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Among the <\/span><\/span><\/span><\/span><\/span><\/span>many reasons why the topic of organized retail crime confuses people<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span> is that the term, also known as ORC, means different things to different stakeholders.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Some retailers in recent years have reported escalating levels of shrink, and the industry generally attributes that to rising ORC incidents. Yet there\u2019s no consistent understanding of this specialized kind of crime among law enforcement or the industry itself, experts say. Even the researchers who spent a year working on a special report on organized retail crime for the National Retail Federation say the imprecision makes it nearly impossible to determine the scale of the problem.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Retailers have poor visibility into where their lost inventory has gone, and theft in general and ORC in particular are getting blamed, without much evidence, according to Brand Elverston, who has worked in retail asset protection for more than two decades, including at Walmart. Industry surveys don\u2019t offer much clarity because the people filling them out perceive organized retail crime in a myriad of ways, he said by phone. Meanwhile, the same surveys have indicated for several years that overall shrink rates haven’t changed much.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cORC has never been totally defined as long as I\u2019ve been in retail, and it raised its head probably about 2006-ish,\u201d said Elverston, <\/span><\/span><\/span><\/span><\/span><\/span>who now works as a consultant. <\/span><\/span><\/span><\/span><\/span>\u201cThere needs to be an industry generally accepted term. But there isn\u2019t one.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Groups like the NRF and Retail Industry Leaders Association have struggled to define and quantify the issue, with mixed results. The ICSC, which represents malls, borrows from the definition <\/span><\/span><\/span><\/span><\/span><\/span>employed by Homeland Security Investigations<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>, a division of the U.S. Immigration and Customs Enforcement, also known as ICE: \u201cthe association of two or more persons engaged in illegally obtaining items of value from retail establishments, through theft and\/or fraud, as part of a criminal enterprise.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Organized retail crime \u201cis not a singular incident, event or individual crime,\u201d according to an email from NRF spokesperson Mary McGinty. Theft related to it includes \u201cshoplifting, cargo or supply chain theft, burglaries, e-commerce and gift card fraud, return schemes and more,\u201d she said, noting that it involve networks of thieves that acquire stolen goods for resale. Reporting varies, in part because sometimes what seems like simple shoplifting turns out to be part of an ORC enterprise, she also said.<\/p>\n \u201cThese crimes may be reported or recorded differently by retailers or law enforcement, and not until intensive and extensive investigations are conducted could be determined to be part of ORC activity,\u201d she said.<\/p>\n Indeed, there isn\u2019t a single definition of organized retail crime, among industry groups or anywhere, according to Mark Skertic, managing director at K2 Integrity, the risk advisory firm that worked with the NRF on a special report on the topic last year.<\/span><\/span><\/p>\n \u201cThese crimes may be reported or recorded differently by retailers or law enforcement, and not until intensive and extensive investigations are conducted could be determined to be part of ORC activity.”<\/p>\n Mary McGinty<\/p>\n Spokesperson, National Retail Federation<\/p>\n<\/div>\n<\/div>\n \u201cThat kind of speaks to one of the problems,\u201d he said by phone. \u201cThere\u2019s no agreed-upon \u2014 \u2018Here\u2019s how it happens. Here\u2019s how we report it. Here\u2019s what we have. What\u2019s the difference between somebody shoplifting and somebody taking part in ORC.\u2019 There is a difference, but I think that difference is not always really clear.\u201d<\/span><\/span><\/span><\/span><\/p>\n That problem extended to the firm\u2019s special report itself, released in April 2023. The report includes the caveat that \u201cthere is a lack of consensus among retailers, law enforcement officials and researchers on various aspects of crimes that constitute ORC.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n That lack of consensus has made measurement difficult. In December, the NRF <\/span><\/span><\/span><\/span><\/span><\/span>removed a key statistic <\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span> from the K2 report, after Retail Dive\u2019s discovery that the number <\/span>didn\u2019t apply to organized retail crime<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>, but, rather, to total industry shrink, or inventory loss. Meanwhile, a $70 billion estimate from RILA from 2019 applies to all types of theft, not just ORC, and, moreover, is dismissed by some experts as not credible.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The NRF has simply stopped estimating the financial impact of organized retail crime, telling Retail Dive that reports from its members likely reflect an undercount because many fail to recognize ORC; don\u2019t realize that losses through their supply chain or via e-commerce are related to it; and often don\u2019t report shoplifting, fraud or other non-violent incidents to police.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cThe ability to determine, record and identify losses come down to the individual retailer\u2019s resource capabilities and even law enforcement\u2019s investigative resources into various channels of loss,\u201d McGinty said.\u00a0<\/p>\n However, Elverston said that, on the contrary,\u00a0many loss prevention experts at retailers tend to over-estimate the impact of theft in general and ORC in particular. The answers to its surveys, from which the organization extrapolates data on theft and shrink, are \u201ceducated guesses\u201d at best, in part due to loose definitions, he said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cWhen you see a video clip of a smash-and-grab, that captures everybody\u2019s attention,\u201d he said. \u201cWhat doesn\u2019t capture your attention is when you see two auditors in the back of a store that just discovered a multimillion dollar accounting error. When was the last time you saw anybody bragging about that online?\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The text of a <\/span><\/span><\/span><\/span><\/span><\/span>Congressional bill aimed at combatting organized retail crime<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span> does cite a 2019 NRF estimate on ORC\u2019s financial cost as \u201capproximately $720,000 per every $1,000,000,000,\u201d or less than one-tenth of a penny for every dollar in sales. That bill defines organized retail crime, in part, as \u201cinvolving groups of individuals specifically targeting retail stores, often by using violence or threats of violence to subdue employees and shoppers while robbing stores of their most valuable and easily diverted merchandise\u201d and elsewhere as involving the sale \u201cof those illegally obtained goods through physical and online retail marketplaces.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The bill also notes that two-thirds of retailers report \u201can increase of violence during the commission of retail theft.\u201d It would establish an Organized Retail Crime Coordination Center under the U.S. Department of Homeland Security\u2019s investigative arm, which could help coordinate what Skertic says is a dearth of information. NRF\u2019s McGinty also <\/span><\/span><\/span><\/span><\/span><\/span>said this aspect of the proposed legislation would help collect information from retailers and local, state and federal law enforcement agencies to improve reporting.<\/p>\n \u201cWhen the NRF came to us and said \u2018Can you help us look at this problem,\u2019 one of the things we immediately realized is that we will never get our arms around it completely because there is no database, there\u2019s nothing that tells me that a certain number of thefts occurred within a certain store at a certain strip mall on a certain date,\u201d Skertic said. \u201cWe built our own internal ORC databases \u2014\u00a0we just started tracking instances \u2014\u00a0but even then, the data gets really dirty, really fast.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n When asked for their definition of organized retail crime, many loss prevention experts, prosecutors and policy makers emphasize, as Skertic does, that it differs from shoplifting.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Shoplifting \u2013 that is, <\/span><\/span><\/span><\/span><\/span><\/span>incidents involving one or two thieves<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span> who are not store employees \u2013 remains the most common type of theft from stores, according to an updated crime report from the Council on Criminal Justice released in January. While, like shopping, shoplifting has bounced back from the low levels of the pandemic, in most major cities it\u2019s on a downward trend, according to CCJ.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n “The data gets really dirty, really fast.\u201d<\/p>\n Mark Skertic<\/p>\n Managing Director, K2 Integrity<\/p>\n<\/div>\n<\/div>\n Organized retail crime, by contrast, is <\/span><\/span><\/span><\/span><\/span><\/span>defined by the NRF<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span> as \u201cthe large-scale theft of retail merchandise with the intent to resell the items for financial gain. ORC typically involves a criminal enterprise employing a group of individuals who steal large quantities of merchandise from a number of stores and a fencing operation that converts the stolen goods into cash.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Rather than being taken for personal use, the stolen goods are often sold via online sites like Amazon, at flea markets and other venues, including other retailers, according to the NRF. The goods are not necessarily taken from stores, but may involve cargo points like trucks or the fraudulent use of credit cards, gift cards or returns, the NRF also says.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n![\"\"](\"https:\/\/d12v9rtnomnebu.cloudfront.net\/diveimages\/corporate_site\/teampage\/square_profiles\/placeholder-200.png\"\/)
<\/div>\nShoplifting vs organized retail crime<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n
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