Organised Retail Theft (ORT) is a $37 Billion problem that affects 96% of retailers(1). Unlike petty thieves, these gangs they are highly organised, entrepreneurial, and technologically savvy. ORT also differs in that it aims to convert the illegally obtained goods into financial gain, not personal use(2). These criminal activities include theft, gift card fraud, receipt fraud, ticket switching and cargo theft(1). Yearly, American retailers spend $27 billion dollars on retail theft prevention(4). Where do grocers fit in the picture and what can they do?
Compared to most other types of retailers, Grocers’ losses due to theft are near the median. But, considering the small margins prevalent in the grocery retail industry, these numbers gain significance. The size of stores, the complexity in the supply chain and fast employee turnover rate are factors that increase theft and burden grocers’ already small margins. Grocery merchandising is also more vulnerable to theft, specially when compared electronics and jewellery (where everything is locked and tucked away). Are safety and sales pitted against each other? Profit depends on finding the middle point.
Three main factors are identified as contributing to ORT: location, types of goods sold, retailer’s controls and policies, and store layout and design.
- Location: stores in malls or near highways are more vulnerable to ORT as they are easier and more efficient target for traveling gangs.
- Type of good sold: CRAVED goods (Concealable, Removable, Enjoyable and Disposable)
- Retailer’s controls and policies: a liberal return policy, ratio of part-time to full-time associates, costumer service and sales floor presence, and staffing at entrances and exits.
- Store layout and design: store layouts can increase visibility and eliminate blind spots, thus maximising the deterrence that employees, electronic systems and other costumers have(2).
These principles were supported by a study in which known retail theft offenders were interviewed about the physical cues that influence their decision to steal. The table summarises the most salient findings(5).
Together with a preventive strategy, retailers should be prepared for when theft does happen or the offender is caught. At the end, you will find a series of links to interview formats and other resources for retailers to take action and curb ORT.
Together with grocers’ expertise, these insights can inform a strategy to fight ORT. It is important to keep tight inventory control, as this will show the effectivity of measures. A sound strategy will deter potential criminals and reduce shrinkage, thus allowing for bottom-line growth
-The Sutti Team
RESOURCES FOR RETAILERS: