If organized retail crime (ORC) continues to plague retailers as recent studies indicate, why are some retailers cutting their ORC investigative staff and seemingly losing their focus on preventing store loses and protecting their store associates and customers?
In the January-February 2018 issue of LP Magazine, author Garett Seivold penned the article “ORC is Worrisome, Worsening…And at Risk of Becoming Ignored?” Seivold noted that a recent National Retail Federation (NRF) ORC study indicated that retailers reported a “30 percent significant increase in ORC” while “7 percent said ORC decreased during the same time.”
Now Is Not the Time to Lose Focus
From this author’s perspective, there is little doubt that ORC activity is in fact rising. While the NRF study certainly supports this assertion, corporate retail executives need only go into their stores to find this out first hand from their associates who are on the front lines daily battling this rising crime trend. It is in the stores that the even more concerning question of Servold’s article title becomes painfully relevant. Is ORC at risk of being ignored?
Most retailers will tell you that their company’s focus on shrink is cyclical. Shrink usually has to rise to an unacceptable internal level before senior company leadership focus on it. While there are some savvy retail executives who understand the delicate dance between driving sales and maintaining a healthy level of shrink, many executives don’t include the “S” word in their strategies for improving their company’s P&L.
As most are aware, shrink comes in many forms. ORC is just one of those forms. It has been argued that in the vast majority of retail environment, ORC is not the primary driver of store shrink. In grocery store environments, for example, perishable or fresh shrink typically holds the title of the top cost driver of shrink loss.
The importance of looking at all the components of store shrink or “total retail loss” as described by Professor Adrian Beck of the University of Leicester can’t be underestimated. As brick-and-mortar retail profits become even more pressured by e-commerce, the profitable retailers will be the ones who can incorporate the ideology of addressing total retail loss as part of their daily operational strategy.
Protecting Store Associates and Customers
If ORC is only a piece of the total retail loss equation, and in many cases not the driving loss leader, what is the concern about the loss of focus or even the acknowledgement of ORC as a shrink contributor? The answer is ORC impacts much more than loss of store merchandise and missed sales due to out of stocks. More importantly, it is about the safety of store associates and customers as well as the protection of a retailer’s brand image.
The NRF study reflected that 48 percent of respondents were seeing increased aggression exhibited by ORC thieves. Store associates and customers are in the direct line of fire, sometimes literally, of this aggressive behavior. This sobering reality should take the option of ignoring ORC off the table. But has it?
As noted above, the cyclical nature on the focus of addressing shrink practiced by many retailers can have a negative impact on controlling ORC losses. Plus, budget cuts are forcing some retailers to disband their ORC investigative units. The same budget cut challenges are also accounting for a reduction in law enforcement resources dedicated to address ORC activity.
To compound these investigative resource headwinds, legislative efforts across the nation have also played a critical role in hamstringing the efforts by retailers, law enforcement, and prosecutors in combatting ORC. The infamous Proposition 47 legislation that was passed in California set the standard for several states to follow-up suit and raise their felony threshold for retail theft offenses. Now many California citizens are seeing that some components of Proposition 47, like raising the retail theft threshold, were not such a good idea. Property crime has soared in many areas of the state because the same ORC recidivist offenders who were previously jailed for stealing from retailers are free to steal from the community at large.
Retail and Law Enforcement Must Partner
It appears obvious that ORC is a clear and present danger. If left unchecked, it is going to continue to grow in frequency, increasing the danger for store associates and customers as well as negatively impacting retail sales and profitability. The time has never been more critical for the retail industry and law enforcement to align on how to combat ORC in these challenging times.
If, as industry experts state, the most effective way to impact ORC offenders is with retailers and law enforcement working together to share intelligence and prosecute offenders, then it is time for a new, innovative approach to ensure these vital partnerships are not only in place but also are consistently used to their full potential to break the cycle of recidivist retail crime to promote safer stores and lower crime in the community.