ANN ARBOR, Mich. — Whether you’re a national convenience-store brand or a locally based retailer, reduction of risk is almost certainly a matter you ponder often. What leadership teams often overlook, however, is the role of seasonality in relation to crime rates.
According to data compiled from the Pinkerton Crime Index, there is a 12% difference between peak (August) and low (March) points in property crime risk. While the seasonal behavior of crime is evident on a national level, some communities display stronger swings than others, particularly “four-season” cities with a larger temperature change over the course of a year, such as Chicago and New York City.
But retail-crime seasonality doesn’t just stop at the literal seasons; cultural, political and technological factors heavily influence retail risk mitigation programs. And like the seasons, each can change on a large scale in a matter of months.
It’s up to c-store leaders to adequately foresee these winds of change and invest in solutions to combat revolving—and evolving—crime waves.
States Divided
There are remarkably few retail crime statutes enforced on a federal level. Therefore, the vast majority of the burden falls to the state level. This leads retail brands to run into the challenging dynamic of dealing with different laws for different states.
In one state, a criminal may need to steal more than $1,000 before the act is considered a felony. Anything less and, if law enforcement even gets involved, it’s a citation or misdemeanor—a figurative slap on the wrist to most offenders. In the next state over, on the other hand, one may only need to steal $300 worth of merchandise for his or her crime to be considered a serious felony.
In 2021, the pendulum in many states tends to swing toward the more lax enforcement option, resulting—at a very high level—in a generationally cyclical scenario:
The cultural push for decriminalization ultimately results in higher crime rates. Eventually, when crime is out of control, stores begin to shut down or pull out of the area, resulting in the loss of tax dollars and the political enactment of new laws that enforce stricter criminal punishment from law enforcement. Feeling like they once again have a partner in the police, brands return, internal loss prevention teams are pulled back, and the shrinkage rate stays low.
Just like rain, snow and cold keeps crime low, so, too, does a local government with strong retail crime enforcement laws.
Organized Chaos
Many convenience and retail brands tend to think of loss prevention as more or less the same as it was a few decades ago; that is, the nature of the crime is largely related to the theft of physical merchandise by lone wolf or one-off offenders. What gets overlooked by security teams is the sharp prevalence of organized retail crime (ORC) throughout the country.
ORC groups successfully identify and exploit the gaps in a retail operation. Because many convenience-store chains don’t understand or are unwilling to adapt to the advancing nature of crime compared to decades ago, this type of crime has skyrocketed in recent years, resulting in gargantuan shrink levels, profit losses and hits to consumer perception.
In many cases, ORC bypasses merchandise and delves right into financial crimes on varying levels. Gift cards, for example, are abused on an alarming level, with both closed-loop and open-loop cards being exploited for nefarious purposes.
A decade ago it was common for criminals to buy merchandise with stolen credit-card data and then find others willing to buy it. Now that stolen data can be re-encoded onto the magnetic stripe of blank credit cards. Money can be laundered by loading up on gift cards from a convenience store—purchased with stolen money from a compromised card—going to a website that buys back those gift cards, and selling them at a 10%-20% hit. This is just one of the many advanced methods ORC groups use to rob consumers and retailers alike.
The Power of Data
Don’t let Father Time pass your organization by. Thinking about ways to advance your security strategy is an always-evolving issue. While employee training is critical, the answer to most trends in retail crime lies in technology: namely, analytics. Whether an external consulting company or a team of internal data scientists, experts are now able to build custom tools and platforms that look at consumer fraud in real time, provide accurate information into abnormalities across stores and provide recommendations and solutions if things don’t look right. In some cases, these analytical models aren’t just limited to loss prevention; they provide transformative value for dozens of other teams.
While digital and analytical transformation costs a great deal of time and money to adopt, the investment will surely pay off in the long run and defend your convenience-store chain from the ever-changing winds of crime.
Brett Detzer is director of Pinkerton, a global provider of comprehensive risk management services based in Ann Arbor, Mich. Reach him at brett.detzer@pinkerton.com.