Organized Crime Costs Retailers $30 Billion

A new study by the National Retail Federation (NRF) describes the magnitude of the problem:

Retail loss prevention executives have their hands full, and when it comes to the organized crime gangs that wreak havoc on their stores, their inventory and their bottom line, retailers are getting more aggressive in their efforts to fight the $30 billion problem. According to the National Retail Federation’s 11th annual Organized Retail Crime Survey, which polled 67 senior retail loss prevention executives, nearly all (97%) retailers surveyed report that they have been a victim of ORC in the past year, up from 88.2 percent who said so last year.

So, the size of the problem is extraordinary and can be added to the widespread problem of shoplifting by both consumers and employees. It is a wonder that, between organized crime gangs and shoplifting, retailers have any profits at all.

And the effects based on the bite organized crime takes are tremendous:

Retailers on average report they have lost $453,940 per $1 billion in annual sales over the past year. Additionally, the survey found on average retailers allocate approximately $434,032 to specific organized retail crime personnel in their company.

Among the primary efforts used by criminals are cargo theft and the misuse of gift card and return policies.

ALSO READ: 8 Buybacks and Dividends Just Too Big to Ignore

The survey showed that much of the activity is concentrated in several cities:

• Los Angeles
• Miami
• Chicago
• New York
• Houston
• Arlington/Dallas/Ft. Worth
• San Francisco/Oakland
• Baltimore
• Orange County, Calif.
• Northern New Jersey

While many retailers have called on and been helped by law enforcement groups, the progress has been modest:

NRF asked retailers about the support they get from law enforcement in the states where they have a presence and that have ORC laws, and the survey found 15.4 percent of those surveyed say they have noticed an increase in support from federal law enforcement, up from 9.6 percent who said so last year; 43.1 percent say they’ve noticed an increase in support from local/county law enforcement and 24.6 percent say support from state law enforcement has grown.

So modest that the criminal activity may be outpacing help from legal authorities.

Methodology:

The 11th annual 2014 NRF Organized Retail Crime survey was conducted July 13 – August 6 by the National Retail Federation. Senior loss prevention executives at 67 retail companies completed the survey with the purpose of identifying the depth of organized retail crime throughout the entire industry. This year’s survey features responses from executives representing department/big-box stores, discount, drug, grocery, restaurant and specialty retailers.

ALSO READ: 11 Jobs Paying Americans Over $100,000