Retailers fortify against crime rings’ evolving tactics
LOS ANGELES – Stung by a new breed of sophisticated thieves, the nation’s major retailers are fighting back.
Well-organized crime rings have added tough new challenges for merchants who have long contended with petty shoplifters and their own light-fingered employees.
Although those concerns remain, retail chains today are plagued by gangs of highly specialized thieves who steal thousands of dollars of merchandise at a time and sell the goods for profit.
There are groups of thieves who make fake price tags, put them on merchandise and purchase the items at a fraction of the actual price. Others shove merchandise into aluminum-foil-lined “booster bags” that deactivate anti-theft devices. “Box stuffers” remove cheap items from their boxes, replace them with pricier goods and check out with hundreds of dollars of merchandise hidden inside.
In the Phoenix area, 36 people were indicted this year, accused of being members of a vast retail crime ring that stole high-priced merchandise from Wal-Mart, Home Depot and Lowe’s stores and returned the items for gift cards, which were later sold on eBay.
They also were accused of going behind some of the stores’ customer service counters to steal children’s clothing and toys that had been donated by shoppers to a charity and later returning them for cash or credit. An estimated $1.2 million worth of merchandise was stolen.
In San Diego, a group would pre-sort sizes and position merchandise to facilitate theft. The thieves would routinely target malls in different parts of the county to avoid being spotted, and they stole $1 million worth of merchandise before being caught.
“Most people think about little Johnny stealing a pack of bubble gum,” said Joseph LaRocca, senior asset protection advisor at the National Retail Federation. “This is anything but that – these are professional criminals.” The federation estimates that retailers lose as much as $30 billion a year to organized retail crime.
Merchants themselves are ganging up to counter the new threat. They are sharing information with one another, installing special shelving units, using more discreet anti-theft tags on products, employing greater surveillance of their customers and employees, adopting stricter return policies, beefing up their security forces and conducting their own investigations. Some even have their own investigation centers and crime labs.
But despite better prevention measures, 94.5 percent of retailers reported being a victim of organized retail crime in the past 12 months, according to a National Retail Federation survey of 129 major retailers released last month. That was the most in the survey’s history and up from 89.5 percent last year.
By “organized crime,” retailers do not mean violent crime families, but rather sophisticated rings that systematically hit several stores a day, stealing thousands of dollars’ worth of merchandise at a time.
Industry experts say the crime rings seek out goods that can easily be sold at near-retail price through “fence locations” such as small businesses, pawn shops and flea markets. In recent years, they have increasingly unloaded their goods online through auction sites and marketplaces such as eBay, where they can operate anonymously and turn higher profits.
The sluggish economy has exacerbated the problem, as penny-pinching consumers seeking low prices have unintentionally boosted demand for stolen merchandise. At the same time, stores say they have had to cut staffing levels, leaving fewer workers to monitor customers. And in some cases, store employees are the ones to blame – working with retail gangs to help facilitate the thefts.
The most-stolen items: over-the-counter medicine, baby formula, electronics, razor blades, beauty products, batteries and designer denim.
That sounds a bit like a shopping list at Target, and, no surprise, the discount giant is on the front line of the fight against retail theft.
Target operates more than a dozen investigation centers, including one hidden behind one of its stores in north Orange County. There, crime specialists can view live video footage from most of the chain’s 1,750 stores, watch for trends and develop “link charts” detailing a crime ring’s network, including recent activity, patterns of theft, possible accomplices and getaway vehicles.
The company also runs two forensics labs, in Minneapolis and Las Vegas, where investigators dust for fingerprints on products that suspects touched but didn’t steal and use video technology to analyze suspects’ identifying features and license plates.
Target’s efforts have led to dozens of arrests, including in a 2009 case that involved the theft of $75,000 worth of hair-care products from several Southern California stores.
“In the past, I don’t know that we would have even had the ability to put it together like that,” said Doug Ramey, investigation team leader for Target’s Western division, who headed the company’s investigation of the case. “Things have really evolved.”
At Walgreens, “shoplifter response teams” have tailed suspected thieves “from Texas to New York – we’ve been on them for as long as 20 days,” said Jerry Biggs, director of the organized retail crime division at the drugstore chain, which recently opened its own investigation center to fight retail crime. “It’s much like doing a drug case: You find out who all the players are, who’s doing what.”
In Southern California, retailers and law enforcement have formed the Los Angeles Area Organized Retail Crimes Association, which counts Nordstrom, Toys R Us, Home Depot and Wal-Mart among its members. More than 55 law enforcement agencies participate, led by the Los Angeles Police Department. At the group’s monthly meetings, retailers share cases, pass along tips and alert one another to repeat offenders.
“I couldn’t do half the stuff I do without the retailers’ help,” said Capt. Bill Williams, commanding officer of the LAPD’s commercial crimes division. “Individually it’s very difficult to do this, but collectively we can do much more.”
The companies say their efforts are aimed at getting a better idea of which products are being targeted and what time of day and from what location within the store they’re most likely to be stolen. Using such data, for instance, some luxury retailers have moved designer jeans away from store exits.
Despite these efforts, retailers can’t stop it all. While organized retail crime has grown, so has theft by employees. Even teens are becoming more adept, forming “flash mobs” that use social media sites such as Twitter to publicize a time and place to meet up and steal goods from a local retail store.
“It just never seems to end,” said Lisa LaBruno, vice president of loss prevention at the Retail Industry Leaders Association.
She added that merchants also face a delicate balancing act between protecting their merchandise and creating a welcoming shopping environment. Although some stores, notably Costco, check receipts at store exits, most say they don’t want to offend honest customers.
Like many other companies, Home Depot has installed cameras in high-theft aisles and shelving units that limit how many products can be taken at a time. But the home improvement seller has also relaxed its returns policy.
“We’re in the business of selling product and customer service, not making it look like a police state where everything’s chained and locked,” said Mike Lamb, Home Depot’s vice president of asset protection.
Companies that install anti-theft technologies in stores say the goal is to avoid being invasive.
At Vector Security, much of the recent focus has been on improving the detector alarms near store exits. The latest ones will alert store employees if thieves walk into a store with hidden booster bags and are equipped with anti-jamming devices so thieves can’t tamper with them.
Vector’s director of North American sales, Gary Fraser, admitted that sometimes it can feel like a game of catch-up, with retail thieves a step ahead.
“If you build a mousetrap, they’ll build a smarter way,” he said. “You have to adapt.”