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Organized Retail Crime is Crushing Merchants: Here's Why


Not only are retailers getting hit by thieves more regularly, they "are also reporting that the criminals they apprehend are increasingly resorting to violence."

MINYANVILLE ORIGINAL A new report from the National Retail Federation finds that "organized retail crime affects almost every single retailer, with 95% reporting they have been a victim of organized retail crime in the past 12 months."

That's up 6% from last year, and 17% over the past five years.

Not only are retailers getting hit by thieves more regularly, but they "are also reporting that the criminals they apprehend are increasingly resorting to violence."

What's going on?

"When you see more thefts occurring during a recession, it's not because regular, everyday people all of a sudden turn into criminals," Dan Burges, senior director of intelligence at logistics security firm FreightWatch International and the author of Cargo Theft, Loss Prevention, and Supply Chain Security, told me last year. "It's because during a recession, people are more prone to look for better deals."

Though truckloads of big ticket items might seem most attractive to the uninitiated, those in "the business" don't discriminate. I spoke with Burges shortly after two Chicago-area men stole multiple truckloads of toilet paper and plastic utensils from a Georgia-Pacific warehouse.

"Thieves will steal anything they can sell," he said. "Walk through your house from front to back -- everything you see in your home, someone would steal," Burges said. "Stolen toilet seats? Consumers create the market. If someone can buy it cheaper, they will."

This is just one of the reasons eBay (EBAY) "currently has about 2,000 paid employees whose job it is to investigate reports of stolen goods, fraud, and other illicit activities," as detailed in the book Supply Chain Security: International Practices and Innovations in Moving Goods Safely and Efficiently, by Andrew R. Thomas.

Other retailers have similar, dedicated teams focused solely on combating theft. Target (TGT) has its own forensics lab and financial investigations unit; Gap Inc. (GPS) fields a "nationwide team of investigators that investigate and apprehend organized retail crime rings with an intense focus on South American theft rings and violent habitual offenders"; Apple (AAPL) has even patented its in-store security systems. Many retailers, among them grocery giant Safeway (SWY), recruit loss prevention managers from the ranks of federal agencies like the FBI.

"It's a matter of supply-and-demand -- not only from the consumer side, but also regarding the availability to a thief," Burges explained. "This guy had access to toilet paper and plastic forks, so that's what was available to him. I would argue that if the same facility was moving cellphones, he would've been stealing cellphones."

The breadth of goods stolen in any given year is remarkable, said Burges, before running down a list of FreightWatch's "greatest hits."

"There was a truck full of sand stolen in Oklahoma in '07, a load of earplugs, five thousand dollars worth of alfalfa hay, plastic cups, a trailer hauling lard," he recalled. "Then, there was the time someone stole an entire load of empty juice bottles."

Burges told me these types of events fall into the "opportunistic" toilet paper/plastic fork category.

"I don't think anyone was out looking specifically for empty juice bottles," he said. "But, opportunity presented itself and they took it."

Catching up with Burges earlier today, he noted an interesting new twist to the NRF's data.

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