Retail business crime

Introduction

Organized Retail business Crimes have been on the rise in both United States and Canada. Organized retail crimes are premeditated crimes committed by sophisticated criminal gangs. It is more sophisticated than common shoplifting where criminals often go in with a shopping list of items. The items are later resold to further other criminal activities. Pricier commodities that can easily be concealed are often the target of retail business crimes. Criminals may take orders from people before engaging in the activity and later resell the items for as low as half the price. Organized retail crime is a multi-million dollar industry in with a huge impact on business owners and consumers. This type of crime has increased considerably over the past few years and is now conducted on daily basis. Two or more individuals conspire to steal large volumes of product with the full intent to illegally re-introducing it into the marketplace by auctioning through online sites, directly selling it to consumers through different avenues such as flea markets, bars, or back of cars or moving them straight across in a drug deal. The sole purpose of organized retail crimes is to generate revenue.

Mac’s Organized Retail Crimes

On December 2014, Mac stores in Parry Sound became a target to organized retail business crime. The company’s bland Toronto office acts as the surveillance room for 560 Mac’s stores in Canada. The office receives live video streams randomly from all its locations.  According to recorded clips at the security and loss prevention store chain in central Canada, on this day, slim woman in a sweater, head scarf, and floor-length skirt sneaked into the back room. The store’s walk-in safe was open, and the woman headed straight for it. She stuffed merchandise beneath her skirt where laundry-sized bags were concealed. The bags are held using a belt around the waist. After stuffing the bags to capacity, her skirt has ballooned out.  She steps out of the backroom and is engulfed by accomplices to shield her from clerks on the way out.  Two or more gang members distract clerks at the counter enquiring about products hanging on the wall behind her. The gang members then make a small purchase before leaving. On sensing foul play, the clerk gets into the back room to replay surveillance tape before calling the police. In the single crime, the store lost $30,000 worth of products within five minutes (Mac’s, 2015).

Mac’s Organized Retail Crimes demonstrates how things have immensely changed in the recent past. Organized retail crimes were not as rampant a decade ago.  Earlier there were many cases of opportunistic theft as compared to very organized gangs.  Criminal gangs employ a variety of techniques, but most of them have an element of distraction. They also utilize particular lined bags to defeat store security alarms.  Some use costumes, props, including wheelchairs.  They also use tricks like walking out the door beside individuals who appears unimpeachably honest.  In the case an alarm goes off, the honest customer stops while the criminal keeps moving forward, into a busy crowd or a waiting car(Mac’s, 2015).

The gang at Mac’s in Parry Sound carried two fake babies echoing other incidents of shoplifting.  Gangs are mobile and employ similar tactics before changing. They may have the same suspect working in one city while others carry out their activities in different cities. With mobile phones, rental cars and fraudulent credit cards and identification, crimes get multi-layered.  As they advance, they become more sophisticated with time.  The stolen goods are sold at warehouse sales, pop-up events, low-income malls and flea markets in neighborhoods where residents are busy to ask too many questions regarding the low prices.  Stolen merchandise may show up mixed among legitimate goods at discount stores or convenience stores owned by unscrupulous vendors (Mac’s, 2015).

Nature of organized retail crimes

Organized retail crimes are different from the traditional forms of shoplifting that most retailers encountered. Although the techniques used are the same, the scale, losses, and frequency of each crime are significantly greater. Unlike the shoplifter, organized retail crimes involve a network of well-trained participants whose sole purpose is to shoplift large quantities for profit. They rely on expertise, experience and well-planned execution to hit retail stores quickly while stealing as much merchandise as possible. The merchandise can be shipped overseas or placed on black markets and resold to traders who believe they are discount priced goods. The reach of organized retail crimes can be global extending beyond a single country's border.  The crime groups are created with a well-established set of connections with different individuals assuming different roles and responsibilities. In the United States, various identified groups have networks in Asia, South and Central America, North America and Russia. Regardless of sizes, organized retail crimes groups are well trained, well networked and well equipped. Roles and responsibilities extend up and down the organizations from actual thieves, sales personnel, and diverters and to the organizers. The last group gets the merchandise back to the market. While members are well educated and trained in their contact, roles and knowledge, contact with members of the network is minimized, either by nature or design making it challenging for law enforcement to break up an entire network (Bamfield, 2012).

How Organized Retail Crime Works

Different organized retail crime carry out their activities with adequate information at hand. They often rely on insiders often an employee, to help them conduct their activities.  The details of how different organized retail criminals operate could be surprisingly sophisticated and complex. The complexity forces management and loss prevention personnel to implement strict measures to keep criminals away. With the introduction of self-checkouts, honest individuals ensure that they ring in all their items. Complacency among honest employees is a great aid to retail thieves and large bar to effective loss prevention. Due to such instances, employees manning self-checkout lanes are required to be doubly vigilant. Retail stores and discount stores consider switching out employees regularly as a preventive measure. Organized retail theft gangs also target business data including banking information and customers' credit.  Despite widely available security precautions, individuals with credit card scanners have the ability to pickpocket sensitive data even when cards are safely tucked away in purses and wallets (Bamfield, 2012).

Employees with ready access to such type of data can easily obtain the necessary information and use it to defraud customers through organized retail gangs.  Due to this, sensitive data has become potentially expensive and most worrisome organized retail theft scam today. Sophisticated organized retail crime gangs may employ a variety of techniques over a period of time.  Well-organized and efficient retail crime groups can have a significant impact on a business and the bottom line. Organized retail gangs also target truckloads of merchandise in addition to targeting stores. They also commit a variety of other frauds such as using cloned or stolen credit cards to obtain merchandise. They also return stolen merchandise to obtain cash or gift cards or change bar codes to pay lower prices. The complexity of operations makes organized retail crimes clearly distinct from ordinary shoplifting carried out by persons seeking goods for personal use (Roberts, 2015).

Cost of organized retail crimes

Organized retail crimes costs retailers approximately nearly $30 billion a year. According to a survey conducted by National Retail Federation, the majority of retailers surveyed in 2014 were victims of organized retail crimes in the previous one year.  They also recognized the increase in the number of incidents over the past year. The average cost of one case was approximately $2.8 million. The exact monetary effect of organized retail crime within the retail industry is still undetermined. However, increased numbers of retailers confirm an increase in incidents of organized retail crimes.  Various studies and surveys show considerable losses that result from organized retail crimes. Although challenging to place an industry-wide value on the costs or retail crimes, the numbers support the argument that growing problem exists. Organized retail crimes are also safety threats to retail workers, with several of the cases involving some level of violence (Roberts, 2015).

The losses increase costs for retailers and, as a result, prices for consumers. They may also create health risk with theft and re-sale of items like baby formula and non-prescription drugs which might be sold after expiration or stored improperly.  Organized retail crimes are often gateway crimes with those apprehended also involved in illegal weapons or drug trade.  Retail Industry Leader's Association (RILA) and National Retail Federation (NRF) are two retail support organizations that have developed a national database to enable law enforcement and retailers to help identify organized rings, analyze possible patterns and track incidents. These efforts in collaboration with individual retailers have helped in raising the level of commitment and support by the law enforcement and legislative communities. While there is evidence of increased support, the individual retailers have intensified their efforts at preventing and protecting to reduce organized retail crime (Roberts, 2015)

Many larger retailers, who have recorded large losses as a result of organized criminal crimes, have developed specific loss prevention mechanisms to prevent significant losses. Wal-Mart is one of the retailers that implemented a facial recognition system to scan the faces of everyone entering its stores. The system identified suspected shoplifters and instantly alerted store security through mobile devices. The potential the technology had been discussed for years. Wal-Mart’s experiment highlighted some of the most effective high-tech tools available to retailers to minimize losses.  Wal-Mart is one of the companies that acknowledge using the software. The retailer later discontinued its use due to low returns on investment (Kopun, 2014)   

A large number of organized retail crime incidents suggest it’s prevalent in department stores and large specialty stores.  The most important factors that gangs take into consideration include merchandise type, store location, loss prevention measures and resell value. It prudent to that assumes that victimizations depend on these retail business factors. The location of the business also plays a major role in it becoming a target. While store locations do not automatically mean that the business is susceptible to retail crimes, risk assessment analysis shows that certain geographic retail locations experience more incidents of crime compared to others.  Resale Value and Merchandise Type is considered a fundamental factor in a retailer's target potential. Retail crime groups are familiar with consumer trends and demands and target those merchandises that they can turn over quickly. In addition to demand, criminal also thinks in terms of prices and sizes. While a larger commodity may have high resale value or high demand, it may be more difficult for a shoplifter. Commodities that are more portable are a larger target. Such items can be sold easily on different markets on the street (Spapens, 2010).

Conclusion

Mac’s Organized Retail Crimes is one example of recent highly publicized crimes that impacted the retail industry. Criminal gangs employed a variety of techniques with an element of distraction. The scale, losses, and frequency of the crime was significantly greater. Unlike the shoplifter, organized retail crimes used a network of well-trained participants whose sole purpose is to shoplift large quantities for profit. They relied on expertise, experience and well-planned execution to hit the retail stores quickly, while stealing as much merchandise as possible. Such merchandise is later shipped overseas or placed on black markets and resold to traders who believe they are discount priced goods. A large number of organized retail crime incidents suggest the prevalence in department stores and large specialty stores.  The most important factors that gangs take into consideration include merchandise type, store location, loss prevention measures and resell value. The losses increase costs for retailers and, as a result, prices for consumers. In most cases, retail criminals have adequate knowledge of a retailer’s security precautions and loss prevention strategies. The information helps in planning out multiple techniques for circumventing them. The merchandise can be shipped overseas or placed on black markets and resold to traders who believe they are discount priced goods.

References

Bamfield, J. A. (2012). Shopping and Crime (pp. 1-10). Palgrave Macmillan UK.

Kopun Francine (2014) Organized retail crime taking off in Canada.

Mac’s (2015) Crimebusters. 

Roberts J. (2015) Walmart’s Use of Sci-fi Tech To Spot ShopliftersRetrieved from http://fortune.com/2015/11/09/wal-mart-facial-recognition/

Spapens, T. (2010). Macro networks, collectives, and business processes: An integrated approach to organized crime. Eur. J. Crime Crim. L. & Crim. Just., 18, 185.

Sherry Roberts is the author of this paper. A senior editor at MeldaResearch.Com in college research papers if you need a similar paper you can place your order for order research paper.