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C+CT

How shopping center owners can address rising retail crime

September 13, 2021

U.S. retailers are experiencing a pandemic-fueled crime wave that is depleting inventories, sapping revenue, alienating customers and even threatening the safety of employees and shoppers in some stores. And with slashed police budgets and chronic understaffing among law enforcement organizations, experts say help is often unavailable or slow to respond when store operators report crimes. "We're in a unique environment in the U.S. right now," said Tony Sheppard, director of loss prevention solutions for loss prevention software company ThinkLP. "Retailers are struggling with the amount of external theft activity. It is significant."

While many retailers expect some degree of loss each year to theft or fraud, Sheppard said an upswing in organized retail crime has made those losses more costly and problematic, as takes per incident are higher and repeated attacks are occurring. Typically, a group of professional shoplifters, or "boosters," quickly will load up on goods that have long shelf-life and high resale value. If confronted, perpetrators have been quick to produce weapons or become violent.

Over-the-counter drugs, toiletries, cosmetics and fragrances are favorite targets due to their small sizes and high price points. A booster crew easily can abscond from a single drugstore with $2,000 in merchandise, Sheppard said. A similar volume of goods stolen from a fragrance store, due to higher price points, can represent a loss of $5,000 to $10,000 per incident. Criminal groups often repeat their attacks at a brand's other stores, so losses can add up quickly. "Organized retail crime is really a hot button among retailers right now," Sheppard said. "It is affecting their bottom line a lot more than it used to."

COVID-19 and crime

Retailers’ security concerns were increasing before the pandemic, but COVID-19 accelerated some of those worries, said National Retail Federation vice president of research development and industry analysis Mark Mathews. That's according to the organization's Retail Security Survey 2021, published in late August. "Mall and in-store violence/shootings were mentioned by 82% of people as what has become more of a priority in the last five years," he said. "Where we've really seen the bump over the last two years was in workplace violence and retail crime. We asked retailers what the pandemic effect was in terms of increasing overall risk to their organization, and the No. 1 answer was workplace violence. No. 2 was retail crime."

Just as COVID-19 triggered business closures and behavioral shifts among consumers, it also forced criminals to adjust tactics, Mathews explained. "Criminals were prevented from their normal modus operandi. It became more complicated." Coordinated, group shoplifting to feed high-volume resale operations has proven profitable, and thieves have grown increasingly brazen. Boosters know they are unlikely to be detained by store employees unwilling to risk a violent response that would endanger staff and customers, experts say.

Even after an arrest, the case may be dropped or result in a light penalty, as many courts have become more lenient in prosecuting misdemeanors during the pandemic. Penalties for shoplifting are light in many jurisdictions. In 2014, California raised the threshold that defines felony theft from $400 to $950, so stealing, say, $800 worth of goods could be a lucrative misdemeanor. In response to increasingly bold and violent smash-and-grab thefts, however, California enacted a law on July 21 that lets prosecutors choose whether to seek misdemeanor or felony charges against those who work together to steal merchandise from a retailer, whether online or at a store.

Omnichannel and e-commerce fraud grows

During the pandemic, criminals paid attention to retailers' expanding omnichannel and e-commerce activity. In NRF's survey, 39% of respondents reported increased fraud in multichannel sales like buy-online-pick-up-in-store. That’s more than double the 19% from the 2020 survey. Seventy-six percent cited cyber-related incidents as more of a priority in the past five years. Mathews chalks that up to a long-term rise in cybercrime across industries. In fact, U.S. e-commerce merchants surveyed by LexisNexis Risk Solutions reported a 140% increase in fraud attacks since 2020, while their counterparts in Canada reported a 52% increase. The company's 2021 True Cost of Fraud Study found that every $1 of fraud costs U.S. retailers and e-commerce sellers $3.60, up 15% from a pre-pandemic survey.

The growth in e-commerce marketplaces also has expanded opportunities to fence boosted goods to buyers in other states or countries, complicating investigations by local law enforcement and by retailers' own investigators. That's why the Retail Industry Leaders Association, ICSC and other associations last year launched the Buy Safe America Coalition to urge governments to combat organized retail crime and protect consumers from the sale of stolen and counterfeit goods. The coalition has asked federal lawmakers to require online marketplaces to collect and verify basic information on third parties who sell products on their platforms, which could help to reveal online fencing operations. “When you buy something in a physical store, a consumer has more certainty about what they are buying because the seller can’t hide behind a computer screen,” said ICSC Global Public Policy vice president of federal operations Jennifer Platt. “The Buy Safe America Coalition wants to improve online seller transparency, which could go a long way to providing law enforcement and consumers with a mechanism for making sure that merchandise is legitimate and hasn’t been tampered with.”

More than 50 organizations and companies have joined the coalition, said spokesperson Michael Hanson, who is also senior executive vice president of public affairs for RILA. “Organized retail crime is a growing and dangerous problem. It is affecting all retailers, their employees, customers and the communities they serve,” he said. “Retailers are forced to close stores, limit hours and there is an unsettling increase in violence toward frontline retail workers."

Buy Safe supports the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers, Act, which would require online marketplaces to verify sellers and enable consumers to contact sellers from which they buy. The Inform Consumers Act " will bring needed transparency [and] accountability to online marketplaces and protect consumers," Hanson said. "Shining a bright light on the criminals that are hiding behind fake screens names will help law enforcement track down and prosecute these criminals, which in turn will protect retail workers and consumers.”

5 landlord best practices

While in-store security is primarily a retailer's responsibility, landlords may suffer consequences when crimes occur on their properties, said Center Security Services owner David Levenberg, a consultant and expert witness on retail and mall security. If a jury finds that inadequate security contributed to someone becoming the victim of a crime committed on mall property, for example, the landlord could be subject to severe civil penalties, he said. Properties also could develop reputations for being unsafe.

"It's important for landlords and owners to understand that security does have an important impact on the [property] itself, affecting customer traffic and sales or resulting in tenants wanting to leave the property because of a crime issue," Levenberg said. "I've seen a number of instances where a tenant either breaks their lease or doesn't renew because they believe the shopping center has become dangerous."

Landlords can mitigate their liability and give law enforcement and prosecutors an edge in catching and convicting criminals by implementing some best practices, such as:

1. Get a third-party security analysis. An independent security advisor can identify weaknesses and suggest adjustments, Levenberg said. "They may suggest things like ensuring manpower deployment is adequate and targeted, improving lighting in the parking lot or putting graphics on patrol vehicles so people can recognize them from a distance.”

2. Track crimes and violence. Many retail brands use incident-tracking software in their loss prevention efforts. For landlords, predictive analytics may help deploy resources for issues like parking lot break-ins or gang violence in common areas. Levenberg advises landlords to track incidents by activity, frequency, time of day and day of the week, which can reveal patterns and suggest adjustments to operations.

3. Enhance video surveillance. Landlords can help retailers and law enforcement identify thieves by improving the quality of closed-circuit security cameras, said ThinkLP's Sheppard, who has worked in retail loss prevention for more than 27 years. At most properties, images from outdoor cameras aren’t clear enough to read license plates or discern facial features. Cameras with night vision, high definition and other advanced features not only improve evidence gathering but also help prevent incidents. Systems with license plate recognition software, for example, can alert a property's security team when a vehicle entering the lot previously was involved in a crime. A security advisor can recommend where to place cameras to provide effective coverage, avoid glare and maximize the likelihood of capturing faces and license plates. "Investigators need video; they need intelligence," Sheppard said. "That is something landlords could help with if they improve the quality of their cameras and coverage in the parking lot."

4. Vet parking lots and building exteriors. Outdoor lighting should meet levels recommended by the Illuminating Engineering Society, Levenberg said. Ensure landscaping doesn't create hiding places for criminals, block security cameras or create shadows that compromise security. Learn more about these and other principles by researching Crime Prevention Through Environmental Design, or CPTED. "The way you build the environment can have a positive effect on deterring criminal activity," Levenberg said, "so when you are going to be renovating a shopping center or building new, that should be part of the design process."

5. Consider expanding the security team. The most accelerated retailer response to escalating security concerns is to reallocate or hire additional employees, according to NRF's Retail Security Survey 2021 survey. Forty-three percent plan to hire staff this year to address security concerns, up from just 26% in 2020. Landlords can do the same by beefing up their own security teams. Hiring off-duty police officers for onsite security is an extremely effective deterrent to attacks by organized criminals, experts say. The cost is typically higher than for private security, however, and in communities where police departments already are stretched, finding officers for outside work can be difficult. Still, even uniformed private security can serve as a deterrent.

Some malls require anyone under a certain age to be accompanied by parents or guardians while on the property, Levenberg said. Though often effective at reducing youth violence, such policies require a substantial investment in staff, who must post at each entrance and patrol the property. Another deterrent is canine patrols during key hours. "You don’t know if a dog is there for narcotics or weapons detection, and if you have either, you are going to go the other way," Levenberg said. "That has been pretty effective in areas with gang or violence issues."

Landlords can help the fight against organized retail crime by joining local or national efforts seeking better enforcement and stiffer penalties. NRF’s Mathews calls for a federal law against organized retail crime. For now, it falls to local police and retailers themselves to investigate crimes often carried out by national or international criminal groups. "This is a major problem — and not just because retailers have to deal with organized crime and that it adds to the price we have to pay in stores," Mathews said. "We have to remember this is funding other illegal activity. This is a major problem for our country."

By Matt Hudgins

Contributor, Commerce + Communities Today

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