be the hardest-hit area for ORC in the nation, a position it has held since 2012. Following in order were New York City, Houston, Miami, Atlanta, Chicago, Orlando, San Francisco/Oakland, Orange County, Calif., and Northern New Jersey.

Organized retail crime continues to be one of the biggest challenges to retailers of all sizes, according to NRF Vice President for Loss Prevention Bob Moraca. “These crimes happen across the country every day, with criminals getting smarter, more brazen, more aggressive and sometimes even attacking store employees and shoppers,” Moraca says. “Fighting ORC is a full-time job, and retailers must learn how to stay a step ahead of these thieves.”

ORC criminals look for items that can be stolen and quickly resold, which include designer clothes, jeans, razors and designer handbags. The survey found six in 10 retailers had recovered merchandise from physical fencing locations including pawn shops, flea markets kiosks and temporary “pop-up” stores, about the same as in 2016.

In the last year, $11,000 worth of underwear was stolen from an Illinois Victoria Secret, while an Ohio Louis Vuitton lost $150,000 of merchandise in just one raid. In June, thieves in Stockholm drove a tractor through the windows of a Chanel store.

The prevalence of cargo theft, when merchandise is stolen along the supply chain, has fallen to 40 percent, down from 44 percent last year, but return fraud continues to be a problem. Eleven percent of returns are likely to be fraudulent, and the number climbs to 17 percent when returns are made without a receipt.  

Of those who have experienced return fraud, the most common method is the return of stolen merchandise (68 percent), followed by employee return fraud (65 percent), returns of merchandise purchased on fraudulent or stolen tender (57 percent), returns made by ORC groups (54 percent), wardrobing (40 percent), returns using counterfeit receipts (29 percent) and returns using e-receipts (19 percent).