The impact of crime on retailers has reached record levels and businesses are ploughing huge sums into tackling the growing problem.

The BRC says retailers will find it

The direct cost of retail crime rocketed to an all-time high of £603m in 2013/14, a rise of 18% on last year’s total of £511m.

Organised gangs and sophisticated thieves targeting high-ticket goods and bulk thefts contributed to the rise as the average value of each in-store theft increased by 36% to £241 per incident.

The increase in crime, which was revealed in the British Retail Consortium’s (BRC) Retail Crime Survey this morning, has prompted firms to shell out an average of £2m per retailer to beef up their security.

But despite the impact on retailers of physical thefts taking place in-store – which includes the 8.9 members of staff per 1,000 who steal from their employers – respondents to the survey named their biggest concern over the next two years as fraud, which alone cost stores £223m in 2013/14.

The vast majority of those surveyed reported suffering increasing levels of fraud, most of which is now committed online. Retailers also issued a stark warning that this will pose the “most significant threat” to their businesses in the coming 24 months.

Police crackdown

It is one thing to pinpoint what is now an obvious threat in an increasingly ecommerce-friendly world – it is another thing entirely to put schemes in place that successfully combat it.

The BRC admits there is only so much that retailers can do and says the police have a key role to play. It is putting pressure on forces to take legal action on a greater number of reported fraud cases and hopes that will act as a deterrent to potential cyber-criminals and organised gangs, who are now responsible for 59% of all retail fraud.  

As BRC director-general Helen Dickinson put it today: “Retailers deserve to know that when a crime is reported, meaningful action will be taken against those responsible.”

Crime experts at the BRC praised the London Metropolitan Police’s attempts to address the problem. The force set up a team of specialist detectives, known as Falcon, to tackle fraud and linked crime online.

But the BRC wants to see similar strategies implemented by forces across the country, after its survey found that a mere 5% of fraud cases reported by retailers in London resulted in any kind of legal action.   

Laura Davies, the BRC’s crime policy adviser, said: “In volume terms, shop theft is still very much the big thing, but what concerns retailers about fraud are the year-on-year increases. It was up 18% this year and there’s a fear that the threat is snowballing – it’s definitely a growing thing.

“We don’t make forecasts, but in our annual surveys we are seeing year-on-year increases and we don’t see that changing next year.

“It is therefore vital for businesses to ensure that they have robust controls in place to help protect themselves from cyber-attacks.  

“A challenge for all retailers, regardless of size, is how to remain abreast of new cyber threats. This is why the BRC is calling on the government to ensure that more intelligence about emerging threats is shared with the private sector in real time, so that they can take proactive steps to respond.

“Much of the current law enforcement activity in relation to tackling cyber-crime is piecemeal in nature, meaning that it is not as effective as it could be.

“When it comes to fraud, the law enforcement needs to match the criminal threat. At the moment, it’s just not keeping up. Retailers actually want to see something happen when they have suffered fraud.”

Of the Met Police’s creation of Falcon, Davies said: “It’s already having a real impact in London, but obviously this is something that needs to be replicated across the UK.

“The Mayor’s strategy is a flagship one, but that has to be implemented effectively with action on the ground.”

Insider threats

Although they accept that cyber-crime is a problem, other analysts have been quick to alert retailers to another very different fraud threat - that posed by people working inside their companies.

Simon Dukes, chief executive of fraud prevention group Cifas, said: “The rise in retail fraud is unsurprising – we know that fraudsters constantly adapt their methods and online shopping has added to the rise of cyber-fraud.

“Retailers are not alone in experiencing increasing levels of fraud. But more than ever before companies also need to be aware of the risks of insider fraud.

“We know that organised crime gangs will often try to gain access to companies from the inside as well as the outside, through duping unsuspecting and honest staff using methods like phishing to gain sensitive information, as well as recruiting or planting dishonest employees.

“We welcome the BRC’s survey and call for action today. The more data we have about the scale and type of fraud, the better we can unite to fight it.”