Organized Retail Crime: Television Drama or Retailer Reality?
What’s worse than a shoplifter hitting a store? A gang of shoplifters hitting a store to commit organized retail crime (ORC). Members of this criminal enterprise profit very highly from actions such as theft, fraud, and hijacking by coordinating their attacks using the “power in numbers” strategy. The more of them, the more they get. It may sound like an episode from a Hollywood crime drama but it’s a sad reality for many retailers. ORC differs from traditional forms of shoplifting, as it involves large-scale retail theft and other fraudulent activity where stolen goods are converted into cash and sold through a combination of websites, street fences, small shops, flea markets, diverters and even shipped overseas.
External theft and fraud, including ORC, accounts for one-third of total global retail loss. That equates to over $30 billion each year! The new Sensormatic 2018 Global Shrink Index, reported the category of external theft, fraud, and ORC as the largest source of shrink worldwide.
According to the NRF 2017 Organized Retail Crime Survey, the financial impact of ORC and return fraud is significant. Organized retail crime costs retailers an average of $726,351 per every $1 billion in sales. It’s clear that retailers have to be vigilant in continuing to find ways to combat these ever-present crimes that directly affect their bottom line. In addition, of those retailers surveyed, 94.6 percent have been victims of ORC in the last 12 months1
While opportunistic shoplifting is still an issue, the biggest problem for external theft for retailers comes from ORC. According to the Sensormatic Global Shrink Index, 26.25 percent of survey respondents assert that the average monetary value per ORC incident is $500 or more, while 43.04 percent cite that it ranges from $100 to $499, and 30.71 percent say it’s less than $100. Those working in consumer electronics (27.64 percent) and department stores (26.01 percent) are most likely to report high value organized retail crime – worth $1,000 or more, on average.
The global survey also provides insights into specific regions, including the source of shrink (percentage of revenue) for external theft/shoplifting (including ORC):
Fight High-Tech with High-Tech
Taking the biggest share of external shrinkage by value, the gangs that characterize ORC operations use sophisticated methods of beating retail security measures. These include tampering with Universal Product Code (UPC) barcodes or point-of-sale (POS) equipment, like the PIN entry device (PED). They also frequently leverage foil-lined “booster” bags and other jamming devices to evade Electronic Article Surveillance (EAS) detection.
While these high-tech criminals have been hard to catch in the past, today, retailers have their own sophisticated technology to help combat shrink. To counter attacks, there is new technology and solutions to arm retailers with the data and insight to protect themselves from ORC loss. New analytical dashboards with real-time loss event data help present actionable insight so retailers can identify problems earlier and make informed timely decisions. Loss prevention professionals can gain a clear picture of store operations across individual stores, districts, regions and even the enterprise to isolate data and gain clear sightline into valuable metrics to help prevent ORC theft. This information can be combined with video analytics and shared with other retail chains and law enforcement for post-event forensic evidence. Retailers now can have new insights into ORC operations to adjust their loss prevention strategies and make data-driven decisions to help prevent future attacks and better manage shrink.
Fighting ORC has felt like an uphill battle for so many retail loss prevention professionals, but now there are more options available. With new innovative technologies and solutions in place, retailers are able to take control of the storyline. Let’s leave the crime dramas to the Hollywood soundstages.