HOT TOPIC: RETAIL THEFT

Smashing Crime

Retail theft—including organized retail crime—is on the rise and making waves in the eyecare business. Are you protecting your business—and yourself?

BY ERINN MORGAN

Edward Beiner has seen his high-end, Miami-based optical stores broken into and selectively cleaned out four times in the past six years. “They hammer out the locks, throw bricks through the windows. The videos don’t help much and the police really don’t care—they figure you will work it out with your insurance company,” says Beiner, who has 12 namesake stores in southern Florida.

To deter the growing rash of increasingly organized thefts, Beiner placed hurricane glass in his front windows. “It’s expensive but it takes 160-mile-per-hour winds,” he says. “Someone tried using a sledgehammer on it to break in and it cracked the glass but it didn’t break.”

At Dietz McLean Optical, which has nine locations in Texas, a recent break-in resulted in thieves shattering a front door, stealing about 15 Cartier pieces, and destroying a Cartier display case. “It was a smash-and-grab, they were in and out fast, and they were very selective on the items stolen,” says Drake McLean, president of Dietz McLean, who notes that his stores are definitely seeing more incidents of theft.

“We’ve had two or three break-ins over the past 12 to 18 months,” he notes. “And, we have shoplifting events quarterly, at least. I think some of the product is ending up online and some is going to flea markets. Police have felt in the past it may be gang initiations.”

By the Numbers

When asked if their company has been the victim of organized retail crime, “yes” replies represent the majority.

2011

94%
2012

96%
2013

93%
2014

88%

Source: NRF 2014 Organized Retail Crime Survey

VIDEO ON DEMAND

Fighting retail theft can be challenging, but with the right training, staff can be prepared for the worst. Check out pointers from Robert Siciliano home security specialist with BestHomeSecurityCompanys.com, ”10 Tips How to Prevent Retail Shoplifting.”

HERE’S HOW TO ACCESS IT:

1. Search “Actable” in your Apple or Google Play store,
2. Download and launch the app on your mobile device,
3. Frame this page through your screen and press “Scan.”

How Should You Address a Thief?

According to Bob Moraca, National Retail Federation’s vice president of loss prevention, a general guideline is that you never want an employee to put themselves at risk.

“If you think someone put something in their pocket, you can tell the manager, but you have to be 100% right and know what it was and where they put it,” he says. “If you see someone steal something, you can always walk over and ask them how you can help them, letting them know they’ve been noticed without saying anything—most retailers don’t want employees to say anything because no one wants to trigger a confrontation and have the employee get hurt.”

Internal Theft

An even bigger problem today than external theft, internal theft by a business’ own employees accounts for over 40% of all inventory shrinkage, according to the 2012 National Retail Security Survey from the University of Florida.

“When you look at shrink numbers, the internal fraud and theft are a bigger piece than the everyday shoplifter or even organized retail crime,” says Bob Moraca, vice president of loss prevention at the National Retail Federation.

Employees may give substantial discounts or even free frames to friends and family. To combat this, some ECPs provide employee education on the parameters of theft and they offer employees discounts for their family and friends.

Moraca offers some strategies that retailers in other industries are using to help minimize internal theft.

Audit your cash registers from time to time to make sure product is actually going out and money is coming in.



Using a high-end closed-circuit TV system can identify items being sold at the register. “Some of the new systems that can literally give you a product count,” Moraca says.



Look to old-fashioned solutions. “A good manager has to be in the store and keeping an eye on things,” he says.



Good defenses never go out of style. “Make sure you always do background checks on new employees,” Moraca adds.

Beiner says he has noticed a definite increase in optical break-ins taking place throughout the country where thieves are targeting—and taking—the same products. “They don’t take everything, they know exactly where they are going, exactly what they want; it’s usually the higher-end product they go after,” he says. “It’s happening everywhere—in Miami, in the Northeast, in Florida, in the Midwest—a month doesn’t go by before I hear about another big optical theft through social media and the Internet.”

According to crime experts, the thefts these eyecare professionals are experiencing are likely part of an organized retail crime (ORC) enterprise. From department and big-box stores to grocery and specialty retailers, eight in 10 retailers were victims of ORC activity in the past year, according to the National Retail Federation (NRF) 2014 Organized Retail Crime Survey.

And, while 2014 marked the first slight decline in ORC since 2008, theft—and its resulting shrinkage—is still a huge problem for retail businesses.

“The external theft issue is growing and the most significant area is organized retail crime,” says Bob Moraca, vice president of loss prevention at the NRF. “ORC is estimated to cost retailers about $30 billion a year across industries here in the U.S.”

Until recently, shoplifting crimes were more common than ORC in the eyewear business. But, a recent rash of clever crimes taking place at higher-end optical locations across the country begs the question: Is organized retail crime now targeting the optical industry?

ORGANIZED RETAIL CRIME & YOU

Some experts say “yes”—this perceived trend is very real in the optical arena. While ORC thieves have traditionally targeted everything from cell phones and designer jeans to baby formula and razor blades, eyewear is a new loot of choice.

It has a substantial profit margin, especially when shipped overseas, where retail prices can be as much as two to three times more than those in the U.S. for the same frame.

“Designer eyewear is a target, but optical stores are typically small which makes theft more difficult,” says Pat Murphy, president of LPT Security Consulting, a Houston-based security consulting company. “Thus, thieves have realized that there is a greater success with burglaries versus shoplifting so they can get more frames.”

What's the hardest thing for eyecare professionals dealing with a recent break-in? “Clean up is a pain, but the worst part is dealing with the insurance claim,” says McLean. “The documentation required by the insurance companies can be very tiresome to gather.” (See insurance sidebar, p. 54.)

COMBATING CRIME

Beyond installing hurricane glass in store windows, how can optical retailers put up effective defenses to block thieves?

According to McLean, even standard defenses have weaknesses. “Break-ins have occurred even with alarm systems and cameras in place,” he says. “And, shoplifting goes on. You need to try to keep a close eye on the people in your stores. And, I would report not only break-ins to the police but also shoplifting. We were hit by a shoplifting ring a couple of years ago and there was, ultimately, a prosecution.”

Outside the optical industry, other retailers look to several standard loss prevention systems. According to the 2012 National Retail Security Study from the University of Florida, over 77% of respondents use burglar alarms, 72% use digital video recording systems, 69% use live visible CCTV, and 46% use acousto-magnetic electronic security tags.

According to Murphy, who notes that the most valuable crime-reducing asset is additional employees on the floor, these systems are not truly effective at stopping thieves. “A dedicated criminal can’t be deterred,” he says. “You just hope to move them down the street.”

Moraca agrees, noting that thieves have found a way to work around even electronic article surveillance systems with metallic foam-lined “booster bags,” which shoplifters use to resist detection of stolen items going out the door.

He recommends placing the most coveted items behind locking glass displays, and recommends putting a greeter or TV surveillance at the door greeting people when they come in.

“When these criminals come in and see a TV screen where they see themselves they think, ‘Wow, there are some serious countermeasures here,’ he notes. “If you have something like that it will move them down the block—they will go towards the path of least resistance.”

What is ORC?

Organized retail crime (ORC) involves sophisticated criminal enterprises that know which goods, brands, and products have the best return on their criminal investment. These enterprises execute break-ins and multi-person shoplifting crimes where only the items with the best resale value are taken.

These items are typically sold through fencing operations such as fake storefronts, third-party and auction websites, pawn shops, and flea markets. Retailers’ financial investment in fighting ORC tops $400,000 on average, according to the National Retail Federation (NRF).

“These enterprises are involved in organized crime but they are typically doing other things, too, like running drugs and human trafficking,” says Bob Moraca, vice president of loss prevention at the NRF. “These groups said, ‘Hey, let’s also do this because the profit margin is so high. It’s like any other business—they are profit-margin driven. If you can steal something for nothing and then convert it to cash, the profit is 100%.”

Return Fraud is Skyrocketing

As if organized retail crime, shoplifting, and internal theft weren’t enough on your optical retail plate, the National Retail Federation (NRF) also points to the growing incidence of return fraud. In fact, the estimated amount of fraudulent returns to retailers in 2014 is $10.8 billion—an increase of a full 20% over fraudulent returns in 2013—according to the NRF 2014 Return Fraud Survey.

What is return fraud?

It occurs when shoplifters and thieves steal merchandise from a store and then return it for store credit or a gift card that they then sell to an online reseller who then sells them to consumers at a discounted rate.

Insuring the Scene of the Crime

It can happen…you might end up the victim of a robbery, left trying pick up the pieces and move forward. Before a crime occurs, call your insurance agent to take the steps that will ensure you’re covered for recovery.

By Amy Spiezio / Sources: businessinsurancenow.com, American Insurers Group, Nationwide, Insureon