ORC: A 'Huge Issue' & Hot Topic at NRF Big Show
Saks addresses organized retail crime at NRF Big Show

On day three of NRF's Big Show, retailers discussed AI applications, organized retail crime, and growing competition from Chinese brands.

Saks president Marc Metrick ended his session by addressing crime, a topic that other speakers addressed less directly throughout the show. Metrick called organized retail crime a "huge issue" facing his business and luxury ecommerce more broadly. These crimes directly impact consumer experience in a negative way, he says.

Retailers like Saks have to "put plexiglass over the experience online," he said, akin to measures taken by retailers like Walgreens in stores, where products are locked behind glass to combat theft. In practice, that means putting additional roadblocks in front of consumers for customer service help, he explained. Walgreens is No. 19 in the Top 1000.

Customer service reports of "merchandise not received" more than doubled in just a few years, Metrick said. In the past, Saks would give that customer a refund or credit for the purchase that never arrived. Now, the retailer has invested in wider fraud protections to determine if that customer has made other similar complaints or has a history of returns.

In December, the NRF retracted a previous statement on the financial impact of organized retail crime. The organization previously attributed nearly half of total retail shrink to the issue in an April 2023 report.

"We stand behind the widely understood fact that organized retail crime is a serious problem impacting retailers of all sizes and communities across our nation," a spokesperson from the NRF told Digital Commerce 360 in December. digitalcommerce360.com

Watch Sessions from NRF Big Show | NRF Big show articles | NRF Big Show Pictures


To Battle Retail Theft, Calif. is Reforming the Reforms
Inside the Issues: California's divided view of Prop 47
California lawmakers are looking to put an end to the rise in organized retail theft by reforming long-standing criminal reform laws. Commercial burglary increased by 16% from 2019 to 2022 across California, according to the Public Policy Institute of California. A driving factor for this increase is the rising of organized retail crime.

Multiple lawmakers are focusing on Proposition 47, a ballot measure that reclassified certain non-violent property crimes under $950 of damages from felonies to misdemeanors which was passed in 2014. According to a 2022 UC Berkeley IGS poll, 59% of the people support making changes to Prop 47, while 30% don't want to see the law amended.

On the first day of the new legislative session, Assemblymember Carlos Villapudua introduced Assembly bill 1787, a referendum to address areas of concern related to Prop 47.

"It's become kind of the norm and it should not be the norm. It's harmful. It's not just about the employees. It's not just about the businesses, but it's been harmful for folks who have gotten injured over this," Villapudua said.

In his recent budget presentation, Gov. Gavin Newsom criticized the idea of needing to reform Prop. 47 in order to curb the rise in retail theft.

"Everyone I know is rushing to reform to raise the threshold, okay, that's not the fundamental issue," Newsom said. "That is the nature of retail theft has changed... it has become deeply organized and that's what we need to go after."

The $950 felony threshold puts California as the 10th lowest amongst states. For example, Texas has the highest threshold with $2,500 needed to be stolen for the theft to become a felony. spectrumnews1.com


California Gov. Newsom Pushes Back On Effort to Lower Felony Theft Threshold
Newsom suggests ways to reduce property crime without dismantling Prop 47
Gov. Gavin Newsom said the problem won't be solvedby changing Proposition 47, the 10-year-old law voters approved to change some felonies to misdemeanors, including thefts of items worth less than $950, which some people blame for a rise in thefts. Instead, he wants to tackle retail theft with legislation to crack down on what he called "professional thieves."

"We can do it without reforming [Proposition 47] and going back to the voters," Newsom said Wednesday as he presented his annual budget proposal, which includes $374 million to combat retail theft. "I want people to know this is unacceptable. Folks need to be held to account. There's nothing right about this."

When a reporter asked Newsom about Proposition 47, he turned to the screen onstage beside him and began playing an animated bar graph outlining states' thresholds for felony theft. Most were higher than California's $950.

"Turns out, well, Texas, you have to steal more than $2,500 before it's a felony," Newsom said.

Though other states do have higher thresholds, critics of Proposition 47 argue that Texas does prosecute repeat offenders who have committed multiple incidences of theft. In California, those critics say, the state does not hold repeat offenders accountable.

The Democratic governor's comments come as some lawmakers in his own party are signaling an interest in changing Proposition 47 to address these grievances. State lawmakers praised Newsom's suggestions, but the prospect of those ideas turning into successful legislation this year remains unclear. latimes.com


ORC Impacts: Risking Profits, Community Safety & Employment Opportunities
Report: Retail Shrink & Organized Retail Crime - Mitigating Financial Losses and Lowering Safety Risks
Organized retail crime is an escalating threat that demands a coordinated response from retailers, consumers, and lawmakers. Its tentacles reach far beyond lost profits, jeopardizing community safety, employment opportunities, and the very fabric of our society. Failure to act swiftly and decisively has dire consequences. Retailers must become proactive, investing in cutting-edge technology, empowering employees, and forging alliances with law enforcement and industry peers. We must push for robust legal frameworks that dismantle ORC networks and deter future perpetrators. This is not just an economic issue; it's a call to action to protect our communities and safeguard our shared future.

The Components and Magnitude of Retail Shrink

According to the National Retail Federation (NRF), shrink or shrinkage is the measurement of losses calculated by a retailer during a specific period of time, categorized across various means of retail loss. Measured as a percentage of sales, shrink percentage includes losses mainly caused by:

• External theft including organized retail crime
• Internal theft
• Operational errors

Shrink Rates Have Increased by 30bps Since 2017

The average rate of shrink has gone from 1.3% in 2017 to 1.6% in 2022 (+30bps). While this seems like a relatively small change, it is actually massively impactful, especially when considering that shrink dollars have increased by $41 Billion or 58% over this same time period. The retail sales base is massive ($7.1 Trillion in 2022), so small increases in the shrink rate results in a large dollar impact.

Importantly, nearly all this loss is hitting stores as e-commerce (eCom) fulfillment centers are much more secure. This is creating an outsized impact on physical retail stores 4-wall-profit. This is what several major retailers have recently been struggling with when considering the closure of stores due to unsustainable losses.

Read the full report here


'America First Policy Institute' Releases Issue Brief on Theft
Protecting America's Retailers from Theft

Key Takeaways

• America's small and large retailers are facing an onslaught of theft that threatens their economic viability, places workers in dangerous situations, and damages Americans' sense of safety in their communities.

• This scourge of retail crime is concentrated in large cities controlled by progressives, where prosecutors have neglected their duty to hold criminals accountable, and the local population has little confidence in the police.

• To combat this crisis, policymakers should crack down on rogue progressive prosecutors, pass legislation to stymie illicit marketplaces, and restore faith in our local police.

Introduction

The retailers at the heart of the American economy are struggling under a spike in retail theft. Criminals are targeting large and small retailers alike with increased sophistication, in some cases using blow torches to break through plexiglass or storming shops in large groups. From small mom-and-pop shops to large brand-name retailers, managers are reevaluating whether operating in these conditions is feasible.

Given the retail industry's status as the Nation's largest private sector employer-providing 32 million American jobs and $1 trillion in direct labor income-any increase in closures will be devastating for American workers (National Retail Federation, 2020a). Even when stores do not close, lower sales can lead to increased prices, further squeezing consumers during a period of unprecedented inflation. Increased crime can also erode Americans' sense of safety, leading to less walk-in traffic for small businesses and a decline in community trust.

This issue brief outlines the data showing a recent rise in retail theft, examines the causes and effects of theft, and provides America First solutions to this crisis.

Click here to see the brief


Mayor Adams Exempts NYPD from New Budget Budget Cuts
NYC Mayor Adams' $109B budget spares NYPD from more cuts
Mayor Adams rolled out a $109.4 billion budget proposal Tuesday that averts some cuts to police, sanitation, libraries and social programs, but keeps a range of other unpopular spending reductions in place even as his administration predicts city tax revenues are set to greatly improve.

The preliminary budget bid, which Adams presented in an afternoon speech at City Hall, marks the starting point of months of negotiations between his team and the City Council before the two sides must finalize a final spending plan before the July 1 start of the 2025 fiscal year.

Citing fiscal fallout from the migrant crisis, Adams announced in November (as reported in the Daily here, here and here) the preliminary budget plan would include a so-called Program to Eliminate the Gap, or PEG, requiring all city agencies to slash their budgets by 5%. That was supposed to come on top of a 5% PEG all agencies were already subjected to in November that resulted in drastic public service reductions.

According to recent department data, there are currently about 33,500 NYPD officers - about 1,400 fewer than the department is budgeted for, and about 2,700 fewer than were on the beat in 2019.

But in Tuesday's presentation, hours after New York Gov. Hochul released her budget, Adams said his team was able to exempt the NYPD, the FDNY, the Department of Sanitation and the city's three public library systems from the latest round of 5% cuts. As first announced last week, Adams said he's also restoring a handful of his November cuts, allowing the NYPD to reinstate a previously cancelled Police Academy class of 600 officers and the Department of Sanitation to keep 9,000 litter baskets on city streets that were initially going to be removed.

He said his administration has managed to reduce the projected cost for caring for the tens of thousands of newly-arrived migrants in the city by $1.8 billion through the end of June 2026.  nydailynews.com   crainsnewyork.com

   RELATED: Hochul's $233B budget would spend $2B on migrants, avoid tax hikes


Crime Keeping Customers Home, Leading to Closures
Memphis restaurateurs discuss recent closings
Memphis restaurants are increasingly shuttering operations as the struggling industry is buckling under crime, a dwindling customer base and rising costs. Numerous factors are contributing to the challenging environment facing the industry.

Among the most pressing problems is that sales and customer counts are down by 15% to 25% from 2022 to 2023, said Deni Reilly, co-owner of Majestic Grille and Cocozza American Italian. Exacerbating the struggle is crime, which tends to cause people to stay home. And last year's near-record violence has had a tremendous impact, Reilly said.

Mike Miller, president of the Memphis Restaurant Association, said crime can happen anywhere, but he thinks the some areas are more affected than others. "Look at some of the growth in Collierville, Lakeland, Arlington, versus what's going on Downtown or Midtown, there seems to be more prevalence of crime," Miller said.

"We understand that everybody is feeling all of these pressures," Dean said. "But I do think that if more and more restaurants have to shutter because of lack of enthusiasm or because of fear of crime, that's going to have a (harmful) effect on the vibrancy of the city."  dailymemphian.com


Schnucks reveals new anti-theft measure that will change the way you shop forever

Editor's Opinion: Congress is Running Out of Time to Pass the ORC Bill

Former Abercrombie & Fitch CEO Led 'Scheme to Recruit Men for Sex Events'
Now he's facing an FBI sex crimes investigation

Ex-Abercrombie & Fitch CEO Under FBI Investigation
FBI probes ex-Abercrombie & Fitch CEO Mike Jeffries over claims he sexually abused male models: report
The FBI has reportedly opened a criminal investigation into Abercrombie & Fitch's disgraced ex-CEO Mike Jeffries after he was accused of orchestrating elaborate sex events to exploit and sexually abuse young male models.

The investigation is being led by FBI agents specializing in sex crimes, as well as federal prosecutors from the US Attorney's Office for the Eastern District of New York, according to the BBC, whose bombshell investigation first made Jeffries' "well-oiled machine" to "recruit" young men for sex events public.

Interviews are already underway, and potential witnesses have been subpoenaed, the BBC reported.

In October, eight men detailed allegations of an exploitative regime led by Jeffries to the BBC, which saw the former Abercrombie & Fitch boss and his British lover, Matthew Smith, luring them to Jeffries' upscale New York residences or luxury hotels in the world's fashion capitals between 1992 and 2014.

"Recruiters" - a type of middleman alleged victims claimed misled them about the nature of Jeffries and Smith's events - received as much as $1,000 per referral, the BBC reported.

The men Jeffries allegedly abused were then required to sign nondisclosure agreements that said they would be sued if they spoke out. They were not allowed to keep a copy of the legal document, according to the BBC. nypost.com

Read the D&D Daily's initial reporting on the sex scheme here


The 'Hook' - Victoria's Secret New York Fashion Show
Netflix Program: Ghislaine Maxwell: Filthy Rich
A number of young women/victims claimed that in recruiting them to Epstien's island one of Maxwell's "hooks" was Epstien's relationship with The Limited's Leslie Wexner and that if he likes you, he might be able to get you involved in the annual Victoria's Secret New York Fashion Show.

In separate accounts victims mentioned that Epstein actually "pitched himself as a talent scout" and recruiter for Victoria's Secret models. Mr. Wexner was alerted, according to the two executives.

It is unclear what if any action Mr. Wexner took in response. But the man - Jeffrey E. Epstein, a New York financier - had developed an unusually strong hold on Mr. Wexner, one of the country's most influential corporate titans.

Within years of meeting Mr. Epstein, Mr. Wexner handed him sweeping powers over his finances, philanthropy and private life, according to interviews with people who knew the men as well as court documents and financial records. And even gave Epstein his "power of attorney."

Mr. Wexner authorized him to borrow money on his behalf, to sign his tax returns, to hire people and to make acquisitions. Over the years, Mr. Epstein obtained a New York mansion, a private plane and a luxury estate in Ohio - today valued at roughly $100 million all together - previously owned by Mr. Wexner or his companies. At the same time, he drove a wedge between Mr. Wexner and longtime associates and friends.

In 1997, then 27-year-old model Alicia Arden was invited to a hotel room by Epstein, supposedly to discuss appearing in the Victoria's Secret catalog; instead, as she recalls in Angels and Demons, Epstein grabbed and tried to undress her. This took place less than a year after Epstein sexually assaulted Maria Farmer, who was working on a project for him in Wexner's Ohio home; she testified that she "fled the room and called the police, but that Mr. Wexner's security staff refused to let her leave for 12 hours," according to the Times. netflix.com nytimes.com vogue.com


Employee Wellness Programs May Be Having Negative Effect
Workplace Wellness Programs Have Little Benefit, Study Finds

An Oxford researcher measured the effect of popular workplace mental health interventions, and discovered little to none.

Employee mental health services have become a billion-dollar industry. New hires, once they have found the restrooms and enrolled in 401(k) plans, are presented with a panoply of digital wellness solutions, mindfulness seminars, massage classes, resilience workshops, coaching sessions and sleep apps.

These programs are a point of pride for forward-thinking human resource departments, evidence that employers care about their workers. But a British researcher who analyzed survey responses from 46,336 workers at companies that offered such programs found that people who participated in them were no better off than colleagues who did not.

The study, published this month in Industrial Relations Journal, considered the outcomes of 90 different interventions and found a single notable exception: Workers who were given the opportunity to do charity or volunteer work did seem to have improved well-being.

Across the study's large population, none of the other offerings - apps, coaching, relaxation classes, courses in time management or financial health - had any positive effect. Trainings on resilience and stress management actually appeared to have a negative effect. nytimes.com


Regulators Delaying Kroger-Albertsons Merger
Proposed Kroger, Albertsons merger delayed
The proposed merger between two U.S. supermarket giants is no longer expected to be completed in March.

The Kroger Co.'s proposed $24.6 billion acquisition of rival Albertsons is now expected to close in the first half of Kroger's fiscal year 2024 instead of early this year. The statement cited ongoing discussions with regulators as delaying the closing of the deal.  The first half of Kroger's fiscal 2024 ends on Aug. 17.

"While this is longer than we originally thought, we knew it was a possibility and our merger agreement and divestiture plan accounted for such potential timing," the statement read.

The companies said they remain in active and ongoing dialogue with the Federal Trade Commission and individual state attorneys general regarding their proposed merger and divestiture plan. chainstoreage.com


Amazon 'Just Walk Out' Expands with 'Badge Pay'
Amazon expands cashierless checkout to hospitals - with a new feature
Amazon has adapted its "Just Walk Out" cashierless checkout technology for use in hospitals and other health care centers.

The updated version includes a new payment solution called "badge pay," which lets staff pay for food and beverages purchases by scanning their employee badge. The first hospital to offer the technology and the badge pay capability is St. Joseph's/Candler's Candler Hospital in Savannah, Ga. Morrison Healthcare, a national food and nutrition provider serving more than 950 hospitals and healthcare systems, operates the Just Walk Out-enabled SmartBytes store at Candler Hospital. chainstoreage.com


Survey: 'Wardrobing' contributing to retailers' returns
One-in-four U.S. consumers bought an an item with the intent to return it ("wardrobing") after use during the 2023 holiday season, according to a Harris Poll survey in partnership with Forter of more than 2,000 U.S. and more than 1,000 U.K. consumers.

TSA detects 6,737 firearms (93% loaded) at security checkpoints in 2023 - Highest total in TSA's history

Target seeing some disruption of India supplies due to Red Sea crisis

The biggest problem with GenAI right now, said Wagner, is understanding "the art of the possible" - understanding how to govern it, what to be afraid of (cybersecurity, factual errors, results bias), and figuring out the use cases in a given industry. (See chart above.)  cfo.com


Tech CFOs Putting Money Into AI
AI ranked by tech CFOs as top 2024 investment priority

The technology also triggered concerns including the potential for data privacy risks and negative workforce impacts such as job displacement.

A majority (61%) of finance executives in the tech sector expect their organizations to invest in artificial intelligence this year, according to advisory services firm Grant Thornton.

In a survey of 150 industry finance leaders, AI topped the list of areas cited as technology-related investment priorities for 2024, according to a recently published Grant Thornton report on the findings. Other such areas included cybersecurity (cited by 45% of respondents as a priority); data analytics and business intelligence (39%); data security and privacy solutions (27%); enterprise resource planning systems (25%); blockchain technology (24%); and robotic process automation (20%).

"AI technology has been around for decades, but it's recently become a priority tool for today's business needs," the report said.

The business demand for AI technologies has exploded since Microsoft-backed OpenAI introduced its ChatGPT tool in November 2022.

Global management consultancy firm Bain & Company reported last September that 89% of software companies were already using AI to differentiate their products - 15 percentage points higher than other sectors. The current generation of AI tools and models could help companies speed up 20% of worker tasks without a loss in quality, according to the research. cfodive.com


Sounding the Alarm Over AI Threats
NIST researchers warn of top AI security threats

State and local governments are among the organizations threatened by various exploits against AI systems, according to a recent paper.

As dozens of states race to establish standards for how their agencies use AI to increase efficiency and streamline public-facing services, researchers at the National Institute of Standards and Technology found that artificial intelligence systems, which rely on large amounts of data to perform tasks, can malfunction when exposed to untrustworthy data, according a report published last week.

The report, part of a broader effort by the institute to support the development of trustworthy AI, found that cyber criminals can deliberately confuse or "poison" AI systems to make them malfunction by exposing them to bad data. And what's more, according to the study, there's no one-size-fits-all defense that developers or cybersecurity experts can implement to protect AI systems.

Researchers warned that some AI training data - such as websites with inaccurate information or undesirable interactions with the public - may not be trustworthy and could cause AI systems to perform in an unintended manner. Chatbots, for example, might learn to respond with abusive or racist language when their guardrails get circumvented by carefully crafted malicious prompts. statescoop.com


White House moves to ease education requirements for federal cyber contracting jobs

Growing pains at the Bureau of Cyberspace and Digital Policy, report finds