Organized retail crime (ORC). A new global threat for retailers.
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Is shoplifting the same thing?
The evolution and impact of ORC
The challenges in combating ORC
Technological and legislative responses
The role of retailers and law enforcement
Retailers worldwide face a growing and sophisticated threat known as organized retail crime. It involves the large-scale theft of goods from retailers by organized crime rings, who then sell these stolen items for profit. This type of crime is not just a series of isolated incidents but a coordinated effort by groups who are deeply entrenched in criminal networks.
Organized retail crime (ORC) is a highly coordinated effort involving multiple individuals who often operate within larger criminal networks. ORC is premeditated and involves intricate planning and execution. The individuals involved in ORC, known as ‘boosters’, steal merchandise not for personal use but explicitly for resale on the black market or through legitimate channels like online marketplaces.
These goods are often resold by ‘fences’, part of the criminal network. ORC results in significantly higher financial losses per incident and can have a substantial economic impact on retailers and consumers alike, as the cost of stolen goods and added security measures may lead to higher prices for shoppers.
Is shoplifting the same thing?
Shoplifting and organized retail crime (ORC) are both forms of retail theft but differ significantly in their execution, scale, and impact.
In contrast, shoplifting is typically an act committed by individuals acting alone without premeditation. It usually involves the opportunistic theft of merchandise and is often spontaneous. Shoplifters generally steal items for personal use rather than for resale. This type of theft is less organized and usually results in relatively low financial losses per incident compared to ORC.
The distinction between shoplifting and ORC is crucial for understanding the different strategies to combat these types of crimes effectively. While shoplifting might be mitigated through enhanced in-store security measures and employee training, tackling ORC requires a more comprehensive approach involving law enforcement, advanced technological tools, and legislative support to dismantle the organized networks behind these crimes.
The evolution and impact of ORC
Organized retail crime (ORC) has existed for decades, but its scope and impact have intensified significantly in recent years.
In the 1980s, police identified groups of shoplifters who were stealing goods not for personal use but to resell them in large quantities on the black market. Today, the problem has escalated into a multi-billion-dollar issue that affects not only the profitability of businesses but also the global retail landscape.
ORC and its impact in the global retail landscape
According to the 2023 National Retail Security Survey, the average shrink rate in FY 2022 increased to 1.6%, up from 1.4% in FY 2021 and in line with shrink rates in 2020 and 2019. The National Retail Federation (NRF) recognizes organized retail crime as one of the primary contributors to retail shrink, accounting for a significant portion of inventory losses.
The structure of ORC networks
Organized retail crime typically involves multiple participants each playing specific roles. These include:
- ‘ boosters’, who are individuals that steal merchandise from retail stores;
- ‘fences’, who buy and resell these stolen goods through various channels such as online marketplaces or physical locations like flea markets; and
- ‘organizers,’ who coordinate the operations, choose targets and manage logistics.
What do they steal?
The stolen items often include easily resalable products such as perfumes, cosmetics, toiletries, and power tools. These goods are sold on the black market, often through online auction sites or to other retailers and third-party merchants on major e-commerce platforms like Amazon and Walmart.
The challenges in combating ORC
In the retail industry, one significant challenge in tackling ORC is the underreporting of incidents. Approximately 50% of ORC incidents are not reported to the police, primarily because retailers believe that the police will not respond, investigate, or arrest the perpetrators. Other reasons include the overwhelming volume of crime and the lack of time and resources among workers to file reports.
Moreover, the ORC has also seen a rise in violence and aggression. Retailers report increased safety incidents associated with theft, which poses a financial burden and threatens the safety and well-being of employees and customers.
Technological and legislative responses
Technology and legislation are being leveraged to combat the rising tide of organized retail crime. Retailers and law enforcement agencies increasingly use advanced tools such as real-time data access, license plate reader technology, fraud detection platforms, and visual recognition systems to identify and prevent ORC.
Legislatively, several states have passed laws to stiffen penalties for those involved in organized retail crime. The federal government has also taken steps to curb the resale of stolen goods online, bypassing the INFORM Consumers Act, which mandates online marketplaces to verify the identity of high-volume third-party sellers.
The role of retailers and law enforcement
Retailers are not passive victims in this scenario. Many have taken proactive steps to secure their merchandise and premises. Measures include installing plexiglass cases and steel cables to lock down high-theft items, enhancing store security systems, and collaborating closely with law enforcement.
Law enforcement agencies, on their part, have set up special task forces and invested significantly in efforts to curb ORC. For instance, California alone has invested over $241.4 million in bolstering law enforcement capabilities to investigate and prevent organized retail theft.
Conclusion
A complex and evolving challenge, organized retail crime demands a coordinated response from retailers, law enforcement, and the community. This multifaceted issue requires collaborative efforts to effectively combat its impact on businesses and society. By understanding the mechanisms of ORC and implementing strategic measures to combat it, stakeholders can protect their assets and ensure the safety of their employees and customers. As this type of crime continues to evolve, so must the strategies to combat it, underscoring the need for continuous innovation and collaboration in the fight against organized retail crime.
Read more on how retailers can protect themselves against ORC.
