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  • ORC Continues To Plague Retailers At An Alarming Rate

  • Despite the fact that shrink has been in a slow decline over the past decade, the scourge of organized retail crime (ORC) remains a thorn in the side of retailers nationwide. According to the results of the National Retail Federation’s 11th annual Organized Retail Crime Survey, 97 percent of retailers surveyed said that their organization had fallen victim to ORC in the past year, which was up from 88 percent in last year’s survey. 

    More than 48 percent of respondents reported that they had experienced a “significant” increase in ORC in the past year, while just over 36 percent indicated they had seen a “slight” increase. Just fewer than 11 percent of respondents said they experience no change in ORC activity and only 4.5 percent said they saw a decrease.

    “I think what the survey tells us is that organized retail crime and aggressive shoplifting is on the rise against retailers,” said NRF Vice President of Loss Prevention Bob Moraca.

    In fact, Moraca said the ORC survey correlates with the results of the 2015 National Retail Security Survey released in June, which for the first time in its history found that shoplifting/external theft accounted for a higher percentage of inventory shrink than employee/internal theft.

    The ORC survey, which polled 67 senior loss prevention (LP) executives, also found that for every $1 billion in annual sales, retailers lost an average of nearly $454,000 due to ORC. In addition, the survey revealed that the average approximate dollar value (specifically salaries and wages) of company personnel allocated to combat ORC was just over $434,000.

    “That’s a substantial amount of dollars and cents that retailers are putting out to help thwart the problem and, again, keep the losses from impacting the consumer at the end of the day because, obviously, that’s a big part of what we’re trying to accomplish,” Moraca said.

    Of course, there are also some positive findings that retailers can take away from the survey. First and foremost, LP executives indicated they are receiving increased support from federal, state and local law enforcement in combatting ORC. Of those polled, 43 percent said they had seen increased law enforcement support on the local/county level, more than 24 percent said they had increased support from state authorities and just over 15 percent said they seen more support from the feds.

    In the past 12 months, five states – Maine, Massachusetts, North Carolina, South Carolina, and South Dakota – enacted legislation related to ORC, bringing the total number of states with ORC laws to 30. While the NRF would still like to see federal lawmakers take action on the issue, Moraca said the support retailers are receiving from law enforcement and the state legislatures is significant.

    “We’ve had a 20 percent increase of states recognizing that this is a real issue, understanding the seriousness and passing legislation,” added Moraca. “Our members are very active in advocating for the industry to see if we can get federal legislation. That would be ideal so that we can get federal agencies engaged because a lot of this activity takes place across state lines and is even international in scope. A lot of these items that are boosted, stored and fenced leave the country. I always use the example of baby formula. It leaves the U.S., goes to some third-world county and it has three, four or sometimes five times the value. The same goes for phones. They can be locked down so they maybe can’t be reused here in the U.S., but now they are worth three, four or five times their value in other countries. The criminals are profit driven too.”

    The most frequently targeted merchandise by ORC gangs, according to the survey, include:

    • Grocery (cigarettes, energy drinks, high-end liquor, and baby formula)
    • Over-the-counter medicine (allergy medicine, diabetic testing strips, pain relievers, and weight loss pills)
    • Home goods (high-end vacuums, high-end appliances, mixers, children’s electronic toys, and laundry detergent)
    • Health and beauty products (teeth whitening strips, pregnancy tests and razor blades)
    • Clothing (denim pants, designer clothing and handbags)
    • And, electronics (cell phones, GPS devices, laptops/tablets, and electronic fitness devices)

    In some cases, ORC thieves don’t even wait until the merchandise hits the store shelves. Just fewer than 38 percent of retailers reported being the victims of cargo theft in the past year, which was up slightly from the 35.4 percent who said they had be victimized by it in 2014.

    “These enterprises of criminal gangs are not just committing organized retail crime; they are also the same groups that are committing narcotics trafficking, human trafficking, etc. They don’t just formulate to commit organized retail; they’re usually in all of these other criminal enterprise, so it’s the same criminals just taking on different activities,” explained Moraca.

    Currently, Moraca said that retailers are sharing information about potential ORC cases with each other as well as regional associations and law enforcement to help put as big of a dent in it as they can.

    “The growth of that part of the industry, with the support of the NRF, is really where the rubber meets the road and that’s where we’re having some great success in having people arrested, prosecuted and put in jail for these crimes,” said Moraca. “But I think the broader we can make these partnerships and the more intense we can work with law enforcement, which is happening at a very fast rate, I think will help make an impact over time.”

    By Joel Griffin