Organized Crime Blamed for Jump in Theft
Just when retailers thought they had loss prevention under control, a new wrinkle is adding concerns. For the first time in four years, the rate of retail loss has increased, according to the most recent National Retail Security Survey. The study, conducted by the University of Florida with a funding grant from ADT Security Services, is based on data shared by 146 of the largest retail chains in the United States.
Retail shrinkage, defined as a combination of employee theft, shoplifting, vendor fraud and administrative error, was 1.6% of total annual sales in 2005, up from 1.54% in 2004, according to the study, for an approximate loss of $37.4 billion.
While shoplifting is always a concern for retailers, chains are blaming organized retail theft (ORT) for the overall rise in incidents.
“ORT, or organized groups that steal merchandise from stores or warehouses, is a growing problem for retailers,” said University of Florida criminologist Richard Hollinger, Ph.D. (Hollinger has directed the National Retail Security Survey for the last 16 years.)
“The average loss per ORT incident is now more than $46,000,” he reported. “These crime rings work in small, organized groups and they can do a lot of damage in very little time. That’s what seems to be driving up the statistics.”
The largest source of loss continues to be employee theft, with the average loss per incident at $1,053. The good news is that this is a significant decline from 2003, when the average was $1,762.
In hopes of changing these trends, retailers are adding more solutions that limit an employee’s ability to walk away with merchandise, including cameras that monitor cash registers and storage areas.
They are also showing increased interest in technology to combat ORT, including video monitoring over the Internet and new intelligent camera systems that pick up unusual behaviors or patterns and can alert store employees to potential organized-crime activities.
Victoria’s Secret Names New CEO
Columbus, Ohio, Limited Brands Inc. on Monday announced that Lori Greeley will replace Grace Nichols as CEO of Victoria’s Secret Stores. Greeley is currently executive VP and general merchandising manager of intimates for Victoria’s Secret.
The retirement of Nichols, a 20-year Limited veteran, from the CEO post was announced in May 2006. She will take a new role supporting initiatives within Victoria’s Secret, including the growth of its Intimissimi brand.
Additionally, Mark Weikel, COO of Victoria’s Secret Stores, will add the title of president.
Wal-Mart to Focus on Expanding Seiyu
New York City, Wal-Mart Stores is open to acquisition opportunities in Japan, but the retailer is more focused on expanding business at its 53%-owned Seiyu chain, according to a report by Reuters. Shares of Seiyu jumped Monday after Wal-Mart vice chairman Michael Duke told the Nikkei business daily that the company might look for more acquisition opportunities in Japan.
The paper reported that Duke welcomed planned changes in corporate laws in May that will enable foreign companies to buy Japanese firms through share swaps.
Wal-Mart last year tried to invest in superstore operator Daiei Inc., aiming to boost its presence in the country, but it lost the chance to Aeon Co., Japan’s second-biggest retail group.
Wal-Mart entered the Japanese market in 2002 by taking a small stake in Seiyu. It has since invested more than $1 billion in the chain, but has yet to return the retailer to profitability.
Wal-Mart spokeswoman Amy Wyatt said Wal-Mart’s focus in Japan is on Seiyu.
“It’s a very sizable business today, so we still think that there are a lot of growth opportunities in the existing business,” she said.
In terms of acquisitions, she said: “I wouldn’t go as far as to say we’re shopping for them.”