Luxury Retail's War with Organised Crime

LONDON, United Kingdom — In the middle of the night in early November, amidst the twinkling of Christmas lights strung across the road all down London's Regent Street, thieves on mopeds made their way to the Canada Goose store, which had officially opened just a few days prior. Equipped with sledge hammers, they smashed through the windows and threatened security guards before making off with merchandise worth thousands of pounds. From beginning to end, the entire theft was carried out within two minutes.

Organised robberies like this one are becoming more frequent in the luxury sector: violent retail crimes in the US increased by 4.1 percent  in 2016, and designer apparel and handbags were the biggest categories hit, according to the National Retail Federation (NRF), as they have high resale value and can easily be turned into cash online. In its 2017 Organised Crime Survey, the NRF stated that 94.6 percent of all retailers surveyed have been victims of organised crime in the last 12 months, each reporting losses of up to $1 billion in sales volumes.

In the month of November in London alone, night-time smash-and-grab thefts targeted not just Canada Goose but also Apple, Mappin & Webb and Louis Vuitton. Last month, in the US, thieves made away with $11,000 worth of underwear from a Victoria's Secret store in Illinois, while Louis Vuitton lost $150,000 of merchandise in one raid alone in Ohio. Earlier, in June, robbers in Stockholm drove a tractor through the windows of the Chanel store.

Besides the obvious loss of stolen goods, robberies can wind up costing retailers in lost customers, especially when gangs can clear out a store's entire inventory of a product. “It may lead to the loss of customers who can purchase that particular item from somewhere else,” said Paul Finucane, group stores director at Harvey Nichols. Smash-and-grabs, which usually take place after hours, are harder and more dangerous to defend against than typical shoplifters. More than a quarter of retailers surveyed by NPD stated these organised gangs were exhibiting more violent and aggressive behaviour than in 2016, raising the question as to how stores can equip themselves to deal with thieves armed with machetes, shotguns and knives?

In 2014, cult Parisian concept store Colette was targeted by masked gunmen, who made off with more than €600,000 ($703,000 at current currency exchange) worth of merchandise in broad daylight. As Colette found, traditional security measures — a security guard, CCTV, electronic tags — are no deterrent for gangs. “That sort of security system only works for the personal shoplifter,” said Robert Moraca, NRF’s vice president of loss prevention. But organised gangs are prepared for that, and often wear helmets or masks which hide their identity.

For years the bad guys have been using technology against us, so it's time for us to stand up and use technology against them

Equally, designer labels also don’t want to resort to security tactics that could damage customer experience and brand perception. A customer who wants to spend upwards of $1,000 on a Louis Vuitton bag doesn’t want to look at it from behind a glass case. And so, luxury stores need to find ways of increasing security discreetly.

Shatterproof glass is one way to reduce the threat of such thefts. Scientists at the Minneapolis-based company 3M have developed an invisible film layer to reinforce store windows — it’s so durable it can withstand a bomb blast. “It really can’t be penetrated, you can hit it with anything,” said Christopher McGourty, founder of the National Anti-Organised Retail Crime Association, a private company headed by the former corporate investigator that links retailers with security affiliates. “We need to look at technologies like this and find a solution to the problem, rather than moving on when a store has been hit as if nothing has happened.”

While it may be an expensive measure — prices range upwards of $180 per square foot of film for commercial windows — it could prove cost-effective if it prevented further smash-and-grab robberies. Additionally, the 3M security window films provide heat rejection that reduces the need for air conditioning — the company estimates a potential payback on energy costs could be seen in as little as three years.

Department store Harvey Nichols’ last smash-and-grab raid was in 2009, when a gang of thieves made off with tens of thousands of pounds worth of jewellery from the Garrard boutique in the early hours of the morning. The store has since installed electronic, key-operated metal shutters, which guard windows overnight. “We’ve definitely seen a decrease in organised crime [since],” said Finucane. The shutters are conspicuous however, which might deter luxury brands from installing them despite their effectiveness.

Organised gangs often return goods to stores in exchange for credit — the NRF reported in its survey that 11 percent of annual returns are fraudulent, and of that 11 percent, 68.3 percent were stolen merchandise. Luxury houses like Burberry, Moncler and Ferragamo already use radio frequency identification (RFID) chips — which cost around 15 cents each — as a means of tracking inventory and preventing counterfeits: the chips store geographical data, while also allowing customers to verify their purchases are authentic. Not only does it save retail staff time on manually taking inventory, but the technology in RFID could also help both cashiers and the police force distinguish stolen merchandise — the data would flag that the garment had never been bought. Chips can also operate as a security tag, setting alarms off if the item was removed — or returned — to the store without prior purchase.

The police can't keep chasing these guys because there's too many of them

But it’s not just the merchandise these gangs are stealing — they also hack computer systems to steal customer data and create cloned cards to shop with in-store. “So, if a product was purchased using a stolen credit card, RFID can determine when and where the transaction took place so the police can then get security videos,” said McGourty. “For years the bad guys have been using technology against us, so it’s time for us to stand up and use technology against them.” Pagemark — a Washington-based company — offers a similar technology via QR codes that operates on a patented system that the company insists cannot be hacked, for a fraction of the cost of RFID.

The issue with RFID tags is that, like a care label, they can be snipped out, but researchers at Nottingham Trent University have found a way of weaving microchips into actual threads that can then be woven into textiles to make sweaters and shirts. “The e-yarns containing RFID tags can be hidden within the structure of a garment and are very difficult to find,” said Dr. Dorothy Hardy, a scientist in the Advanced Textiles Research Group at Nottingham Trent University. “If found, then removal might result in partial destruction of the garment, which would make the garment useless to a thief.” Short, thin copper strands — which cost a few pence each when bought in bulk — are sealed inside micro resin pods that are then embedded in yarn fibres, acting as an antenna. The research team are currently in discussions to take the project commercial.

Retailers in hardest-hit areas could look to tackle the problem by partnering together, like those on Bond Street in London have done. Brands on the street will work with the New West End Company (NWEC) to trial new security measures — details of which they won’t disclose. “We are monitoring ‘smash and grab’ incidents carefully,” said Jace Tyrrell, chief executive of NWEC. “With this particular crime on the increase, especially in the run up to Christmas, it is crucial for businesses and public services to work together to tackle it and ensure our district remains safe for visitors, employees and residents.” McGourty also suggested that Transport for London looks to implement systems such as Automated License Plate Readers (ALPRs) used by many shopping malls in the US. “License plate readers can determine what cars are at a specific mall, or what cars are going in, so if there is an incident, they can track back to law enforcement,” he said.

“And could they put bollards up along the pavements outside the store so these mopeds and cars can’t target them?” asked McGourty, referring to prestigious streets in Mayfair and Knightsbridge. “The police can’t keep chasing these guys because there’s too many of them, it’s costing law enforcement so much time and money. The private sector has to work with the public sector to tighten up controls so that the bad guys can’t manipulate these systems.”

Not only do retailers need to invest in the latest security systems, but they could also look to support tech development labs like those at NTU as a means of encouraging further advances in the field. “It makes sense for luxury brands to [do this],” said Hardy. “It requires ongoing research to stay at the forefront of developments in technology used by thieves and methods of thwarting theft.”

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