Rich Mellor, vice president of loss prevention for the NRF, joined NRF in Nov. 2011 and tirelessly works to raise the visibility of retail loss prevention issues, including organized retail crime and return fraud. Prior to joining NRF, Mellor served as an executive with companies such as Helzberg Diamonds, Macy’s, Woodward & Lothrop and John Wanamaker.
Despite the rising tide among retailers to combat Organized Retail Crime (ORC), the problem still seems to be a growing one in America. Of the 125 retail companies surveyed for the National Retail Federation’s eighth annual Organized Retail Crime Survey, a record-setting (96.0%) reported their company has been the victim of organized retail crime in 2011 — up from 94.5 percent in 2010.
For a full overview on the ORC threat, please see our May 2012 cover story, available at www.securityinfowatch.com/10713236.
Security Technology Executive recently sat down with Rich Mellor, vice president of loss prevention for the NRF, to discuss the trends that are impacting retailers’ ORC prevention efforts. Mr. Mellor joined NRF in Nov. 2011 and tirelessly works to raise the visibility of retail loss prevention issues, including organized retail crime and return fraud. Prior to joining NRF, Mellor served as an executive with companies such as Helzberg Diamonds, Macy’s, Woodward & Lothrop and John Wanamaker.
Here’s the interview:
Q: ORC was officially named and identified by the FBI in 2005, yet according to NRF’s 2012 Organized Retail Crime Survey, 96% were a victim of ORC. Are American companies making any progress, or are the criminals staying a step ahead?
A: I would say American companies are making progress in this area, and although the criminals are attempting to be one step ahead, I think the loss prevention divisions of the retailers are making advances themselves and learning to actually be one step ahead of the criminals. Every month that goes by each side comes up with a new ideas and concepts — it goes back and forth.
Even though it is a growing problem affecting more retailers, those retailers that have been dealing with ORC for a number of years have recognized the problem and have put strategies in place to curtail these thefts. They are getting pretty good at tracking these criminals and bringing them to justice.
What kind of stance is law enforcement taking on ORC—have there been more convictions, and are they being couple with long sentences?
The broad statement would be the education and awareness factor among law enforcement organizations — and that includes local, state and federal agencies — is much better over the last few years. There are lots of conversations going on between the retailers, the law enforcement community and even into the prosecutors’ offices, where they meet collaborate and talk about strategies to devote manpower, resources, etc. to this. I think the awareness and the collaboration has really notched up over the last couple years.
Retailers are doing a much better job on tracking incidents and collaboration, which has been extraordinarily helpful to the law enforcement community to get credible information.
How are different retailers collaborating?
The retailers are collaborating now from one company to another — most of the retailers with a large number of stores have ORC teams within their company. Those ORC teams analyze the information they collect from video and other security systems to develop historic and predictive information using analytic software.
Although retailers are competitive by nature, when it comes to ORC, loss prevention folks are working together almost as if they are in the same company. They are so closely aligned on trying to catch these thieves and prosecuting them. When prosecutions do occur, it’s not going to be just one retailer standing in front of the judge — the larger the number of incidents and accumulated theft of merchandise that can be proven, the more likely that a severe sentence will be handed down in a successful prosecution.
Is retail loss prevention partnering more with law enforcement?
That is absolutely the case. The NRF is very much involved with that too — as an organization we have a number of different groups that meet around the country where information and stats are shared in groups. Commonalities and patterns start to emerge, and law enforcement agencies are coming to those meetings now to discuss the problem and see if they can collaborate with different localities and retailers. That cooperation is huge compared to what it used to be just a few years ago, and we are excited to see what that’s going to lead to.
We are seeing cases develop and arrests being made across the US – we get bulletins every day where some group was taken down and it led to the recovery of hundreds of thousands of dollars, or even millions in merchandise. That’s going in a very good direction.
Michigan has made ORC a felony, are other states following suit with similar legislation?
It’s one state after another really that are putting in place felony thresholds and defining what constitutes organized retail crime at the state level, but those definitions vary from one state to another.
What is the direct impact of ORC on the retail community?
The financial impact is extraordinary — when you put out 25 items and 15 get stolen, you are operating in the red. In some cases, retailers have to make a judgment call — if they continue to put these items on the shelf and lose them at a high rate, it becomes cost-prohibitive to even carry them.
Often, the consumer is overlooked when it comes to the impact of ORC. When these thieves take a whole shelf of jeans or a whole rack of medication, it’s not available for the consumer. Some retailers have had to take these items off the counter, and then the consumer can’t buy it and they become frustrated with the retailer.
What are some of the items that ORC is targeting?
Baby formula, for example, has been a topic of conversation for at least a decade. It’s expensive and desirable product, and it’s easy to sell in flea markets and other places. Over the years, there’s hardly an item that the organized retail thieves won’t go after if in fact they can get a quantity.
Popular items include designer products such as jeans, handbags, scarves or shoes, where there is a market for them both inside and outside the United States.
Grocery and pharmacy items such as over-the-counter medications, beauty products, skin care items, disposable razors are attractive because thieves can sweep them off a shelf quickly, and the price points are not cheap. The products we mention on our survey even include laundry detergent — as crazy as it sounds, Tide really became a target. It was an easy product to recognize, it was not exactly locked down and secured and it was displayed in close proximity to exits. The reality is, the thieves have the ability to sell items like that very quickly, so they are desirable.
But groceries and pharmacies are now doing a better job in protecting them.
What are the physical protective measures that groceries and pharmacies are using?
Now you see the plexi-type devices that prohibit you from getting more than one package at a time. They are common for items like Tylenol or razor blades — you have to slide the plexi-glass aside to get the one you want. Those physical controls can be a bit of an inconvenience for the customers, but the honest ones recognize the need for those types of devices.
Technology is definitely helping along those lines and those physical controls are being coupled with electronic measures. For example, if you hold those plexi-devices open for a specific length of time, you might hear an audible tone to alert an in-store associate that someone is holding it open. Coupled with that, an alert message might be sent to that associate’s mobile device. Then the person in that aisle may suddenly see someone from the store show up pretty quickly.
What other types of technology are common among retailers to theft prevention?
I happen to believe that public view monitors have a great impact. If your camera equipment is good and it displays a very clear picture, the thieves can see that they can be recognized. It creates awareness that the store is probably not a good one to target.
Thieves have countered by wearing baseball caps and keeping their heads down, but retailers have responded with cameras positioned at different levels — they may be pointing down, or upward, or straight at you.
The thieves use electronic devices just like anyone; for example, they use a GPS device to plot the route they will take from one store or mall to another. But the retailers are using those devices as well to predict where the next theft will take place, and they are sharing that knowledge with each other and the police to stay a step ahead. They will call and say ‘we’ve had a series of hits at our mall, and it is likely that (the thieves) will be at this neighboring mall within a half hour.”
Outside of cameras and access controls, is there a particular newer technology you see being deployed to combat retail theft?
Retailers are starting to see the benefits of RFID, and they are moving toward using them instead of traditional EAS tags. This technology helps not just in loss prevention, but also in other areas of the business, such as inventory control and supply chain tracking. RFID tags enable a retailer, for example, for example, to see and be alerted to an item that has been moved from one area of the selling floor to another. This is a technique used for ORC — someone comes in and targets the merchandise they want and move it closer to an exit to make the theft easier for a second person. From an ORC and loss prevention standpoint, you will be on alert and better prepared to catch someone shoplifting, since you know the items have been moved and the crime is likely about to take place soon.
This technology can help in curtailing employee theft as well.
Are flash mobs still a problem?
Flash mobs are unfortunate because they victimize these stores where it’s just one or two people working and it’s an overwhelming thing. Sometimes it’s not for theft, just intimidation. In that case, it’s almost like a prank-type of incident, but it’s not funny.
When it is a theft, it brings us back to the collaboration with law enforcement, as they don’t take to this kind of behavior kindly. Even if the merchandise stolen is not expensive and the quantity doesn’t amount to a lot of dollars, the police have responded very quickly and with a sense of commitment to these incidents.
Based on what I’m hearing and seeing, there has already been a serious reduction of these types of incidents, due to the effective police reaction. They are all about seeing if they can find and arrest these people and I see more arrests from them than ever before. It goes back to the quality of cameras — if the police can identify and find one of the people, it becomes easier to find the others.