Written by Kim Souza ([email protected]) November 6, 2021 at 9:44 AM 896 views  

For retailers of all sizes, organized retail crime remains a growing problem. Tony Sheppard, a loss prevention expert at the software platform ThinkLP, said there is no sign of any reduction. Shepard said that this is not a crime without victims. Over time, it will raise prices for consumers.

He said Walgreens recently closed five stores in San Francisco on the grounds that rampant shoplifting caused by organized crime caused the store to lose more than $1,000 in stolen goods every day. Walgreens said the problems in San Francisco forced it to close 10 stores in the city since 2019.

"Organized retail crime is still a challenge facing retailers across San Francisco, and we are not immune," said Phil Caruso, a spokesperson for Walgreens. "In the past few months, retail theft in our San Francisco stores has continued to increase, reaching five times the average level of our chain stores."

Caruso said the retail chain increased its spending on security measures 46 times that of other locations, but criminal activities continued.

Shepard recently spoke at a retail conference in Dallas that the closure of a local pharmacy made the community feel sad. Nevertheless, business is still business, and organized crime continues to increase in the post-COVID-19 recovery.

According to a recent survey of retailers, the National Retail Federation (NRF) found that 57% of respondents indicated that organized crime has worsened. NRF stated that 65% of retailers agreed that organized retail crime (ORC) groups showed a higher level of aggression and violence than the previous year. Retailers cited COVID, changes in regulatory and sentencing guidelines, and the growth of the online market as the main reasons for the increase in criminal activity.

NRF stated that as the scale and scope of these threats continue to expand, it is clear that retailers need the support of additional external resources, including legislators and law enforcement agencies. NRF found that 78% of respondents believe that federal ORC laws are needed.

Shepard said that the orc gang running the theft gang could cause huge damage in a matter of minutes. Target items frequently stolen include brand-name clothing, washing powder, anti-allergic drugs, painkillers, tooth whitening strips and infant formula. Last year, the top five cities ranked by ORC were Los Angeles, San Francisco, Chicago, New York and Miami. Shepard said that several criminal gangs attacked southern Texas and then headed north for Oklahoma City, Tulsa and other metropolitan areas.

Shepard said that Level 3 thieves steal products in bulk from retailers and sell them to dealers for about 30 cents. A thief who steals in a store is called a booster. He said that level 1 boosters work alone in familiar areas and tend to move goods to the market or a trusted fence (dealer). He said that the level 2 booster cooperates with other small groups in the extended area, usually belonging to loosely structured groups. Level 3 boosters travel across the country and belong to organized theft gangs.

He said a group of level 2 boosters attacked nine stores in the Dallas market within 90 minutes and stole $9,000 worth of products from drugstore chains, most of which were anti-allergic drugs. He said the organization planned to attack shops in the metropolitan area and then head to Oklahoma City, but law enforcement caught them. He said that if they successfully carried out the robbery, the damage caused to the retailer by a few days of work would exceed $250,000.

Sheppard said that boosters cooperate with fences or dealers, just as there are different levels of boosters, there are also different levels of fences. He explained that the level 1 fence may seem legal, but it recruits and trains boosters. The primary fence can buy 10 to 20 booster products per day. He said that they may move the product to a level 2 fence every day or every week. The middle fence buys stolen goods from boosters and may operate an overseas repacking warehouse.

They usually operate in storage units or at home. Sheppard said that at this level, the fence can be demarked on the product and repackaged. They also operate an online marketplace and sell to level 3 fences. Level 3 fences are used as wholesalers or distributors to mix legal products with stolen products. If level 2 is repackaged, level 3 fences usually do not know that the product has been stolen. Sheppard said that Level 3 fences put the product back on the market. In some cases, they will sell the goods back to the stolen retailer.

Sheppard said there are multiple reasons why retailers may buy products from wholesalers who sell stolen items. He said that small independent chain stores often buy products from wholesalers because they are too small to deliver whole vehicles from manufacturers. He said that clearance and display products have also entered the wholesale market for resale, as have retail over-purchases.

He said that a booster worker in a country stole Claritin allergy medicine from their low-level fence (buyer) for $3 per box, and then they sold the chain store for $7. The distributor will get $8 when it sells it to the wholesaler, and the wholesaler will make $9.50 when it sells it back to retail, and then the wholesaler will reprice it to $12 per box. Sheppard said that although $3 per box seemed like a small return, they stole hundreds of boxes within a few hours and then shipped them to their enclosure.

He said these groups often wear masks to the store-now necessary in many cases-and they will fill their bags as much as possible when the clerk is distracted. Then it goes to the next store on the street. He said that in many cases, as soon as the shelves are on the shelves, they will strike.

"Have you ever been to a pharmacy to buy allergy medicines, but they are not the brand you want," Sheppard said. "So you go to another store on the street and they go out. Walmart is also out, you can only buy online from Amazon. You may actually be buying stolen goods.

"Then you are angry because you are not in the store, so you will order online from now on. This deepens the loss of retailers hit by the booster."

Shepard said that a national criminal gang in Texas recently shipped 1,013 packages of stolen goods to the fence, costing retailers $1.72 million a year. In their four years of operation, the retailer lost $8.88 million. He said this was just the tip of the iceberg.

He said that professional theft is not a crime without a victim. Retailers lose sales and face more stock-outs, communities lose sales taxes, stores sometimes close, fewer jobs and less competition can lead to higher prices. The rise of online markets has made it easier for fences to transfer products, and retailers must better censor and supervise sellers on these sites.

Editor's note: The supplier part of Talk Business & Politics focuses on companies, organizations, problems, and individuals that provide products and services to retailers. The supplier is managed by Talk Business & Politics and sponsored by Propak Logistics.

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