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The $30 Billion ORC Problem

December 27, 2013

We've talked on these pages in recent days about shoplifting prevention best practices and what to do about criminals who hack store and credit card databases. What we haven't discussed much is ORC, which is defined by StopORC.org in this way: "Short for Organized Retail Crime. This refers to theft of retail products, generally from a retail establishment, by an organized, professional crime ring. A single person acting alone is not considered ORC. An ORC theft ring plans thefts of targeted items and develops channels to sell the stolen merchandise."

ORC costs the industry over $30 billion per year. Teams of thieves target high value merchandise that they can steal and resell. According to NRF's 9th annual survey on the subject, over 93 percent of retailers surveyed have been victims of ORC in the past year, which is actually down slightly from 2012.

During a recent StopORC webinar, Denny Dansak, the corporate manager of the ORC Division of Kroger, outlined the problem and possible solutions. According to Mr. Dansak, Kroger had 537 ORC cases in the past three and a half years, leading to 634 arrests and 489 convictions. Forty-five cases were withdrawn, generally due to the cooperation of the thieves, which led to the apprehension of other perpetrators. The average value of a case was a whopping $365,000.

Interestingly, Mr. Dansak said that one of the biggest problems with ORC is getting law enforcement authorities involved. Often, they view ORC as a shoplifting issue, which it is not, as 93 percent of the "boosters" in the Kroger cases were narcotics uses, and this is their "full time job."

Mr. Dansak said that law enforcement doesn't have enough time or manpower for these cases. Retailers need to provide assistance and educate authorities on the fact that ORC is a gateway crime which leads to other, even more serious criminal acts, such as narcotics, intellectual property (counterfeiting), weapons, and smuggling crimes. Ninety-one percent of Kroger ORC cases have led law enforcement to initiate other investigations and, in 86 percent of Kroger cases, narcotics are seized.

When retailers identify ORC rings, law enforcement can conduct reverse buys and execute search warrants. In almost all cases, defendants will plead guilty. Law enforcement benefits because they gain confidential informants who are eager to cooperate, property crime gets reduced as fencing operations are dismantled, and the assets from seizures benefit law enforcement operations.

Discussion Questions:

Do you think the ORC problem is being sufficiently addressed in the retail industry? How can retailers best work with law enforcement to combat ORC?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Do you expect the ORC situation to become worse or better in the next three years?


In society today, many stores have a policy of not even confronting shoplifters over fears of lawsuits, and the harm that could happen to their employees. You have tons of these thugs in every town intimidating retailers, almost daring them to say anything, as they rip off merchandise in record numbers. It is sad indeed, and I really don't have an answer for this, because the police can barely handle the bigger crimes in their towns, and shoplifting is a very low priority crime today.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

While $30B is a large number on its own, given retail sales in the US > $4T (trillion) it makes this < 1% of all retail sales. While I am sure retailers would like to see this total be a much smaller number, it's a company by company decision based on a cost/benefit analysis.

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Bill Davis, Director, MB&G Consulting

Interesting lack of comments on this $30B problem. And, it strikes me that the one comment is from an actual retailer. Could it be that the retail industry is really at a loss as to how to get law enforcement as involved as they need to be, success stories like Kroger aside?

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Al McClain, CEO, Founder, RetailWire.com

I think Mr. Dansak had some great points. Too often, law enforcement sees all shoplifting as a teenage girl stealing inexpensive makeup. They don't realize the huge underground economy ORC fuels and how it contributes to a host of ills in society. I think the ORCAs that are being formed throughout the country have a great potential to serve as the common point of connection and education between retailers and law enforcement. They should be leveraged to build relationships and provide the awareness and education to law enforcement to make inroads into combating ORC.


In a word, "No."

The problem is that thieves understand that they can't get arrested in the store and in 90 percent of the cases nobody is going to follow them out of the store.

As to working with law enforcement, police tend to see even "sweeping" as an individual act and one that's fairly low on their list.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

ORC can also define a relatively "disorganized" criminal or group of criminals. The vast majority of loss occurs from those disorganized people whom get very comfortable with shoplifting. In my world of supermarkets, more than 50% of product theft is from employees. There are some great security tools and services available today. Think about the cost to your business of theft and the related expense of trying to reduce that cost. The ROI for the theft solutions can be justified in most cases.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

The core problem is inventory on the sales floor which is a 20th century antiquated retail design layout.

21st century retail design should transform the sales floor into a showroom with only one display product that can be interrogated with mobile interaction.

If the store guests wish to convert into customers, they will ask a salesperson for assistance to enter the sales lifecycle of demonstration and retrieve the item from a secure cage in a backroom.

Apple store operates in this fashion, Footlocker has a showcase of exhibit shoes on their sales floor in this fashion and car dealerships do business in this fashion.

Law enforcement can do little except profiling based on stereotypes. It is up to the retailer to be smart about how they secure their inventory and design the sales floor to be more than a place to store unsecured inventory.

Ed Dunn, Founder, (Stealth Operation)

The creation of laws and a criminal justice system that favors victims of any size, make up, and stature would do much to reduce any and all types of crime. Our losses if reduced by this means would reduce the amount of revenue available to share within criminal elements organized or random, making this a much smaller option for economic advancement and achievement. This approach is most commonly viewed as oppressive and will remain so until we see the injustices our victims, as in individuals, society and corporations, suffer on a nightly media report. I wonder why we are not doing this sort of thing?


No. Law enforcement needs a great focus on this problem, and retailers need to step up their security. It is only through a combined effort from both sides that this can be controlled!

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Kai Clarke, President, Kowa Optimed, Inc.

It is hard to say whether the problem is being sufficiently addressed without knowing what each retailer is doing. In terms of how best to work with law enforcement, it strikes me as a situation where the better and more air-tight the information that is provided, the more that we can expect follow-up and convictions to occur. In that regard, it might help for leading retailers to target the highest volume crimes that will get the most attention, and share information with other retailers in order to build better cases.

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Alexander Rink, CEO, 360pi

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