Retailers Look to Law Enforcement for Help with Taking on Organized Retail Crime
Organized retail crime (ORC) has been a growing problem for retailers nationwide, resulting in store closures due to rampant theft. Now, retailers nationwide are calling on law enforcement to help fight ORC, which is the large-scale theft of retail merchandise with the intent to resell the items for financial gain, largely on the internet.
Retailers are worried not only about the financial impact, but also about the safety of employees and shoppers.
ORC is becoming more violent, with 81 percent of respondents to the National Retail Federation’s (NRF) Security Survey, saying that ORC offenders grew more violent in 2022.
Some retailers like Target are hiring more security personnel, putting products behind locked doors, and conducting employee training on de-escalation techniques. Others are removing certain products all together and limiting self-checkout options. The industry is also looking to Congress for action, which includes more funding for law enforcement.
In the Senate, Senator Chuck Grassley (R-IA) and Senator Catherine Cortez Masto (D-NV) unveiled the Combating Organized Retail Crime Act of 2023.
The bill takes several steps to curb ORC. It establishes the Center to Combat Organized Retail Crime at Homeland Security Investigations (HSI) which combines expertise from state and local law enforcement agencies and retail industry representatives. It also creates new tools to assist in the investigation and prosecution of organized retail crime and helps recover lost goods and proceeds.
A companion bill was also released in the House. It was applauded by many in the retail industry, including the Retail Industry Leaders Association (RILA).
“In order to expose and stop these sophisticated criminal rings, we need the federal law enforcement to be coordinated, resourced, and focused on investigating these crimes. This legislation will do just that,” said RILA Senior Executive Vice President, Public Affairs Michael Hanson
Last year, retailers and industry groups worked to pass the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (INFORM Consumers Act). The legislation took effect in June and requires online marketplaces to report and verify information about high-volume third-party sellers.
In addition, retailers are urging local governments and law enforcement to do more. That includes getting tougher on criminals who commit lower-level offenses like shoplifting. Nine states recently passed laws calling for stricter penalties for shoplifters.
Questions About Financial Impact
On the financial side, NRF says shrink (when a company’s inventory decreases for reasons other than sales) was responsible for $112 billion in losses in 2022, up more than 19 percent from 2021.
However, external theft accounted for just 36 percent, down slightly from 2021. Employee theft and operational and processing errors made up more than half the theft.
That leads some industry experts to question whether retailers are using security as an excuse for slowing sales.
“As shrink includes many things including internal theft and items a retailer has lost, it is difficult to understand the true scale and impact of crime,” Neil Saunders, managing director of the analytics company GlobalData Retail told the Washington Post. “This gives rise to a view that some retailers are hiding poor performance behind the excuse of crime.”