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Retail gangs take growing toll on sales

Losses from organized retail theft have topped $30 billion annually, triple what they were a decade ago, according to the National Retail Federation, leading to higher prices, frequent out-of-stock problems and a more cumbersome shopping experience for consumers.
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At CVS, the diabetic test strips and the perfume are now behind locked glass cabinets, with a bell to ring for service. Nearly all over-the-counter medicines are behind plexiglass panels that customers must reach over to get their Advil or Pepcid. And most razors and refills are in clunky, noise-making dispensers that won't let you put back what you take out.

The new displays are part of a larger effort by chain stores to combat what has become a significant problem for the retail industry: organized theft. Retailers say rings of habitual shoplifters are proliferating nationwide, but particularly in urban areas such as Washington, where retailers and malls are packed close together and there is easy access to highways.

"We're seeing an incredible amount of activity from organized retail theft gangs from the New York area all the way down into Richmond," said Robert Wade, vice president of loss prevention for Hecht's.

Losses from organized retail theft have topped $30 billion annually, triple what they were a decade ago, according to the National Retail Federation, leading to higher prices, frequent out-of-stock problems and a more cumbersome shopping experience for consumers.

Losses spur security investments
Companies are spending millions of dollars on security systems to tackle the shoplifting rings, from software that tracks patterns of theft regionally, to complicated fixtures that prevent the removal of multiple packages at one time. Retailers are increasingly using racks that lock for a period of time after one unit is taken, cabinets that beep if they're open too long, and hangers that lock to a jacket or suit. Some of the nation's biggest retailers, including Wal-Mart Stores Inc., Target Corp., Lowe's Cos. and Limited Brands Inc., have formed organized crime divisions to focus on the issue.

"A store could lose its entire inventory of a popular item by one professional shoplifting ring, making it now unavailable when there should be a week's supply on hand," said Joseph LaRocca, vice president of loss prevention for the National Retail Federation. "Stores are being forced to do something about it now because they're not only losing the items, now they're also losing sales."

Increasingly, retail theft cases are being prosecuted by federal law enforcement, such as the Secret Service, because the crimes are large-scale, cross multiple jurisdictions and often involve the online selling of stolen merchandise.

"We have a lot of shopping malls and outlet malls in this area, and they're all vulnerable," said Ron Perea, assistant special agent in charge for the Washington field office of the Secret Service.

In June, for example, an alleged fencing operation in Landover was raided. Prince George's County had its officers on the scene "just to provide a uniformed presence," said Lt. Terence Sheppard, but the operation was handled by the Secret Service.

"Locals have their hands full with a lot of street crime. If the feds can come in with our resources and take this off their hands, that's helpful," Perea said. "We are working with a number of jurisdictions in D.C., Virginia and Maryland on very similar crimes like this."

Organized theft a ‘ghost’ crime
Organized retail theft has been around for years, especially in some high-profile products such as infant formula. But it's always been a difficult concept for retailers to accurately measure, because when a product disappears, it's hard to know exactly where it went: Did an employee steal it? A delivery driver? A shoplifter? As a result, retailers have largely treated all shoplifters much the same, with the occasional prosecution leading to little or no penalty.

But theft has been growing so fast that retailers are only now recognizing the role that organized crime is playing in the industry's growing losses. Wade of Hecht's said sometimes a major theft will go unnoticed until the store does inventory and finds, for example, 400 missing ties and 200 missing shirts.

"The problem with external theft is it's a ghost," said Jerry Biggs, organized retail crime section coordinator for the drugstore chain Walgreens Co. "It's been a ghost for so long that it is now like having something that's been dormant and all of a sudden it's grown under the carpet and it's big ."

Lost in the crowd
Retailers and theft experts say criminals have discovered that large profits can be made relatively easily, and without much risk, by stealing merchandise from crowded, understaffed stores. They say the most stolen items tend to be high-priced, widely used products that are routinely sold in chain stores: over-the-counter medicines, razors, film, CDs and DVDs, baby formula, diapers, batteries, hair-growth and smoking-cessation products, hardware, tools, designer clothes and electronics.

Shoplifters might spend all day going from store to store, then sell the goods they've stolen to the fence for 10 or 20 percent of their retail value, said Chuck Miller, a retail security consultant in Great Falls and author of "Organized Retail Theft," a handbook published this month for industry professionals. Fences then aggregate the products from multiple shoplifters and sell them at flea markets, online or to bodegas and convenience stores, he said.

In department stores, thieves will work together, with one distracting a sales clerk and another stealing clothes. Some schemes involve creating high-quality fake receipts in order to return stolen goods for cash. At home improvement stores, a shoplifter might take an inexpensive item out of its box, fill the box with higher-priced goods from all over the store, then seal it up and pay only for the cheaper item that was originally in that box.

Thieves plead ignorance
"The common criminal would rather have a situation occur at the register where they plead ignorance, so to speak, rather than do straight shoplifting and risk being apprehended by a loss prevention detective," said Claude Verville, vice president of loss prevention for Lowe's. Shoppers found with phony bar codes or stuffed boxes, he said, usually say they don't know anything about it.

Lowe's has responded by beefing up its in-store camera systems and installing more-sensitive electronic sensors at the exits, while also requiring that employees respond within 12 seconds if an alarm sounds.

Yet catching the sometimes loosely organized rings of individual shoplifters remains notoriously hard because gangs tend to hit numerous jurisdictions. When a chain store is robbed, managers may not realize another store was hit by the same group earlier in the day.

"It's very hard to connect the dots," said Thomas S. Saquella, president of the Maryland Retailers Association. "They may hit a store in Frederick, a store in Prince George's and a store in Montgomery in one day."

Retailers are beginning to work together, establishing a joint database of crimes so that companies can prove the scope of theft by a particular group, and thereby lead to more forceful prosecution by law enforcement. Individually, loss prevention executives focus on gathering enough evidence to elevate organized theft cases to the federal level.

"I'm going after a guy right now that's been arrested 56 times," Walgreen's Biggs said. "I've got to put together a case that can show this isn't your typical little shoplifter."

The day after making that statement, Biggs called back to say he had just arrested the same shoplifter for the 57th time.