The retail industry constantly faces challenges in various forms. Among these challenges, the impact of consumer behavior on Organized Retail Crime (ORC) and Asset Protection leaders have been significant in recent years. From active shooters, fraud, retention, and of course shrinkage, these are only a few of what retailers face daily. While playing a crucial role in safeguarding, we spoke with ORC/AP leaders in our consumer community on some of these challenges and how to implement effective strategies.

1. Return Fraud: A Growing Menace

Return fraud has been a persistent challenge that retailers are grappling with. Dishonest consumers are exploiting lenient return policies, returning used/wrong items, and are using counterfeit receipts to obtain refunds. Those employees who are not trained to notice these nuisances are often taken advantage of. Per our community, “ORC and Asset Protection teams must not only train their staff diligently to recognize this issue but deploy sophisticated systems that can detect and prevent fraudulent returns”. Leveraging technologies that incorporate A.I/ML algorithms are now more common in the retail industry says our community. Such technology can be found at retail specific shows like NRF (National Retail Federation), NRF Protect, & CLEAR (Coalition of Law Enforcement and Retail). This kind of balance between human intervention and technology enablement is common in various industries besides retail. Most common being in the Gaming & Entertainment space.

2. Employee Theft & Retention: The Internal Challenge

While external theft is a common problem in the retail industry, “there has been an uptick with the internal threat of employee theft” says our community. Is there is a generation gap, inefficient training programs, or something more? An AP leader from a Tier 1 retailer voiced that “asset protection teams must implement stringent hiring practices, conduct regular training sessions, and establish effective internal controls to minimize the risk of employee theft. But above all, building a culture of integrity within the workforce is key to combating this challenge”. While we have seen retailers face this, our casino community has also experienced the same. Many from that community say that “this challenge needs to foster an environment of trust and accountability within your workforce”. We would even argue that this is a challenge that could be more detrimental than others. With the way society has evolved over the last decade, the ability to effectively manage employee behavior can be a difficult task to do. Should retailers incorporate autonomy through the use of robotics to avoid this challenge? That is something we have seen in the QSR (Quick Service Restaurant) industry (Taco Bell being one of the first). What are your thoughts?

3. Battling the Perennial Threat

The most common challenge that continues to be relevant in retail is shoplifting. Even with technology being lightyears ahead than where it was 20 years ago, this challenge remains a perennial concern for retailers. Both amateur and professional thieves are becoming smarter with such advancements in tech. Even more so, this challenge intensifies as shoplifting gangs work in coordination to steal high-value merchandise. Otherwise known as “organized retail crime”. In response to this challenge, ORC professionals in our community say “retailers need to stay ahead of evolving tactics by leveraging advanced surveillance technologies. Incorporating open platform systems that implement proactive solutions such as weapon detection or slip and fall recognition is just the start”. Slip and fall was interesting to hear from our community. Many said that these groups will team up and “fake a fall” to distract retail employees. Thus, allowing enough time for others in the group to steal merchandise. Retailers in our community say this is a challenge that “will never go away [but] is something that can be managed better moving forward”. When we asked where retailers should look to start, many mentioned the CLEAR conference. Which is a conference that is in conjunction with law enforcement and the latest tech.

4. Cybersecurity: Navigating the E-commerce Landscape

Cyber, cyber, cyber. Yes, why are we not surprised? Cybersecurity has been growing in popularity the last few years. With companies being hacked, millions being lost, the shift towards e-commerce brings forth new challenges, particularly in the realm of digital fraud and cybersecurity in the retail space. From account takeovers to payment fraud, retailers must invest in robust cybersecurity measures to protect sensitive consumer data. We have seen mainstream casinos such as MGM & Caesars become exposed for millions in the gaming industry as well. So, how often does this occur in retail? Per our community, “more often than not”. Taking down the world’s largest retailers such as a Wal-Mart, Target, Kroger, or Walgreens would be a trophy for any hacker”. Our community says, “ORC professionals need to collaborate with IT and cybersecurity experts to develop strategies that safeguard both physical and digital assets. We also encourage IT teams to look for hackers in the cybersecurity realm”. We’ve heard this strategy before. Check out our interview with Richard Marcus in a previous article we wrote about. Sometimes the best defense is hiring folks who expose companies for a living.

5. Supply Chain Disruptions: A Chain Reaction Impacting Retail Assets

When COVID-19 came out, there is no question that the supply chain space took a hit in every industry. Even here in the security industry, we saw manufacturers have crazy lead times on equipment. Disruptions in the supply chain, whether due to natural disasters, geopolitical events, or unforeseen circumstances, can have a profound impact on product availability. In addition, consumer demands and expectations often don’t help the cause. When combatting this challenge, our community says “ORC and Asset Protection teams need to collaborate with supply chain managers to identify vulnerabilities and implement contingency plans. Exposing where the current gaps are, preparing ahead for these circumstances, and setting expectations with the public can limit the impact”. A proactive approach to mitigating supply chain disruptions is vital for maintaining business continuity and safeguarding retail assets.

The challenges faced by ORC and Asset Protection professionals in relation to consumer behavior demand continuous adaptation and innovation. While the security industry has always stepped up with the latest tech, the involvement and collaboration of retail professionals dictating the solution they need will help.