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Combating organized shoplifting

As losses increase, retailers adopt new strategies

WASHINGTON -- At CVS, the diabetes test strips and the perfume are now behind locked glass cabinets, with a bell to ring for service. Nearly all over-the-counter medicines are behind plexiglass panels that customers must reach over to get their Advil or Pepcid AC. And most razors and refills are in clunky, noise-making dispensers that won't let you put back what you take out.

The new displays are among efforts to combat what has become a significant problem for the retail industry: organized theft. Retailers say rings of habitual shoplifters are proliferating nationwide, particularly in urban areas where retailers and malls are packed close together and there is easy highway access.

''We're seeing an incredible amount of activity from organized retail theft gangs from the New York area all the way down into Richmond," said Robert Wade, vice president of loss prevention for the Hecht's department stores.

Losses from organized retail theft have topped $30 billion annually, triple what they were a decade ago, according to the National Retail Federation, leading to higher prices, frequent out-of-stock problems, and a more cumbersome shopping experience.

Companies are spending millions of dollars on security systems, from software that tracks patterns of theft regionally to complicated fixtures that prevent removing multiple packages at one time.

Retailers are using racks that lock for a period of time after one unit is taken, cabinets that beep if they're open too long, and hangers that lock to a jacket or suit. Some big retailers, including Wal-Mart Stores Inc., Target Corp., Lowe's Cos. and Limited Brands Inc., have formed organized crime divisions.

''A store could lose its entire inventory of a popular item by one professional shoplifting ring, making it now unavailable when there should be a week's supply on hand," said Joseph LaRocca, vice president of loss prevention for the National Retail Federation.

Increasingly, shoplifting cases are being prosecuted by federal law enforcement, such as the Secret Service, because the crimes are large-scale, cross multiple jurisdictions, and often involve the online selling of stolen merchandise.

''We have a lot of shopping malls and outlet malls in this area, and they're all vulnerable," said Ron Perea, assistant special agent in charge of the Washington field office of the Secret Service.

In June, for example, an alleged fencing operation in suburban Landover, Md., was raided. Local officers were on hand to provide a uniformed presence, but the Secret Service handled the operation.

''Locals have their hands full with a lot of street crime. If the feds can come in with our resources and take this off their hands, that's helpful," Perea said.

Organized retail theft has been hard to measure accurately because it's difficult to know whether the product was stolen by an employee, a delivery driver, or a shoplifter. So retailers have largely treated all shoplifters much the same, with the occasional prosecution leading to little or no penalty.

Retailers are only now recognizing the role that organized crime is playing in the industry's growing losses. Wade of Hecht's said sometimes a major theft will go unnoticed until the store does inventory and finds, for example, 400 missing ties and 200 missing shirts.

''The problem with external theft is it's a ghost," said Jerry Biggs, organized retail crime section coordinator for the drugstore chain Walgreens Co.

''It's been a ghost for so long that it is now like having something that's been dormant and all of a sudden it's grown under the carpet and it's big," he said.

Criminals have discovered that large profits can be made relatively easily by stealing from crowded, understaffed stores, retailers and theft analysts say. The most stolen items tend to be high-priced, widely used products sold routinely in chain stores: over-the-counter medicines, razors, film, CDs and DVDs, baby formula, diapers, batteries, hair-growth and smoking-cessation products, hardware, tools, designer clothes, and electronics.

Shoplifters might spend all day going from store to store, then sell the goods they've stolen to the fence for 10 or 20 percent of their retail value, said retail security consultant Chuck Miller, author of ''Organized Retail Theft," a new handbook for industry professionals. Fences then aggregate the products from multiple shoplifters and sell them at flea markets, online, or to convenience stores, he said.

In department stores, thieves will work together, with one distracting a sales clerk and another stealing clothes. Some create high-quality fake receipts to return stolen goods for cash. Others will remove an inexpensive item from its box, fill the box with higher-priced goods, then seal it and pay only for the cheaper item that was originally in that box.

''The common criminal would rather have a situation occur at the register where they plead ignorance, so to speak, rather than do straight shoplifting and risk being apprehended by a loss prevention detective," said Claude Verville, vice president of loss prevention for Lowe's.

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