GAP Tackles Organized Retail Crime, Saves $77 Million

7/2/2013
In March, a mall security supervisor was doing a walkthrough of the Express store at 5 p.m. because it had been identified as a hot spot. He observed two men leaving the store with a Brookstone bag, but there was no Brookstone store in that mall. He approached them and they dropped the bag and ran, enabling 75 items worth $3,300 to be recovered.

In April, a trainee retail crime action team officer saw two women acting suspiciously, going in and out of stores with bags, so he followed them into H&M and saw them remove security sensors and place apparel merchandise in their bag. He called dispatch who alerted police, while the store's loss prevention agent found clothing from H&M and Ann Taylor and watches worth $2,000. The police arrested the pair.

These two success stories are a result of the increased cooperation between retailers and malls and were retold at the National Retail Federation's Loss Prevention Conference in San Diego earlier this month, where the focus was on cohesive partnerships that share information and techniques to prevent crime, and how to leverage technology in innovative ways beyond basic loss prevention.

Apparel checked in with loss prevention executives at retailers across the country and found that a common theme was how thinly stretched loss prevention teams need to look beyond internal resources to forming creative partnerships that can effectively combat the growing savvy of thieves.

At the Organized Retail Crime (ORC) panel, GAP Inc., Aeropostale and the country's second largest mall developer, General Growth Properties (GGP), weighed in on how the partnership between retailers and malls is working to prevent and reduce heists by organized crooks who are shrewd enough to work around video cameras and mall security's typical patrolling patterns.

How the partnerships work
Steven Crumrine, who is director of corporate security at GGP, highlighted how the traditional view of using mall security to just patrol common areas is changing because retailers did not see the value proposition in what the security officers were doing − in fact, several retailers including GAP, Limited Brands and Abercrombie & Fitch sent a joint letter in 2007 to the leading mall developers in the country, saying they didn't think the malls were doing enough in terms of security.

That eventually led to the organized retail crime action plan partnership between the NRF, mall developers, the retailers that spearheaded the initiative and the International Council of Shopping Centers.

For the first time, the retailers saw things from the malls' perspective − how the negative history between malls and retailers impeded cooperation. They came to understand the fact that many stores did not share incidents with mall security, and that even those stores that did report crime did not do so consistently.

"Even if you don't ask for their interference, just call them so you can alert them that there has been a theft and security may spot them in another part of the mall or keep an eye out," advises Nelson Harrah, director of ORC at GAP.

In catching shoplifters, Crumrine emphasized how mall owners have to be careful with jurisdiction and liability issues associated with mall security and merchant privilege statutes, as the authority extends to agents and employees of the stores, but not to mall security.

(When Crumrine retired from the Baltimore City Police Department and began a second career in loss prevention with a mall developer, his company had paid out $7 million as compensation for illegal detainment the previous year and he was asked to come up with comprehensive guidelines that mall security officers could use to effectively help retailers.)

The ORC partnership's first step was a training video that armed store associates with knowledge about the most common behaviors and tactics used by thieves. Each year, as crime syndicates come up with new techniques, the videos are updated and GAP, Abercrombie & Fitch and The Limited send people to malls across the country to train them in the latest. 

"Counter-surveillance techniques are really important, so we show them how criminals operate in stores, in malls and in parking lots. Using actors to give an authentic idea, we show them how they shake a tail and how they evade," Harrah says.

The videos are available free to retailers.

But the centerpiece of the plan is the Top 25 ORC Report that shares information across mall properties to identify which retailers are hit most frequently, and by analyzing the shared data, creates a mall "hot spot" map to indicate which areas are being targeted. Mall owners such as GGP create customized reports for specific properties each quarter, enabling security and retail loss prevention teams to come up with strategies to combat ORC networks.

The report then leads to action plans for identified hot spot areas, which are typically popular brands like Abercrombie, Hollister and Victoria's Secret, Crumrine says. He briefs his security officers on how to patrol and he lets the retailers know that they will do a full-court press, unannounced walkthroughs and increased surveillance.

Part of the plan is also to determine the highest risk periods during the day and particular days of the week. All this has changed the role of mall security in the malls where the ORC plan is deployed.

"Back in the day security would walk through a floor, go down through another floor and a couple stores, be highly visible and that was it − they did this a couple times a day. But now, they are trained to greet shoppers, so they can surprise an ORC group member who may get nervous," says Crumrine. "They meet with retail managers, introduce the retail crime action team program, enlist assistance of local police, strategically use video patrol, create hot spots crime maps and post them in the security office and conduct frequent walkthroughs of hot spot retailers."

The ORC partnership also offers training for law enforcement groups such as the California Highway Patrol, so they can track down booster bags when they pull cars over, which has enabled them to catch thieves with huge hauls of merchandise. They are also training probation parole officers, frequently in and out of people's homes, to spot booster bags with merchandise. All of this helps with recovery, Harrah says.

New retail crime action teams
The ORC alliance has a new program called the retail crime action team, created expressly to combat retail theft. Assigned team members wear plain clothes to blend in with shoppers and observe characteristics and behaviors of retail theft − but they don't make arrests.

When they observe theft in action, they notify security dispatch, which sends uniformed officers if the store wants them to come. Dispatch will also call police if it spies a sensor removing tool or a ‘booster bag' − basically bags designed for shoplifting, lined with multiple layers of aluminum foil to trick security detectors from recognizing sensors.

These action teams are the ones behind the two success stories already mentioned, and many others.

"It has been very successful; 31 arrests were made [in the malls where it was tested]. We will expand it to other properties too," says Crumrine.

Another feature of the mall-retailer partnership is the rapid notification system, which provides information if there's a lost child or a severe weather situation moving in that calls for evacuation, as well as alerts about road closures and criminal activity.

"Since that letter in 2007, we've come a long way. We've developed a partnership based on commitment and communication," explains Crumrine.

GAP sees big-ticket savings from revamping its ORC plans
Working with malls has led retailers such as GAP to review and change their policies.

"We were one of the most hated retailers by police, because we would never call them when incidents happened and we would refuse to prosecute people they caught," reveals Harrah.

So GAP's first step was to revise its prosecution policies. Harrah says it has now taken that decision out of the store manager's hands, so the manager contacts the loss prevention team, which makes the decision.

The retailer has also changed its return policies. "We saved $77 million in the U.S in one year just by tweaking our return policies," he says, although he did not elaborate on those policy changes.

GAP no longer accepts personal checks because it didn't see legitimate customers writing checks. But Harrah said bogus credit cards trump checks in terms of loss. Store staff also run a daily gift card report to see where gift cards are purchased by manually run credit cards.

"We're saving $1 million a year by shutting down these cards. We're not prosecuting too much of this, but we are shutting down the cards. We're also catching particular cashiers who seem to run more of these cards," Harrah says.

Aeropostale's one-woman LP team
Unlike GAP and other retailers that maintain a full complement of loss prevention staff, Aeropostale makes do with one executive who helps to train store associates so they are more aware of retail theft issues.

Sarah Torrez, Aeropostale's regional director of loss prevention, says partnering with malls and being kept in the loop definitely helps, so that there aren't two separate entities fighting the same fight.

"We are a hot spot, right up there with Victoria's Secret, Limited, GAP, etc., so we are targeted all the time and we are constantly recovering merchandise. We try to strategize ways to cover the sales floor because there aren't as many associates on the floor as there used to be."

While it has been able to recover stolen goods, the retailer has yet to see ORC rates come down.

ORC action plan for retailers
To have an effective ORC action plan in place, Harrah says retailers need to review and set policies that address when stores should call security and when to prosecute – he urges stores to prosecute as much as they can and says the ORC partnership and training have increased the number of arrests made.

In formulating individual action plans, Harrah suggests starting with identifying the most active locations where ORC takes place and benchmarking with existing retail ORC teams, since everyone is open to learning and sharing.

He also points out that it works well in areas where the police departments and mall security are serious about ORC, citing the example of Albuquerque, N.M., which has six detectives devoted to fighting retail crime. He encourages loss prevention professionals to take an active role in influencing policy changes within their companies.

So far, California has six ORC alliances and there are 20 others around the country. The ORC partnership is focused on rolling out in additional locations across the country, especially in remote areas. It also plans to have actors enact a diverse array of crimes, in order to expose retailers and malls to more techniques and train them better, and look into the increased safety risks during crimes.

Padma Nagappan is a San Diego-based free-lance writer.
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