GHQ Cover Story: Booster Clubs
Through special arrangement with Grocery Headquarters, what follows is an excerpt of the current cover article, presented here for discussion.
Organized retail crime (ORC) is taking a bite out of merchants’ profits and supermarkets are no exception, according to the latest Grocery Headquarters‘ cover story, Booster
In fact, many security experts say grocery stores are at a greater risk for being hit by organized shoplifting gangs because of the large number of high-ticket and easily stolen items, such as razors and over-the-counter (OTC) remedies. Store layout issues — high shelves, overnight stocking and multiple entryways and exits — contribute to the relative ease with which organize shoplifting gangs go about their illegal business.
The internet has also played a role in emboldening ORC groups. According to Joseph LaRocca, vice president of loss prevention at the National Retail Federation (NRF), the sale of stolen goods online (AKA eFencing) has made illegal business easier and safer to conduct.
“With eFencing you have this low-risk, high-reward theft on the front end, and on the back end you have an electronic way of selling goods, so you now no longer need to have face-to-face contact with your buyer, and you have a national audience that you can sell to,” he said. “And the reality is that because you can remain faceless and in most cases nameless, the chances of getting caught are drastically reduced.”
Mr. Larocca said retailers need to understand, “this is an issue that is not going away. In fact, it’s worse now in what we’re seeing and hearing than it has ever been – in some cases we’re seeing that these groups are becoming more aggressive, both in their numbers and in their tactics.”
Despite the increasing number of thefts attributed to ORC, grocers and other retailers are not aggressively addressing the situation. The National Retail Security Survey found only 33 percent of retailers track ORC activity and just 10 percent have developed a task force to address the issue.
Retailers, say experts, need to develop a multi-prong approach to tackle ORC head-on.
“The No. 1 way to prevent losses from occurring is through good customer service,” said Mr. LaRocca. “When a store has vigilant employees that are watching the sales floor, and they’re interacting and communicating with their customers, we know for a fact that that has a deterrent value in stores.”
Employee theft has long been the number one source of shrink in retail. Increasingly, however, these inside thefts appear connected to ORC activity.
Catherine Aldrich, executive vice president of Accurate Background, said, “A decade ago store owners didn’t think they needed to perform background checks on entry-level employees or even minimum-wage employees, but what has been discovered over time is that these employees make up the biggest segment of potential loss and shrinkage.”
Technology such as closed circuit cameras and electronic article surveillance are among the weapons used by retailers to prevent shrink, but they no longer appear to be enough.
“Everybody uses EAS systems, which are fine, but if you’re looking at them as your primary driver of your product-protection initiatives, you’re really going to miss the boat,” said Ernie Deyle, vice president of loss prevention at CVS. “You’re not going to be able to get the full benefit of a true product-protection type of program.
CVS, said Mr. Deyle, has turned to video analytics to help it address the ORC issue. “When you start to look at how we’re structured, we have a great deal of technology in place to help us understand trends, behavior patterns and things of that nature that will help us understand where we’re being exposed before we actually become exposed.”
The system used by CVS is programmed to spot what is predetermined as suspicious activity and send a real time visual report to an employee’s hand-held device. The system can also be set to monitor areas within the store that are most at risk for theft.
Ed Jimenez, retail global marketing lead for Cisco Systems, said it’s important for retailers to look for best practices in loss prevention. “We would recommend that the grocery industry not only look at other retailers but the hospitality and casino industry in terms of truly understanding how this infrastructure can be used. The casino and hospitality industry is at the forefront of loss prevention and leveraging technology.”
Discussion Questions: How significant an issue is organized retail crime? What are your recommendations for retailers to deal with this problem?
Last week, The Associated Press reported that ORC bosses were paying junkies in Philadelphia between $800 and $2,000 a day to carry out shoplifting