The State of ORC
Retailers and law enforcement agencies across the country are nipping at the heels of organized retail crime. But this multi-billion dollar enterprise, run by sophisticated networks as well as local operators, shows no signs of letting up.
The sad truth is that ORC remains far too lucrative a practice — a high-reward, low-risk activity — thanks, in part, to the anonymity of online marketplaces. Unfortunately, the current economic downturn has also fueled ORC fires. Theft is simply an easy way for more people to make "bad decisions" and retailers faced with sliding sales have had to cut back on store personnel — the first line of defense against boosters.
Additionally, reductions in corporate funding for asset protection and severe budget constraints among law enforcement agencies have made retail crime that much easier.
These factors have attracted everyone from traditional organized criminal enterprises to flea market sellers and a plethora of online and bricks-and-mortar fencing operations.
"I think the whole definition of fraud and organized retail crime is widening," says David Speights, chief statistician for The Retail Equation, an Irvine, Calif.-based provider of transactional optimization solutions for retailers. "The area of returns which, on the surface, doesn't appear to break the law, has become very troubling and it's creating billions of dollars in damages to the profitability of our retailers."
A recent report from the Urban Institute's Justice Policy Center states: "Of the crime trends on the horizon, perhaps the greatest threat is ORC. It will continue to grow and become one of the most costly crimes experienced by the security industry. Efforts should begin now to train employees on identifying behaviors associated with these activities."
This was underscored in a recent NRF survey which found that 85 percent of retailers had fallen victim to ORC in 2008 and 87.5 percent of LP executives believe ORC has grown in the past three years — with one-third citing increases of 25 percent or more.
Industry-wide, the only real debate over ORC is the size of the problem and, to a degree, how it's defined.
"There's plenty of anecdotal and case evidence from retailers about the significant number of gangs and individuals being arrested and charged," says Richard Hollinger, head of the department of sociology and criminology and law at the University of Florida and compiler of the annual National Retail Security Survey.
"But because of the economic downturn, we're getting information about a whole new group — people who have never stolen before but are now financially desperate and making very bad decisions.
"When our new report comes together, they are going to have a substantial impact on shrink levels," Hollinger predicts. Preliminary results of the 2009 NRSS will be released later this month at the NRF Loss Prevention Conference & EXPO in Los Angeles.
