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By GEORGE CHAMBERLIN, Executive Editor

Tuesday, June 18, 2013

 

Retailers call it shrink, losses realized from shoplifting and employee theft. In addition to significantly affecting the profits of a company, these criminal activities also make it more expensive for consumers to shop.

Retailers are stepping up their efforts to crack down on theft. The annual retail theft survey from Jack L. Hayes International found 23 major retailers apprehended more than 1.1 million shoplifters and dishonest employees in 2012 and recovered $189 million. Apprehensions are up 7.4 percent from a year ago and recovered dollars soared by 22.7 percent.

A 2011 report from the Centre for Retail Research in the U.K. found all versions of theft, including organized crime and administrative errors, totaled $119 billion with dishonest employees accounting for 35 percent of the shrink.

“Although there are commentators who view retail crime as a harmless or intriguing social phenomenon or simply a cost of doing business, this ignores the impact of criminal gangs, growing levels of violence against employees and customers, and the links between retail crime and drugs, fraud and extortion,” said Joshua Bamfield of the Centre.

The study found the average family in the United States sees their shopping bill go up $435 a year as a result of retail crime.

The National Retail Federation is working to raise the awareness of organized crime and the impact it has on the retail sector. A survey of 125 large retailers this year found 93.5 percent said their company had been the victim of organized crime, down from 96 percent in the previous year.

“Though retailers continue to make great strides in their fight against organized retail crime, savvy, unconscionable criminals are selling stolen merchandise for a profit that doesn’t belong to them,” said Rich Mellor, Vice President of Loss Prevention at the NRF.

The most common type of fraud involves stolen merchandise and gift cards. According to the Federation, a “booster” returns stolen merchandise without a receipt with the intent to receive a store credit in the form of a gift card. They then turn around and sell the gift card for cash through secondary markets, including pawn shops.

“In conversations with retailers and law enforcement, we’ve learned that there are already defrauding process being put in place, but retailers continue to lose millions of dollars to this enterprising scheme,” said Mellor.

The Federal Bureau of Investigation earlier this month busted a group of boosters who had targeted retail stores and pharmacies in Texas from 2008 to 2012, stealing an estimated $10 million in products each year.

“To make matters worse, many of the goods — some possibly compromised by being stored and shipped under improper conditions and some sold past their expiration dates — eventually ended up in the hands of an unsuspecting public,” according to the FBI report.

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