Sophisticated Stealing: A New Criminal Enterprise
 

By Farrokh Abadi, President & COO, Merchandise Availability Solutions, Checkpoint Systems

Published in Apparel Magazine, October 16, 2013
 

Already widely recognized as a growing criminal trend, organized retail crime (ORC) is going global with rising rates of thefts being reported across all geographic regions around the world. As a result, retailers are under greater pressure to complement technology with processes and investigative resources that can help prevent, deter and reduce the impact of the problem.

According to the latest Global Retail Theft Barometer (GRTB), ORC was one of the leading contributors to the estimated $119 billion global retail industry, one of the highest figures ever recorded.

What is Organized Retail Crime?
ORC is commonly identified as groups or gangs of individuals who coordinate their activities to illegally obtain large quantities of desirable retail merchandise through both theft and fraudulent activities. ORC gangs differ from opportunist shoplifters by operating and organizing as a professional business with quotas, revenue plans and managing inventory – often running underground activities as part of a commercial enterprise where they resell or exchange the stolen merchandise for cash or drugs.

In the US, the Organized Retail Crime Act of 2008 defines ORC as the 'acquisition of retail merchandise by illegal means for the purposes of reselling items into the marketplace.’ It is agreed that ORC activities will contain at least one of the following four basic elements:
 

ORC: The scenario today
The scale of the ORC problem is highlighted in the most recent GRTB report, which revealed losses from ORC related theft increased by 13.4 percent globally in 2011.

However, for many regions, ORC is an emerging problem, and this has resulted in difficulties monitoring its growth, as there is no current consensus on what ORC is or how to respond or prosecute it. However, while not all countries directly monitor ORC, there is an abundance of regional data on shoplifting and retail crime, much of which could be attributed to gang-related thefts.

ORC in the US
The National Retail Federation (NRF), the world's largest retail trade association which represents retailers of all types and sizes from the United States and more than 45 countries around the world, revealed that in 2012 alone, a staggering 96 percent of US retailers had been a victim of ORC activity. It also revealed that 'cargo thefts' had risen by 2.5 percent with 52.1 percent of respondents falling victim to such activities over the past 12 months. The majority of these incidents occurred en route from the distribution centre to the retailer's store, enabling ORC gangs to obtain big shipments of products.

The scope of this problem is further revealed by data from the Federal Bureau of Investigation's Unified Crime Report, which indicates that ORC is currently resulting in bigger losses than auto theft, burglary and larceny. This highlights the growing problem facing retailers as ORC continues to be favored by many criminals aiming to illegally obtain large quantities of merchandise to fund their operations.

Speaking about the rise of Organized Retail Crime Professor Joshua Bamfield, Director for the Centre of Retail Research has noted that Organized Retail Crime has had an increased impact on retailers in most countries, particularly in the last five years. Earlier in the 2000's, inquiries about ORC carried out by the Centre for Retail Research got little response except in the US, Canada, Latin America, the Netherlands and Italy.

However, by 2011, the growth in retail crime meant that retailers in every continent were experiencing appreciable losses from ORC activity. The latest GRTB survey revealed the impact of ORC was most significant in North America where 58.4 percent of retailers suffered an increase in ORC activity. Europe was also affected, with 41.7 percent of retailers claiming to have experienced increased losses from organized crime. However, anecdotal evidence suggests that ORC could be increasing.


To read more about how organized retail crime groups operate, how retailers can help deter ORC activity in their stores, and the ways retailers and law enforcement can collaborate to help mitigate thefts of this magnitude, please click here.

To read Checkpoint's whitepaper on The Growth of Organized Retail Crime please click here.