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October 18, 2016

       

 
   


Retailers See Increase in Organized Retail Crime

For the first time, 100% of retailers say they were victims of ORC, according to NRF's 2016 ORC Study


WASHINGTON, October 18, 2016 - Organized retail crime is continuing to grow, with 83 percent of merchants surveyed reporting an increase in the past year, according to the 12th annual ORC study released today by the National Retail Federation.

"Retailers continue to deal with the challenges that come with fighting organized retail crime," NRF Vice President of Loss Prevention Bob Moraca said. "Every day, criminals are getting more creative in the ways they manipulate the retail supply chain. Combating ORC is a full-time job, and it is a constant battle industry-wide for retailers large and small to stay one step ahead of these savvy criminals."

The survey of 59 senior retail loss prevention executives found that 100 percent said their companies had experienced ORC in the past year, up from 97 percent in 2015 and marking the first time in the survey's history that all responding companies reported being a victim. In addition, 83 percent said ORC had grown: The average loss was $700,259 per $1 billion in sales, a significant increase from $453,940 last year.

With the problem growing, 71 percent of loss prevention executives said they now believe their top management understands the severity and complexity of the crimes, up from 63 percent last year.

ORC gangs often use storefronts, pawn shops, flea markets and kiosks to fence stolen goods, and 63 percent of those surveyed said they had recovered merchandise from a physical location. But many criminals turn to the Internet for the anonymity it offers -- 58 percent of retailers said they had identified stolen merchandise from an e-fencing operation.

Criminals are also finding ways to manipulate store return policies. According to the survey, 68 percent of respondents said they had experienced thieves returning stolen merchandise for store credit, which is often resold to secondary-market buyers.

Four new states -- New Mexico, Oregon, New York and Vermont -- have enacted ORC laws in the past year, bringing the total nationwide to 34. But the survey found that 56 percent of retailers in states with ORC laws said they had seen no increase in support from law enforcement, the highest in the survey's history. Retailers continue to support creation of a federal ORC law, which is backed by 79.7 percent of those surveyed.

"Organized retail crime continues to impact retailers at a larger scale now more than ever before," said NRF Vice President for Supply Chain and Custom Policy Jonathan Gold, who heads NRF's lobbying efforts on ORC. "ORC also poses a threat to unwitting consumers who may purchase stolen merchandise that is not stored properly or may have expired. It is critical for our industry to continue pushing for strong federal legislation that would properly define ORC and make it a federal crime. Until there is a federal ORC law to counter this increasing criminal activity and the ability to transport stolen products across state lines, it will be nearly impossible to put a dent in this $30 billion-a-year problem that threatens retailers, the economy and consumers across the country."

Cargo theft continued to impact retailers, cited by 44 percent of those surveyed, up from 38 percent last year. The most common place for cargo theft to occur is when merchandise is en route from the manufacturer to a retailer's warehouse or from the warehouse to a store, followed by on-site at the warehouse.

Los Angeles continued to be the hardest hit area for ORC in the nation, a position it has held since 2012. Following in order were New York City, Chicago, Miami, Houston, San Francisco/Oakland, Arlington/Dallas/Fort Worth in Texas, Atlanta, Philadelphia and Orange County, Calif.

The survey of 59 executives representing department, big-box, discount, drug, grocery and specialty retailers was conducted July 20th to August 19th, 2016.

About NRF
NRF is the world's largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation's largest private sector employer, supporting one in four U.S. jobs -- 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation's economy. NRF's This is Retail campaign highlights the industry's opportunities for life-long careers, how retailers strengthen communities, and the critical role retail plays in driving innovation. www.nrf.com.

Click here to download the full 2016 NRF ORC Survey.


Below are some key findings from this year's study:


Cost of ORC Climbs

The cost of organized retail crime has increased for retailers. In all, retailers see an average impact of $700,259 per $1 billion in retail sales. That is up significantly from 2015's $453,940. Because respondents change from year to year, the median might be more significant. While it also shows an increase, it is not as dramatic. The median increased to $200,000 from $194,340.

Cargo Theft on the Rise
Cargo theft is up again this year, with 44% reporting they've been a victim in the past 12 months, but still not near the 2012 high of 52%. The most common place for cargo theft to occur is still en route from the distribution center or manufacturer, followed by onsite at the distribution center.

New Trends in ORC
Shoplifters are becoming more aggressive. Only 3.4% saw a decrease in aggressive tactics while 96.5% reported an increase or the same levels of aggression. About one in six retailers -- 17.2% -- felt that the level of aggression was much higher than the previous year.

Retail Strategies to Combat ORC
Though eight in 10 retailers have seen ORC increase, half have not devoted additional resources to address it. There are increases in staff and technology resources compared with the previous two years. However, policies related to returns, point-of-sale and trespass continue to remain largely untouched as a response to ORC.


Additional Law Enforcement Support
In states with ORC laws, more than half of surveyed retailers -- 55.9% -- haven't seen any additional support from law enforcement, the highest in the survey's history.

Most Popular ORC Items
Organized retail criminals have a decided preference for the products they steal, with a mix of
high-end luxuries and everyday commodities.




Click here to download the full 2016 NRF ORC Survey.


 
 

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