Just how big of a problem is organized retail crime? The answer likely varies in absolute dollar terms, but undoubtedly the answer is “huge.” We wanted to look into this as this week will bring the National Retail Federation’s NRF Loss Prevention Conference & EXPO in San Diego.
The old rule of thumb for retail workers was that for every $1 that was stolen, another $100 had to be sold just to make up for that loss. A recent post from the National Retail Federation showed that in the last few years organized retail crime has helped to bring on a new threat of store merchandise credit card and gift card fraud. As far as how much this comes to, one NRF figure put the tally of organized retail crime as still costing retailers $30 billion a year.
An NRF infographic showed how much this translates to, but we would use a better comparable metric. Macy’s Inc. (NYSE: M) generated $27.68 billion in sales last year. If the $30 billion is a real metric, then the organized crime portion of this is large enough that it is absorbing more than Macy’s sells legitimately each year.
Retailers were shown to have said that the percentage of retailers reporting online reselling (eFencing) was true for 72% of retailers and actual fencing of items resold elsewhere had happened to 69% of retailers. Some 48% reported cargo theft, but a whopping 78% reported that they had been victims of gift card and store credit fraud. The top items targeted were listed as baby formula, laundry detergent, energy drinks, high-end denim, allergy medicine, and cell phones.
The NRF said, “Essentially, experienced ‘boosters’ return stolen merchandise without a receipt for the sole purpose of receiving store credit for a gift card, and then turn around and sell that merchandise credit for cash to secondary markets.”
Fraud and loss prevention player Checkpoint Systems, Inc. (NYSE: CKP) referred to organized retail theft being a larger and larger piece of the $104 billion “global shrink challenge” and that was a 2008 figure. It has even recently launched a new product aimed to detect the most common types of in-store theft.
Having personally had to intervene before in a retail shoplifting incident where the loss prevention individual could not restrain a thief alone, this is an issue that has literally hit home for yours truly. Under just about any circumstance, $30 billion is a huge number. What is often more sad than anything is that the police often turn a cheek here because the legal system is chewed up fighting more serious cases that involve violence and other more widespread crime and fraud.