Why Loss Prevention Is More Important Than Ever

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The challenges retailers and communities have faced when it comes to crime have grown in scale and complexity over the past two years.

Many customers from across the world have asked us about the impacts that COVID-19 has had on the asset protection and loss prevention retail industry, and how they’re dealing with new crime threats as markets begin to open more fully.

Some of the key challenges include the surge in aggression and violence in stores, changes in law enforcement response and legislation, impacts of lockdowns, rapid growth in online marketplaces, and the subsequent and continued rise in organized retail crime (ORC).

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Surge in Aggression and Violence in Stores

Unfortunately, people are taking advantage of retailers’ response to aggressive behavior and COVID-19 threats.

Data from Auror’s Crime Intelligence Platform shows serious incidents within retail, such as robberies and assaults, have doubled in the last 12 months with repeat offenders and ORC groups accounting for a large proportion of this.

While only 1 in 10 shoplifters are repeat offenders, they account for half of all serious events and are five times more likely to be violent or aggressive towards retail team members and customers.

There is growing commentary and calls for support to address the theft related violence in the United States and United Kingdom, with a new initiative between retailers and police focused on organized and violent retail crimes.

Challenges with Police and Judicial Responses

Law enforcement is still processing the aftermath and ongoing effects of the pandemic. Civil unrest, protests, and subsequent reductions are putting pressure on already stretched resources.

People are continuing to take advantage of a reduced police response. Safe in the knowledge that even if caught, police are reluctant to put someone in jail, as seen in the 36 percent decrease in arrests from shoplifting related cases reported in San Francisco compared to the prior year.

Felony thresholds continue to rise in some states, with others reclassifying retail theft as a civil offense, instead of a more serious misdemeanor or felony crime. The retail industry was already seeing a dramatic shift in crime due to this decriminalization, and this continues to be the case post-pandemic. All this is resulting in the risk versus reward for shoplifters tilting more and more in their favor.

Impact of Regional and National Lockdowns

Despite long periods of store closures for some retailers, retail crime has continued to increase both in number and ferocity. Widespread burglary and looting has been reported worldwide including in South Africa and the Netherlands in response to lockdown measures.

Data from Auror’s Crime Intelligence platform shows aggressive behavior has increased in some regions by up to 65 percent when lockdowns have eased (versus the previous open period). With regions and nations moving in and out of lockdowns as new COVID-19 variants emerge and spread throughout communities.

LP teams are constantly needing to prepare and refine their responses to secure their teams. The above environment is encouraging people who offend to show aggressive behavior as they know the store team will back down and allow them to leave uninhibited.

The Rise (and Rise) of Online Marketplaces

So far, more than 200,000 US businesses, including restaurants and retailers, permanently closed owing to COVID-19 according to recent estimates. Meanwhile online marketplaces such as Amazon continued to grow as they supplied everything from toilet paper to home office supplies, reporting a 47 percent year over year increase for the second quarter of 2020.

This rise has also given ORC groups more opportunity to quickly and discreetly resell mass quantities of stolen merchandise. The stealing of this merchandise has become more violent and brazen as outlined above, with new coalitions such as Buy Safe America pushing for legislation for online marketplaces to collect and verify third party sellers on their platforms.

Without this, repeat offenders and ORC groups can continue to profit without consequence.

Organized Retail Crime Reaches Epidemic Levels

The above conditions have not only assisted ORC groups, but have shifted the risk versus reward ratio even further to the reward side. Demand for many items has outstripped supply in the wake of disruptions to global supply chains.

ORC groups are stealing and hoarding essential items en masse to resell, with data from Auror showing 30 percent of offenders leaving empty shelves when stealing.

The impacts are being felt with store closures in San Francisco and empty drug store shelves in New York. Operation Proof of Purchase, presented at the Global Retail Crime Summit, is a $50 million resolved case against a sophisticated ORC operation targeting over the counter drugs and health and beauty products, and an example of the sheer scale this problem has become.

For years retailers have asked their LP teams to do more with less. But what the pandemic has shown is that many teams are doing even more with even less.

Without sufficient resources, retail crime could mean the difference between life and death for many retailers. For instance, if a $500 theft isn’t prevented, it could require over $10,000 of sales to make up the difference (at a 5 percent profit margin).

Therefore, it’s imperative for retailers looking to thrive post-pandemic to ensure that there isn’t an increase in external and internal theft. It will be important that loss prevention is seen as a strategic activity, and it will require new tools and technology to account for decreases in headcount and measure the effectiveness and return on investment.

Debbie Perano, head of loss prevention at Bunnings ANZ, presented a case study at the Global Retail Crime Summit on how she’s created a self-funding LP model to thrive into the post-pandemic future. So how are you going to elevate the profile of LP inside your company and be a critical part of its future?

Loss Prevention has Enabled Retailers to Survive, but Now it’s Time to Thrive

COVID-19 has posed significant challenges for all retailers and will continue to do so for a while yet. LP has been critical to surviving what we hope is the worst of the pandemic, and has now rightfully earned its place at the table for how to thrive in the future.

This is going to provide plenty of opportunities to find new ways of working, including new technology and working closer as an industry and with law enforcement. So look out for one another, stay safe, and share with us the challenges you’re facing.

We want to express gratitude to the LP professionals on the front line who have and continue to work hard to keep everyone safe, calm, and reassured during these times.

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