The Business of Shoplifting. Second City Style Fashion Blog

Fountain of 30

August 3, 2007 • Shopping


Shoplifting is big business. Gone are the days when a store’s concern was a kid stealing a t-shirt for a cheap thrill. In a very interesting article in today’s WWD titled, "Retail’s Latest Plague: Fighting Back Against Shoplifting Gangs," by Evan Clark, points out the money made from reselling the goods online, to fences or
returning them for rebates at the store helps fund criminal enterprises…really hurt us all.

Someone has to pay for this and guess what? It’s us. "It all comes to
be another tax on the consumer," said Dan Doyle, vice president of loss
prevention and human resources at department store chain Bealls Inc.
"They end up footing the bill on all this. As a consumer who’s
concerned about higher prices, they should be mad as hell about the
fact that they’re out there stealing this stuff and selling it."

"This is their job, they have people who work for them and potentially
people who work for them," said Doyle, explaining the multilayered
structure of the syndicate. "They either take orders or they go out and
steal stuff knowing they have a market to sell it — the Internet sites
that allow people to sell merchandise somewhat anonymously. It isn’t
like you have to walk into a back alley where you’re exposed."

The Federal Bureau of
Investigation has focused more attention on organized crime as
of late. In conjunction with retail trade groups, the FBI helped
establish an online tracking system to help stores protect themselves
and aid law enforcement in capturing and prosecuting criminals.

organized groups come in all shapes and sizes, from gangs such as
MS-13, a violent street gang with Latin American roots, to
organizations that use everyone from illegal immigrants to all-American
types. Bealls was even hit by a group of strippers who were stealing
from stores around Florida and selling the goods to a fence.

"Typically, the organizations that we look at or law enforcement looks
at are dozens of people working together," said Brian Nadeau, who until
last month was a supervisory special agent in the FBI’s major theft
unit before transferring to the bureau’s inspection management unit.

groups have "boosters" who steal the product, as well as fences who
move the goods, people who determine what stores will be hit and scouts
who get the lay of the land beforehand. Often there are drivers behind
the wheel of a getaway car.

Boosters will go into stores,
distract the salespeople, perhaps by setting a small fire in the back
of the store or spilling something, grab thousands of dollars worth of
merchandise and sneak out, only to go directly to another store,
perhaps in another state along a major highway.

To combat the gangs, Nadeau has preached collaboration, even among retail rivals.

Law Enforcement Retail Partnership Network, or LERPnet, an online
database  is just gearing up and connects retailers with each other
and law enforcement. Companies from Bealls and Mervyns to Saks Fifth
Avenue, J.C. Penney and Wal-Mart are part of the program.

using the network can post descriptions and vital statistics on
suspected thieves and get alerts when there has been criminal activity
nearby. The authorities will also soon be able to look into the
database to hopefully connect the dots to catch bad guys.

prevention people now have the ability to share this information with
each other almost real-time, as it’s happening," said Nadeau. "This
will give the ability for a retailer in one state to quickly know that
the same problem happened 45 minutes or an hour ago in another state
and then notify law enforcement."

Being part of the network
frees loss prevention executives from having to get approval from their
superiors to share notes with their competitors.

enforcement has not, in the past, been focusing heavily on organized
retail theft," said Nadeau, noting the concentration was instead on
areas such as drugs.

Shoplifting gangs targeting stores are getting more attention now, in part because of the FBI’s new program.

If LERPnet helps
authorities tie one robbery to another, a larger case can be brought
against the professional criminal who, with just a slap on the wrist,
might go undeterred.

While some large chains do have a strong
loss-prevention apparatus, Hayes said most retailers are not set up to
deal with organized gangs.

"They probably do not have a real
handle on the scope or dynamics, and they don’t have the infrastructure
or resources to attack it," he said, noting a good place to start for
stores is to understand how much they are impacted by theft through
surveillance and research.

Though often not connected to an
organized gang, employee theft is also a big drain on stores. "There’s
clearly an employee component [of theft] throughout the supply chain,
not just in stores," said Hayes, noting retailers estimate that
employee theft accounts for 30 to 40% of their inventory

The excitement and buzz that brands create around
their products attract not only shoppers, but thieves who have a great
incentive to steal.

Stolen goods fetch about 30 cents on the
dollar on the street, 70 cents on the dollar if they’re sold online or,
for the more enterprising, 100%  plus tax if they’re returned to
the store, said Joseph LaRocca, the National Retail Federation’s vice
president for loss prevention.

"They’re going from store to store in the mall, they’re loading up
shopping bags, they’re going from mall to mall and stealing up to
$10,000 a day," said LaRocca. "These groups are very sophisticated and
they, for the most part, slide in and out of stores without ever being

addition to sophisticated surveillance of stores and malls, boosters
come prepared with plans to distract employees, or tools such as
jackets or "booster bags" lined with tin foil to confound antitheft

has done very little to assist retailers’ investigations, stating that
their platform is merely a way to connect buyers and sellers," claimed
LaRocca. "Retailers have repeatedly asked for assistance in the
identification of sellers who off-load their brand goods or items
believed to be stolen or fraudulently obtained, and there has been
little to no response."

experts said they could virtually stop theft tomorrow, but acknowledge
that increasingly draconian protections would make customers feel
unwelcome in the stores.

we just keep doing what we’re already supposed to be doing, it’s going
to control organized crime — good customer service," said Chris McGoey,
a Los Angeles-based security consultant. "Having people on the floor it
has been proven time and time again, increases sales and reduces
losses. The store looks much better, it’s in stock, everything works,
everyone’s happy. The only downside is that you’re spending some money
up front to get the benefits later of increased sales and reduced
inventory shrinkage."

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One Response to The Business of Shoplifting. Second City Style Fashion Blog

  1. James says:

    I hope people concerned could do something about stolen products getting sold on line. It is I think what motivates them even more to steal. We business owners have done so much already to stop stealing on our end. The use of cameras and other loss prevention devices from brackley-industries, training loss prevention people and many others. Like it was said, the consumers are the ones affected by this crimes as it directly affects an increase in cost of products.

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