Organized retail crime continues to rise—how are grocers responding?

For a long time, grocers have faced the problem of shoplifting. In the past few years, however, they have witnessed a troubling rise in a new type of retail crime—one typically carried out by groups of individuals that can bypass traditional store security measures.

Organized retail crime (ORC) has disrupted operations at Walmart, Target, Kroger, and many other retailers. According to the National Retail Federation (NRF), ORC has become a major source of the nearly $100 billion in losses U.S. retailers currently face annually. Of the retailers recently surveyed by the NRF, more than half (52.9%) reported an increase in ORC cases, and none reported a decrease.

David Johnston, NRF's vice president of asset protection and retail operations, called the past few years a "perfect storm" for ORC. He noted that while the problem has existed for years, the pandemic and current economic conditions accelerated its worsening. Experts say that the social norm of wearing masks in stores objectively facilitated theft and emboldened criminals known as "boosters" (industry jargon for ORC thieves).

As new technologies are deployed to reduce ORC behavior in stores, grocers are forming ORC departments staffed with specially trained investigators who work with local law enforcement and prosecutors to dismantle ORC criminal rings. Experts say these teams' effectiveness is already showing initial results and being validated.

Not a new problem, but an escalating one

Organized retail crime is exactly what it sounds like: organized, targeted schemes carried out by groups of individuals for financial gain. Experts explain that ORC criminal groups carry out planned robberies, often striking when stores are understaffed, with getaway vehicles or escape routes ready, and taking as much of the same product category as possible.

According to an NRF report, retailers reported a 26.5% increase in ORC incidents in 2021, and among surveyed retailers, eight in ten reported an increase in violence and assaults related to ORC incidents over the past year.

Johnston said that in most cases, the items "boosters" steal are favored not just for their monetary value, but more critically because they are easy to resell. Consumers looking for cheaper goods online, at local shops, or flea markets often don't realize they are buying merchandise stolen by ORC criminal groups.

"Whatever consumers have a demand for, that's what 'boosters' have a demand for," said Karl Langhorst. Langhorst is an asset protection executive and adjunct professor of criminal justice at the University of Cincinnati, having served as senior director of loss prevention at Kroger for nearly nine years.

The main items targeted by ORC criminals include many categories commonly found in grocery stores, such as health and beauty products, food and beverages, household goods, office supplies, baby care products, and toys.

Johnston noted that meat and seafood, energy drinks, alcohol, over-the-counter medications, razor blades, detergent, infant formula, and baby food are some of the most frequently stolen items in grocery stores.

Experts point out that beyond the wide variety of products, grocers display their merchandise openly, which allows a "booster" to easily sweep desired items into a bag and slip out of the store. Additionally, grocery stores are easy to enter and are located throughout most communities.

"Anyone can walk through the front door," Langhorst said.

This just happened at Gough and Fell in San Francisco@Walgreens。#NoConsequences @chesaboudin pic.twitter.com/uSbnTQQk4J

— Lyanne Melendez (@LyanneMelendez) June 14, 2021

Caught in the act

Experts roughly estimate that the first internal ORC departments at retail companies took shape between 2005 and 2007. But in recent years, as ORC operations and prevention measures have become a priority, more ORC departments have been established. For example, Safeway was among the first in the grocery industry to establish ORC teams in the early 2000s within two of its Tom Thumb divisions, becoming one of the early pioneers in the sector.

"It's really been in the past year or two that many CEOs and C-level executives have truly started paying attention to the ORC issue—not just in the grocery industry, but across all of retail," Langhorst said. "The issue has always been on the periphery of discussions, touched upon, but it wasn't until CEOs truly started treating it as part of their financial metrics and mentioning it in earnings calls that it really came to the forefront."

Nearly one-third of retailers surveyed by the NRF said they have dedicated ORC teams, but this still means the majority of retailers (68.5%) have not yet established such teams. According to the Food Industry Association, in the grocery sector, about three-quarters of food retailers have established programs to address ORC, while many other companies are developing plans.

According to the NRF report, ORC teams have led to more arrests, prosecutions, and civil claims, and experts note that these teams are helping retailers better identify theft patterns, behavioral characteristics, and repeat offenders.

ORC team sizes vary widely. The NRF report shows that the average team size among surveyed retailers was 17.2 people, with a median of 7. Experts say team size can vary depending on factors such as the retailer's division size, geographic location, store footprint, number of employees, and the severity of the ORC problem in a particular area.

According to the NRF survey, more retailers have loss prevention and asset protection teams than ORC teams, and the former are typically larger, with a median team size of 32.

But Langhorst noted that despite some obvious overlap, there are significant differences between the roles of ORC investigators and loss prevention/asset protection managers.

"Understand that ORC is a specialized field," Langhorst said. "When you conduct an ORC investigation, it's completely different from many other types of asset protection roles and investigations. It requires a different body of knowledge, not only in how to conduct such investigations, but also state laws. It requires someone who has a solid investigative background and can work with law enforcement as well as asset protection ORC teams at other retailers."

Langhorst said this "body of knowledge" includes identifying behavioral patterns of "boosters" (since it's impossible to review every case individually), training store management teams, submitting case reports to local law enforcement, and following up on prosecution progress.

More and more grocery companies are forming ORC teams to combat shrinkage caused by theft. In October 2017, Albertsons re-entered the ORC prevention space through a short-term partnership with Alto, a company focused on loss prevention and technical security services.

Langhorst, who also serves as a senior advisor at Alto, noted that Alto has other grocery partners that have sought its help with ORC prevention and other anti-theft security measures.

Albertsons, Kroger, and Weis Markets are all hiring loss prevention, asset protection, or ORC investigators. For example, Weis Markets has posted positions for "RCI: Organized Retail Crime Theft Investigator" at multiple locations on LinkedIn and its own website. The job posting states that the role requires investigators to "identify, investigate, and resolve external theft and organized retail crime within a designated geographic area."

The Weis position will also "handle retail theft accordingly and participate in the prosecution process and court proceedings," according to the job posting.

Grocery Dive contacted Kroger and Weis for further information about their ORC efforts, but both companies declined to comment or confirm whether they have established ORC teams. Albertsons did not disclose specific details, but a spokesperson confirmed the company has taken ongoing measures to address ORC.

Prevention technology and deterrents

Overall, retailers are increasing loss prevention budgets, investing in both ORC teams and technology. The NRF survey found that 52.4% of surveyed retailers increased capital and equipment budgets, including anti-theft technologies such as AI-based video analytics, locked display cases, autonomous security robots, and license plate recognition.

Langhorst noted that having the latest security camera systems is essential for a successful ORC department. Additionally, several innovative technologies are attempting to deter "boosters" directly at the store shelf level.

Companies like Indyme are piloting these technologies. The company has introduced locking display units called "Freedom Cases" that customers can unlock with their phones to access products. Recent news reports indicate that Kroger and Safeway are piloting Freedom Cases, aiming to reduce theft while improving shopping convenience.

"The experience with these (traditional) locked display cases is terrible," Joe Budano, CEO of Indyme, said in an interview. "We've all experienced it, and we know it from retailers as well. And we know that once you lock products up, (retailers') sales drop by 15% to 25%."

In addition to Freedom Cases, Indyme has introduced anti-theft systems that use cameras installed at store exits and audio speakers placed near frequently stolen items, which can play warning messages to potential thieves.

Budano noted that both devices are particularly effective in preventing theft of meat and poultry in grocery stores.

But Langhorst pointed out that customers often still feel these additional measures intrude on their shopping experience, which creates significant resistance for grocers in implementing such technologies.

"When you walk into a clothing store, (shoppers) expect to see (security) tags on items," he said. "But when you walk into a grocery store, you don't expect to see anti-theft devices."

Heightened urgency in the grocery industry

Johnston said that items with expiration dates that are stolen and resold pose a higher risk to consumers. These items are often repackaged, have their expiration dates tampered with, or are otherwise adulterated, creating health and safety hazards for consumers who purchase secondhand goods.

To minimize this threat, many grocers use EAS tag systems, a manual solution that involves attaching tags to packaging. Doug Baker, vice president of industry relations at FMI, said that if a "booster" tries to remove the tag, the product packaging will be damaged, making it impossible to resell online or at physical markets.

Nevertheless, cases of food tampering remain common. Several experts cited infant formula as an example.

"In past investigations, there have been incidents where powdered infant formula was mixed with flour and tampered with," Johnston said. "These formulas were washed, repackaged, and had their dates altered, which now poses a safety risk to infants' health."

Beyond grocery and retail stores, legislators are also taking action. A proposal currently under consideration in the House and Senate would establish an Organized Retail Crime Coordination Center within the Department of Homeland Security, integrating federal, state, and local law enforcement to more effectively combat ORC.

Several states and regions have established their own departments and programs, including Idaho, North Carolina, South Carolina, Nevada, Utah, Minnesota, and San Diego, California.

"Shoplifting will always exist. I think a certain level of professionalization and organized theft will also always exist," Johnston said. "But given the frequency and scale of theft we're seeing now, we really do need (legislation) to curb it."