Organized retail crime (ORC) involves the association of two or more persons engaged in illegally obtaining retail merchandise in substantial quantities through both theft and fraud as part of an unlawful commercial enterprise.
The primary objective of these professional crime rings is to steal from retail organizations for the purpose of turning retail products into financial gain, rather than for personal use. Typically coordinated under well-planned procedures and rules, organized retail crime can operate on a local, regional, national or international scale. These intricate criminal operations are responsible for tens of billions of dollars in losses each year that can devastate a retail business.
Operations can cover a spectrum of possibilities from simple to extremely complex; involving organizers, boosters, fencing operations, re-packagers, and even illegitimate wholesale operations. Members can be recruited and well-trained, with each collaborator having a specific role to fill in the operation. Sophisticated techniques may be used, to include advanced communications and the latest technology. Working together, teams can steal thousands of dollars worth of merchandise from multiple retailers in a single day.
Organized retail crime is not a new challenge, but one that may have been referred to by different names over the course of retail history. For many years, there have been theft groups that have moved from store-to-store and market-to-market, stealing large quantities of goods and selling product through a variety of venues. This is no different than what we’re facing today in many respects. However, while the basic concepts may be the same, the execution—and the potential consequences—have been greatly magnified.
What Is Organized Retail Crime: Defining the Problem
With the reach and sophistication of these networks, the advancements in technology, the potential profitability of the illegitimate venture, and the diverse ways that they can impact the retail business, today’s professional criminals are attacking retailers with a voracious appetite. They are highly motivated and mobile, and the ability to resell or move product has climbed to an unprecedented level through both physical locations and online marketplaces.
With organized retail crime accounting for more than double that of other property crimes such as robbery, larceny, burglary, and auto thefts combined, the gravity of the losses attributed to ORC operations have grown so significant that it has captured the attention of retailers, the law enforcement community, and society as a whole. ORC teams have become bolder, and multi-million-dollar cases have grown more commonplace.
Loss prevention departments across the country are banding together with local, state and federal law enforcement agencies to combat one of the most insidious and sweeping threats to face the success and profitability of the retail market.
Organized retail crime is a pervasive issue, and can occur anywhere and in any community. Every region of the country has reported problems. Whether in urban markets such as New York or Los Angeles or rural areas across the nation, ORC has shown no prejudice in mounting multi-million dollar theft and fraud rings. Key concepts used to define events that may be considered organized retail crime might include but are not limited to:
- Groups of two or more people working together to steal or illegally obtain retail merchandise; or otherwise defraud retail organizations
- Merchandise and other products involved in theft incidents is intended for resale rather than for personal consumption or usage
- A wide geographic area of activity is exposed
- Diverse merchandise brands and retailers are targeted
- There is often a hierarchy of structure within the criminal organization to include thieves, fences, and leadership.
Recognizing the Target
Businesses targeted by organized retail crime can be as diverse as the types of products targeted, whether department stores, specialty stores, supermarkets, pharmacies, convenience stores, category killers or other types of retailers. Every area of retail can be affected, and no company is immune from the prospective threats. Attacks can come through the front door, back door, internally, over the internet, or anywhere along the supply chain.
Potential product lines can include almost anything; however targeted products almost always share some or all of the following key characteristics:
- The product is considered valuable or in high demand.
- The product is easily accessible to consumers (and thieves).
- The product is often easily concealed to avoid detection when stolen.
- The product has expansive availability and demand, especially in different stores or markets.
- The product is innovative or offers premium performance that is highly attractive to “customers”.
- The product is easily sold and converted to cash quickly.
Based on this model, it’s easy to see that ORC groups can potentially steal a wide array of products, from over-the-counter drugs, razor blades, baby formula, cigarettes, batteries, video games, DVDs, gift cards, jewelry, large or small electronics, designer clothing, power tools, high-end meats, or any number of items that are in high demand.
Essentially, product is only limited by the needs of the criminal element, the ingenuity of those attempting to steal products, and the expedience through which the product can be sold and converted to cash.
Understanding the Threat
The potential profits associated with this type of theft also remind us that we should never underestimate the ingenuity, motivation, or ruthlessness of those involved. The presence of determined, organized criminals working and stealing throughout our organizations pose a real threat to both employees and customers alike. From in-store thefts to cargo hijacking and every possible opportunity in between, these incidents may involve fear, intimidation, and violence, with the potential for perpetrators to harm anyone that might stand in their way.
Organized retail crime activities can also result in dangerous products ending up in public venues. Counterfeiting, re-packaging, the changing of expiration dates, handling products in dirty and unsanitary environments, and product adulteration and dilution operations can result in item contamination, health and safety concerns, in addition to eroding brand credibility and lost sales.
Dealing with the many aspects involved with organized retail crime requires an advanced level of skill and training, but also necessitates sound judgment and common sense. Anyone that may potentially become involved in dealing with this type of crime should use extreme caution. Following the policies and guidelines of the retail organization as well as the direction of supervisors and ORC experts should be our protocol at all times.
To overcome the threats posed by organized retail crime, it’s important to learn and understand the hierarchy of the ORC structure and roles of the players involved. Strategic methods need to be examined in detail in order to fashion a strong approach and an effective result. Shared tools and common language must be established so that cooperative efforts between law enforcement and retailers can be fostered. Organized retail crime associations (ORCAs) have also taken on a larger role in these efforts.
Every effort must be made to educate our teams, heighten awareness among company decision makers, and protect our customers and employees from these incidents. Sound judgments, safety, prevention and awareness should be our ultimate objectives as we develop the strategies necessary to help us detect issues, deter incidents, protect resources and resolve these criminal episodes.
By capitalizing on opportunities to enhance our knowledge and education, we are making an investment in our own future. To learn more about organized retail crime and the certification process, visit losspreventionfoundation.org.
This post was originally published in 2017 and was updated October 2021.