BY JENNIFER LIPNER
www.stores.org

Accountants classify losses from theft rather euphemistically as part of “inventory shrinkage.” But everyone knows what that usually refers to: lost revenue due to theft.

While the everyday, garden variety shoplifter is a perennial thorn in any merchant’s side, focusing solely on the lone thief diverts attention from a much larger and more pervasive threat to a store’s profitability: organized retail crime. Think of it as shoplifting on steroids.

The uptick in ORC is responsible for the changing statistical landscape of retail inventory shrinkage. According to the 2017 National Retail Security Survey from the National Retail Federation and the University of Florida, the value of merchandise taken in the average shoplifting incident is $798. In 2014 it stood at only $318. The report indicates that shoplifting has exceeded employee theft and is the largest component of overall shrinkage.

Industry support
Just what makes ORC “organized”? Security experts distinguish between the individual who takes advantage of an inattentive sales clerk and the ringleader of a group engaged in large-scale theft that traffics in stolen goods. There are different models of ORC, a few of which were described recently during a webinar presented by Protection One, a division of ADT security, which used actual cases to illustrate its points.

One concept resembles a pyramid. Detective Miguel Garcia of the Miami Dade Police Department describes the first rung as “boosters.”

“Boosters are individuals or a group of people that go out, target and steal consumer goods — clothing, over the counter medications, perfume and the like — and ‘fence off’ [hand off the goods to their boss]to a secure location and make money,” Garcia says. On a good day, boosters might steal between $700 to $1,200 worth of goods.

The boosters are paid by the “fencers,” who then sell the goods to the next-level fence, who in turn sells them to yet another fence — or to ordinary (often unsuspecting) retail establishments. At each level, a markup is applied, which generates significant income for those involved. Some fences may have more than one network of boosters working underneath them.

Garcia cites a recent case in south Florida when a theft ring was busted and some $15 million in stolen medication confiscated. The investigation began when a woman was apprehended stealing diabetic test strips from a local pharmacy.

After agreeing to become a confidential informant, the woman introduced her fence to an undercover officer, which ultimately led to arrests that brought down the entire operation. Code-named “Operation OTC,” the investigation uncovered a sophisticated network, involving people from across Florida.

Sergeant Leopoldo Fuentes, a colleague of Garcia’s, strongly emphasizes the necessity of retailers and law enforcement working together to thwart ORC.

“Without industry support, we would have been unable to conduct the investigation,” Fuentes says. “A lot of the information we needed came from store loss prevention people.”

Information dissemination
When ORC traffics in higher ticket items, the potential ramifications can be far more impactful — and may even affect public safety. “ORC relative to the jewelry industry, due to the price points we deal in, often involves other criminal activities such as money laundering, drug cartels, the funding of terrorism and various underworld dealings,” says Mark Neapolitan, senior director of loss prevention at Signet Jewelers.

Elaborate counter measures are necessary to combat this level of sophistication. Signet’s loss prevention department has 24 managers, each of whom oversees security for some 130 locations. Signet is one of the largest retailers of fine jewelry, operating over 3,300 locations in the United States and Puerto Rico under several familiar names including Kay Jewelers and Jared-The Galleria of Jewelry. The company’s LP staff performs a wide range of security-related activities, including offering seminars in jewelry identification and jewelry investigation to law enforcement.

Neapolitan points out techniques used by jewelry thieves, some of which are similar to other types of retail fraud, while others are specific to jewelry; they include grab and run, burglary, distraction theft and credit fraud. Internal theft can also occur at jewelry repair locations or in the store.

An especially noteworthy case involved a series of armed robberies that occurred from January 2015 until June 2016 at Signet locations throughout the South. Early on, the female suspect targeted was dubbed the “diamond diva,” and was thought to be part of a criminal cell.

After the first few incidents, analysis performed by Signet LP staff and the FBI detected several patterns. In each case, the suspect entered the store when only female employees were on duty and no customers were present. After asking to see some merchandise, the offender produced a handgun, ordered the employees to the back and bound them. She then took their showcase keys and stole several pieces of merchandise.

During each incident she wore a wide-brimmed hat to obscure her face; only her manner of dress varied from instance to instance.

However, advanced video technology made it possible to see outside the store and determine the color and make of the getaway vehicle. Rapid dissemination of this information was made possible by effective coordination with law enforcement at the local, state and federal levels, and also through the Jewelers’ Security Alliance, a trade organization that shares security related information throughout the industry.

Eventually a robbery occurred in which the suspect’s face was exposed. The video was immediately pulled and shared among all parties. National TV networks broadcast it, and within one week arrests were made of the suspect and her cohorts.

Coordinating operations
“It’s a misnomer in loss prevention to feel that information cannot or should not be shared. This hurts you, it doesn’t help you,” Neapolitan says. “The more sharing there is between parties, the greater the amount of new information that can be generated.” ORC makes this is especially crucial, since cells often operate over several states and jurisdictions.

This level of coordination was instrumental in busting a much larger cell operating out of Detroit. Known as the Red Wing Gang, it consisted of close to 100 members committing “smash and grabs” from New York to Wisconsin during 2015 and 2016. The mutual sharing of intelligence was instrumental in 26 arrests, with the potential of more in the future.

Security experts say that ORC is spreading to other product areas. This growing problem underscores the importance of security people from this branch of retail to consider a more coordinated, multifaceted approach to loss prevention.

In addition to the jewelers’ alliance, the Coalition of Law Enforcement and Retail, formed in 2008, promotes the formation of partnerships between merchants and law enforcement agencies. The coalition claims a number of high profile members, including Target, CVS and Under Armour. read more

Wednesday, 06 September 2017 14:48

Hurricane Irma Merchant Alert

With Hurricane Irma approaching our State, the Florida Retail Federation and our merchant program Florida Bankcard Solutions would like to take a moment to remind you of some recommendations to help protect your merchant processing account.

IN ADVANCE OF THE STORM:

  • Make sure you settle and then secure your credit card terminal and cables in a dry location.
  • Store your past sales receipts in a dry storage location away from potential moisture.

AFTER THE STORM:

  • If you have power but your internet is not working, your terminal can be set to dial backup. Call customer service if you need assistance in setting up this function.
  • If you do not have power you can still accept cards but be sure to call for a voice authorization. If you are processing credit card transactions with Florida Bankcard Solutions, the customer service number is 800-563-5981 option 4 for voice authorizations.
  • Be sure to make a manual imprint of the credit card to verify the card was in your possession during the transaction. Have the cardholder sign the imprinted slip.
  • If your equipment has been damaged or is not functioning after the storm, call customer service to acquire new equipment.

As always, please call us with any questions or assistance you need. If you are processing credit card transactions with Florida Bankcard Solutions, the customer service number is 800-563-5981 option 2.

Most important, please be safe during this storm as it approaches the state and stay tuned for updates from the Florida Retail Federation as we have staff in place at the State of Florida’s Emergency Operations Center.

Friday, 01 September 2017 14:47

Retail Store Openings Increase in 2017

By Mark Mathews
www.nrf.com

As the “retail apocalypse” canard continues to grab the odd headline in the media, the data and the facts are consistently telling us quite a different story: a story of an industry in transition, but still growing. The most recent retail sales figures released by the Census Bureau were up a robust 4.2 percent year-on-year in July. Every month this year has seen a steady increase in sales over the same period last year.

Nonetheless, we keep hearing about record-level store closings and how this portends doom for the retail industry. But we’ve consistently argued that this data is drawn from a biased sample. IHL Group just published a report that offers a thorough and complete debunking of the main false premise supporting the retail apocalypse myth. Their data shows a net increase in store openings of over 4,000 in 2017. In fact, for each company closing a store, 2.7 companies are opening stores.

WHAT APOCALYPSE?
To dive deeper into IHL's new research, watch their recent webinar: Debunking the Retail Apocalypse.

Across the broad spectrum of retail sectors, IHL Group’s data shows that none are closing more stores than they are opening. Even in the supposedly beleaguered department store sector, just as many businesses are opening stores as are closing them. According to IHL’s data, 751 brands are increasing their store counts versus 278 that are reducing store counts. On a percentage basis, 42 percent are opening stores, 43 percent are holding steady and only 15 percent are showing a net decrease in stores. Some apocalypse we’re suffering through.

As we have consistently asserted, overall the retail industry is healthy. When you look at individual sectors, businesses or regions, there are clearly areas that are challenged. The fallacy occurs when one looks at those exceptions and extrapolates them to represent the norm. Every industry experiences turnover and change and companies are consistently having to adapt their business models to new realities.

Retail is no different. It is a dynamic, fast-paced, highly competitive industry that is going through a period of rapid change. Consumer behavior, abetted by technology, is forcing retailers to adjust to this change at a speed that is unprecedented. In this sort of environment, some businesses will struggle but others will adapt and exciting new businesses will spring up to take the place of those that can’t. What remains clear amidst all this noise is that the store is as relevant and important a part of the retail experience as it ever has been. The IHL data makes this case quite clearly — and the consumer is telling us the same thing. Almost 80 percent tell us they are visiting stores as frequently or more frequently than last year. Interestingly, this number goes up by 5 percent when you sample Millennials and Gen Z. Don’t bet your shirt on the death of retail, or you’ll be forced to shop for a new one.

According to a new report from global research and advisory firm IHL Group, U.S. retailers are opening 4,080 more stores in 2017 than they’re closing and plan to open an additional 5,500 next year. The report, “Debunking the Retail Apocalypse,” identified grocery retailers as among the three fastest-growing core retail segments, with 674 stores expected to open.

The other two fastest-growing core retail segments, the report found, were mass merchandisers such as off-price retailers and dollar stores, with 1,905 stores expected to open, and convenience stores, with 1,700 stores.

IHL’s research reviewed 1,800-plus retail chains with more than 50 U.S. stores in 10 retail vertical segments. The firm discovered that for every chain with a net closing of stores, 2.7 companies showed a net increase in store locations for 2017.

“The negative narrative that has been out there about the death of retail is patently false,” asserted Greg Buzek, president of Franklin, Tenn.-based IHL. “The so-called ‘retail apocalypse’ makes for a great headline, but it’s simply not true. Over 4,000 more stores are opening than closing among big chains, and when smaller retailers are included, the net gain is well over 10,000 new stores. As well, through the first seven months of the year, retail sales are up $121.6 billion.”

Other research has pointed to the overall decline of grocery stores, at least in their traditional form, in favor of niche concepts and ecommerce solutions. Additional findings from IHL’s report include:

  • The total net increase of stores for 2017 is 4,080, including retail and restaurants. Core retail segments will see a net gain of 1,326 stores, while table-service and fast-food restaurants will add a net of 2,754 locations. In total, chains are opening a net 14,239 stores and closing 10,123 stores.
  • 42 percent of retailers have a net increase in stores, only 15 percent have a net decrease, and 43 percent report no change.
  • Specialty apparel retailers are experiencing the largest number of closings, with a net loss of 3,137 stores. However, for every chain closing stores, 1.3 chains are opening new stores.
  • Just 16 chains account for 48.5 percent of total number of stores closing. Five of these chains – Radio Shack, Payless Shoesource, Rue21, Ascena Retail and Sears Holdings – represent 28.1 percent of the total store closures.

“Without question, retail is undergoing some fundamental changes,” added Buzek. “The days of ‘build it and they will come’ are over. However, retailers that are focusing on the customer experience, investing in better training of associates and integrating IT systems across channels will continue to succeed.” read more

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