Defending Against Organized Retail Crime (ORC)Source: Tyco Retail Solutions
By Nancy Chisholm, Vice President and General Manager of Loss Prevention Solutions, Tyco Retail Solutions
Shoplifting is a persistent challenge for retailers trying balance a pleasant shopping environment against a drain on their merchandise, profits, and patience. And while total inventory shrinkage has shown modest declines over two decades, losses remain unacceptably high. Shoplifting currently accounts for 31% of investigated US cases of shrinkage. Most disturbing, however is that 25% of investigated US shoplifting cases are due to organized criminal gangs. The rise of Organized Retail Crime (ORC) raises the stakes in retailers’ constant struggle to control losses without alienating honest shoppers, and it demands new strategies and technologies to protect retail merchandise, profits, employees, and customers.
Organized Retail Crime
Organized Retail Crime refers to groups of people who illegally obtain merchandise in substantial quantities through theft and fraud for the purpose of resale. It is typically a two-stage process: theft of the merchandise, followed by monetization of the stolen goods, including related financial crimes such as credit- and gift-card fraud, return fraud, and smuggling. Almost all retailers—94.5%—report that they have been victims, and 84.8% report increased incidents over the past three years. Retailer reports put ORC losses at an average $6,842 per instance compared with $438 for shoplifting incidents in 2009, so the financial impact of ORC is much greater than incident percentages indicate. And because thieves steal in bulk and concentrate on categories that are easy to resell, indirect losses include inventory turns on popular items no longer available for sale, and “frozen out-of-stock” conditions when shelves have been picked clean of a popular style or size.