Why are six in ten retailers prioritizing organized retail crime (ORC) more than they were five years ago? With 75 percent of retailers reporting an increase in all ORC forms, ten out of ten retailers would make more sense.
According to the National Retail Federation’s (NRF) latest study, ORC activity increased 68 percent in a year-over-year comparison with losses averaging $719,548 per $1 billion in sales before the pandemic. This increase represents the fifth year in a row that losses topped the $700,000 mark. It is important to note that 2020 ORC numbers included criminal tactics outside of traditional shoplifting. Low-risk, high-reward crimes such as fraudulent returns, cyber fraud, and counterfeiting can be much more lucrative for criminals and highly damaging to retailers.
The retail landscape continues to change rapidly, and its likely criminal and consumer habits will not follow pre-COVID patterns. According to the PYMNTS.com 2021 Shopping Retrospective Report, over 70 percent of retail consumers plan to maintain their digital shopping habits beyond the pandemic.
With economic instability and uncertainty as inevitable after-effects of the pandemic, a change in ORC targeted products is expected. Easily fenced products such as designer clothing, handbags, and electronics remain consistent. However, many retailers reported an increase in more “daily essentials” products such as razors and laundry detergent.
Many malls and nonessential stores were closed in 2020, and a short-term shift was anticipated purely based on availability. As more data becomes available in 2021, we will understand the entire evolution and if the target products will continue to evolve in the post-pandemic world.
Today the data indicates retail violence has increased unequivocally. According to the most recent Retail Violent Fatalities Report, almost 60 percent of retailers reported a rise in ORC violence and general criminal aggression during the pandemic. Even with many malls closed or capacity limited in 2020, retail fatalities still increased 5 percent, with violent incidents up 14 percent. Associates and customers now disproportionately represent the majority of those affected by retail violence in 2020, rising over 40 percent compared to 2019. Why the spike?
COVID-19 and the social and political unrest of 2020 required many police departments in major cities to allocate resources away from property theft, lessening risk, and ramification for ORC groups to operate. In February 2021, a video was circulated displaying an ORC group stealing handbags from a Chanel store worth $165,000 while employees and security guards helplessly watched. Recently social media feeds have shown a brazenness during property crime that was not evident in the pre-COVID era. So, does increased boldness explain the greater violence?
Even with some aspects of society starting to normalize, the data is mixed. Organized retail crime and the tactics criminals use to cause losses will continue to increase. In the face of life-altering events, history has shown an increase in property theft. According to US court statistics, the 2008 financial crisis saw over a 30 percent increase, with 9/11 seeing a 16 percent increase in shoplifting cases within our court system. Analyzing both historical and current data, retailers should expect gasoline to be thrown on a flame that was already growing. The connection between ORC’s surge and the rise in violence has not been well established in the past. Unique to COVID-19 and the current climate of social unrest, the sharp 2020 – 2021 upswing in ORC aggression could have more to do with a lack of enforcement surrounding these types of crimes. Today, we know that violence and ORC activity is increasing. Tomorrow has many unknowns and might require anxious waiting for new analyses to aid our decision-making as more data becomes available.
On the brighter side, the divide between public and private efforts in combating ORC is shrinking. Law enforcement and loss prevention professionals have continued to see success in 2020 – 2021, closing large and complex ORC cases during the pandemic. Still, anti-shoplifting laws have remained a challenge for both sides. In 2020, most retailers reported that ORC cases grew in states where the felony threshold increased. The pendulum will likely continue to swing, and as more data becomes available, we will better understand the full impact of COVID-19 on ORC. As we look ahead to the pandemic’s conclusion, it seems clear that collaboration and a unified front between public and private enforcement are essential to sustainable, collective success.
About the Author
Alexander Snyder, MBA, CFI, has been in the retail, e-commerce, and software solution industries for over ten years. He is an area loss prevention manager for Express, previously holding LP roles with Inditex Group (Zara) and Hollister. Currently based in Portland, Oregon, Snyder supports the LP efforts in the Pacific Northwest, California, and Utah. He serves on the ORCAOR board and mediates NRF’s quarterly ORC/investigators network conference call. He can be reached at email@example.com.