These unprecedented times are already creating new challenges for retailers and communities when it comes to crime. Many customers from across the world have asked us about the impacts that COVID-19 is having and will likely have on retail crime now and in the post-pandemic future. So over the next few weeks, our team is going deep on sharing what we’re seeing and what the longer term impacts on retail crime could be. Some of the key challenges facing asset protection and loss prevention (AP/LP) teams are going to be the fast-changing store environment, a rise in ORC, changes in law enforcement response and legislation, the impacts of unemployment and economic downturn, and a focus on budgets and expenditure.
Panic and fear creates opportunity for criminals
Unfortunately people are already taking advantage of the fast-changing environment. Crowds of panic-buyers, busy staff focused on replenishing shelves, and other distractions are making it easy for offending to occur with a reduced likelihood of detection. In just the past few weeks, retailers have already seen increased offending, aggressive behavior towards staff and other customers, the use of COVID-19 as a threat, and pressure on law enforcement.
There are already plenty of examples of opportunism from across the world including thefts from hospitals in the UK, US law enforcement politely asking criminals to take a break, and organized crime groups targeting trucks transporting toilet paper in Hong Kong.
Further rise of ORC
The above distractions in stores have also greatly assisted ORC groups and shifted the risk/reward ratio even farther to the reward side. The strong demand for essential items during this time also creates further opportunities for ORC groups to be given ‘shopping lists’, target the stores that stock those products, and sell them on the black market or overseas. Our data is showing an increase in average $ amount per event during this time as it becomes easier to steal in-demand products and the Australian Federal Police are already seeing a “highly organised” and “criminal element" undertaking such activity.
“Even with reduced hours of operation for our stores we have seen an increase in total events and the average dollar value of each event is increasing."
Daryl Blackmore, Rexall Director of Loss Prevention
There are also some unforeseen consequences with many people now working from home. First, there is an increase in fraud, phishing, and hacking attempts against retail workers. The Loss Prevention Research Council has already documented a number of these scams, including the interesting statistic that websites that have “coronavirus” or “covid” in the domains are 50% more likely to be malicious.
Secondly, just as retail opportunities are disappearing with people not leaving their houses, so to do the opportunities for burglars. Burglars will find it increasingly difficult to break into homes when occupants are in all day, and these career criminals are known to resort to retail crime as an easier and lower risk day job. The addition of burglars to the ORC labor market will likely increase shoplifting, violence towards staff, and store break-ins.
Law enforcement is already stretched and this pandemic doesn’t make life any easier for them. Unfortunately, this is resulting in a decrease in responses to retail and property crimes. Some areas that are in full lockdown are actually seeing a stronger police presence at supermarkets as they are one of the few places people are allowed to visit, but this does not assist the other retailers whose stores are still open. Offenders will take advantage of a reduced police response, along with the knowledge that even if caught, police are reluctant to put someone in jail and being confined in close proximity to others.
The longer-term impacts of COVID-19 could also see legislation changes and the acceleration to decriminalize retail offending. The retail industry was already seeing a dramatic shift in crime due to this decriminalization, and post-pandemic it may continue with police responses unchanging from above, and pressure on court systems and prisons to clear backlogs. All this could result in continuing the trend to increase felony thresholds, and make it easier still for retail offenders to succeed.
Impact of unemployment and economic downturn
Unemployment, financial pressure, uncertainty, and desperation may make people more willing to steal or to just purchase stolen goods from online marketplaces. Many studies have shown that an increase in unemployment was correlated with an increase in property crime. In fact, out-of-work people commit 60% more property crimes (such as theft, shoplifting, burglary, and vandalism) in the year after losing work. Property crime can increase by up to 1.8% for every 1% increase in unemployment, so with a significant spike in unemployment caused by COVID-19, it is possible that retail crime could also increase by 20%+. Such an increase could prove too much for many retailers that operate on tight margins.
The role of AP/LP teams - Doing even more with even less
For years retailers have asked their AP/LP teams to “do more with less”. But when the pandemic is over, you may be asked to do even more with even less! At some point soon, many retailers may have to work through cost-cutting measures, and as it’s often seen as a cost-center, AP/LP can be an easy target. Yet, without sufficient resource, retail crime may end up being the straw that breaks the camel’s back. For instance, if a $500 theft isn’t prevented, it could require over $10,000 of sales to make up the difference (at a 5% profit margin).
Therefore, it’s imperative for retailers bouncing back from this pandemic to ensure that there isn’t an increase in external and internal theft. It will be important to have loss prevention seen as a strategic activity, and it will require new tools and technology to account for decreases in headcount and measure the effectiveness and return on investment. So how are you going to elevate the profile of AP/LP inside your company and be an important part of the recovery?
Loss Prevention is the key to surviving and then thriving
COVID-19 is providing significant challenges for all retailers and will continue to do so for a while yet. The jobs of AP/LP is more important than ever to ensure retailers survive and then thrive. It is also going to provide plenty of opportunities to find new ways of working, including new technology and working closer as an industry. So look out for one another, stay safe, and share with us the challenges you're going to face
Our thoughts are with those who are impacted by COVID-19 already. We wish a speedy recovery to those that are ill, and to the retail economy in general. We also want to express gratitude to the AP/LP professionals on the front line who are working hard to keep everyone safe, calm, and reassured during these times.