Jun. 18--Minneapolis -- An industry that guards its secrets carefully is making an exception when it comes to shoplifting. Retailers have been hit hard this year by organized rings of thieves, and they're fighting back by talking about it.
"It's killing us," said Stan Berger, regional loss prevention manager for Stage Stores in Houston.
During a lunch break at a National Retail Federation meeting this month, Berger was swapping phone numbers with loss prevention managers from other companies. By sharing information, people charged with nabbing retail crooks are hoping to stop the big operators who are costing the industry billions.
"Organized retail crime is definitely the hot topic in retail crime prevention," Berger said.
Last year, retailers in the United States lost about $37.4 billion worth of merchandise, with about 80% of that stolen by shoplifters or employees. That amounts to 1.6% of the $2.3 trillion worth of goods sold.
Some of the merchandise that disappeared was taken by traditional shoplifters: thrill-seeking teenagers or people who just want a free sweater. But huge amounts were removed from stores by professional shoplifters, known as "boosters" in the industry, who make a career of stealing and turning over the goods to bosses who sell to someone else, known as "fences." The merchandise then goes to black market stores, flea markets or to online auction sites.
Organized crime is a big topic for loss prevention managers at Green Bay-based ShopKo.
"It has escalated in the past year, primarily in our larger markets," said John Vigeland, spokesman for the discount chain. A ring operating in Salt Lake City has been stealing baby formula and health and beauty products, such as shaving items, Vigeland said. The products are going over the border to Mexico for resale, he said.
ShopKo has been sharing information with other retailers in Salt Lake City that have been hit by the theft ring, and it is planning to get involved in a national database, Vigeland said. ShopKo also has increased video camera surveillance in its stores.
"In the past, ShopKo has been reluctant about sharing information," Vigeland said. "Now (organized crime) is picking up enough steam that we have to get involved."
Bon-Ton Stores Inc., which operates the Boston Store and Younkers chains in Wisconsin, is represented on the National Retail Federation's advisory board for loss prevention and is participating in the intelligence network.
"All of retail faces this," said Mary Kerr, spokeswoman for Bon-Ton.
The federation honored a Portland, Ore., FBI agent, Christopher Frazier, at the Minneapolis loss prevention conference for his role in bringing down a retail crime ring that operated for years in the Pacific Northwest. The four-year undercover operation that Frazier oversaw resulted in indictments against 91 people and the recovery of $7 million in merchandise and $1 million in cash.
After being approached by the loss prevention executive for Safeway Inc., Frazier agreed to take the case, despite enduring teasing from fellow agents who viewed it as shoplifting, which is not something that most law enforcement officers see as an important crime. Safeway and other retailers in Portland were targets for thieves who took health and beauty products, cigarettes, DVDs, over-the-counter drugs and other small items that were fenced to illegitimate wholesalers in the region.
Retailers say the professional boosters are bold.
Venus Finley-Akins, senior regional loss prevention manager for Gap Inc., based in San Francisco, said one of her most notable cases happened in an earlier job at Mervyns, a discount department store chain also based in San Francisco.
Looting store at night
Thieves had discovered that they could get into a store at night through an air conditioning duct on the roof by removing the vent. One man would crawl through and drop into the store, dragging a rope. He would fill bags with merchandise and send them up to an accomplice on the roof, then leave the same way.
The store had been losing so much merchandise that the loss prevention team did a stakeout to catch the crooks, Finley-Akins recalled.
"We had 30 bags of merchandise on the roof when we caught them," she said. The crime ring was fencing the stolen merchandise to South America and Asia, Finley-Akins said.
During the day, the pros work in teams while stores are open, loss prevention managers say. A few of them will gather merchandise into "booster boxes" or "booster bags" that they carry, while a lookout watches for store security officers. Lookouts use cell phones these days, allowing them to hang out without drawing suspicion.
"Nobody bothers someone who's talking on a cell phone," Berger, of Stage Stores, explained.
Retailers are just starting to take action to stop the crime rings.
Preliminary results released this month of the 2005 National Retail Security Survey from the University of Florida show that only 10% of the retailers who responded have an organized retail crime task force. One-third of companies are tracking organized retail crime data.
Last year, the National Retail Federation started polling its members on organized crime. In its latest poll, conducted in April, the federation found that 81% of companies had been victimized by organized crime, but only 52% were allocating additional resources to stopping it.
Catching the boosters in a store is one thing, but getting prosecutors to pursue a case can be even more challenging, retailers say.
Frazier, the FBI agent from Portland, said the Sept. 11 attacks only made it more difficult.
"We've had to decrease resources for bank robberies, drugs and property crimes," Frazier said, because the money is being diverted to fight terrorism.
A big job to do
That means retailers have to take responsibility for doing much of the detective work themselves, and for educating local law enforcement officers on the scope of the crime rings.
The retail federation is supporting the establishment of a national network that will allow retailers and law enforcement agencies to share information that will help them to stop the crime rings.
Congress recently authorized the FBI to set up a task force to fight organized retail theft and to set up a national database to track and identify where organized retail theft crimes are being committed. The database will allow federal, state and local law enforcement officials and retailers to submit information and to review what others have put into the system. Through 2009, Congress has authorized spending $5 million for training officers and investigating and prosecuting organized retail theft crimes.
In addition to the database system, Richard Hollinger, the University of Florida professor who compiles the annual retail loss survey for the retail federation, urged retailers to screen prospective employees carefully. Hollinger said 27% of retailers who responded to the 2005 survey planned to do more checks for criminal convictions.