Organized crime and shoplifting are hitting retailers where it hurts the most this holiday season —the bottom line. So far this year, sticky fingers have cost U.S. retailers tens of billions of dollars.
The National Retail Federation estimates 40% of theft caused by shoplifting, organized crime and return fraud typically happens right now. The lobbying group representing the nation's largest retailers does not expect the situation to get better any time soon.
"This year, the indicators we have seen year-to-date all show that retail crime has been on the rise. Organized retail crime, which is professional shoplifting and return fraud, where people return things back to the store, is up," said Joseph LaRocca, the NRF's Vice President Of Loss Prevention. "The shoplifting activity is consistent with last year so the number is very high."
Overall, retailers lost $35.3 billion in 2010 versus $33.5 billion in 2009. Shoplifting accounted for about $11 billion in lost merchandise while organized crime rings, return fraud, general inventory mistakes and price labeling errors accounted for the rest.
Whether it's the newest video game or designer handbag, retailers are using a lot of resources to crack down on shoplifting and fraud. They have been going after the problem by hiring specialized loss prevention personnel and by going high-tech.
Retailers are using digital cameras track grinches who try to steal. These high-tech cameras are in more stores than ever before because they have become less expensive.
But, the technology is both a blessing and a curse to catch thieves. A determined crook with his own technology can overwhelm what's in the retailers' arsenal. An example would be the shoplifter who brings his own inventory control tabs that beat the store's system.
"We have seen shoplifting gangs continue to evolve in terms of their skill and technology. Over the years, we have seen an increase in organized crime activity," said LaRocca. "In 2010, 89% of retailers polled were victims of organized shopping crime. In 2011, it was 94.5%. So, we have seen organized retail crime on the rise and the skill of these groups and the types of tools they use continue to advance."
Many retailers now have a special database to help catch people who return items they never bought in the first place. The stores are electronically keeping track of who returns the most items in order to figure out who may be gaming the system.
LaRocca said the most effective way to prevent billions in losses are the employees on the front line. He said a vigilant worker is still the best defense in deterring the yule time crimes.
Stephanie is Squawk Box producer. Follow her on twitter @StephLandsman
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