ORC Overblown?

By: Brian Rhodes, Published on Jul 16, 2012

While Organized retail crime captures big headlines and claims of billion dollar losses, is it really the problem it is made to be or is it wildly overblown? For retailers nationwide, ORC is the hottest of hot button issues and has gained national recognition as a significant source of retail loss. In this note, we examine the claims that ORC is the biggest loss risk to retailers.

For problem definition and a background on common defenses against ORC , see our 'Organized Retail Crime Countermeasures' note.

Overview

During the recent NRF-LP show [link no longer available], several insights were shared by attendees of a breakout titled 'ORC: Fact or Fiction? [link no longer available]' Their feedback to us summarizes the opinion of many LP executives: The perceived threat of Organized Retail Crime is largely fiction:

  • ORC is a new label applied to existing problems
  • The losses associated with ORC are overstated
  • ORC is a geographically specific issue, not widespread

New Label / Old Problem

ORC is a new label applied to existing problems: In the world of Loss Prevention, ORC captures attention. In part due to substantial publicity, most retailers now suggest that they are victims of ORC. The label evokes the impression that massive ORC rings are planned and executed by sophisticated, underworld gangsters in a highly disciplined effort. This imagery has captured the attention of retail executives in a way simple shoplifting cannot. Nationwide, retailers are scrambling to address the problem, many for the first time. Needless to say, the influx of new money and intrigue has provided many LP departments a new avenue to address age-old problems.

Many retailers apply a general, non-standard definition of 'ORC' when categorizing root cause, and lump together common shoplifting and logistics thefts into the more eye-catching, sexy 'ORC' category. The end result: widespread overstatement of an existing problem into new terms. Even the National Retail Federation expresses difficulty defining ORC due to the ambiguous definition adopted by different retailers.

Losses Overstated

The losses associated with ORC are overstated: While ORC is widely reported to be a $30 billion problem, following more stringent definitions yields the problem is much smaller, with some claiming as little as $3 billion to $500 million. This disparity reinforces the need for standardized metrics to quantify the loss.

The risk in overstating the impact of ORC can draw attention, energy and resources away from dealing with the real threats. For example, varying opinions exist whether 'employee theft' should be considered part of the ORC problem. However, 'best practice' methods of dealing with employee theft are entirely different than confronting external threats. The same dynamic applies to gift card fraud: mitigating this issue follows a different plan entirely than protecting showfloor merchandise. Where should retailers spend their money for protection? Is it really useful to lump both crimes together in the same category? When vast sources of shrink are labeled ORC, yet are not subsequently diminished by misapplied 'anti-ORC' efforts, it undermines the true effectiveness of the technology being applied. Having an accurate understanding of 'how much loss is occuring' is vital for security countermeasure planning.

Get Notified of Video Surveillance Breaking News
Get Notified of Video Surveillance Breaking News

Geographic Specific

ORC is a geographically specific issue, not widespread: While hotspots exist, broad portions of the US lack sustained evidence of ORC activity. Vast populations exist where no defined threat of ORC has been noted, yet it is characterized as a nationwide issue. The map below indicates the cities where ORC is reported to have the most significant impact:

orc by city

While the risk of ORC can be quantified in certain areas, the danger is in oversimplifying 'the problem'. Rubber stamping an action plan based on an arbitrary assessment of 'a nationwide problem' is bound to fail. Effectively cracking down on the problem means understanding it at a local level. Several high-profile LP Professionals relate the importance of working with local Law Enforcement on a regular basis in order to have sufficient risk awareness in place for their stores, and a risk for one region is not necessarily the same in all regions. Overhauling loss prevention systems to combat ORC in locations where ORC is not a risk could be expensive and unnecessary.

Impact on System Selection

Retail security system selection is driven by perception of risk. While many retailers are evaluating themselves to be inadequately prepared to deal with the threat of ORC, many existing security systems are being adapted and enhanced to address the issue. In numerous cases, as we cover in our 'Organized Retail Crime Countermeasures' note, retailers are not faced with 'reinventing the wheel' when confronting ORC, but are doubling down on existing systems like EAS, CCTV, and Data/Video Analytics for defense.

Comments : Members only. Login. or Join.

Related Reports

Casino Surveillance Pro Interview: James Lathrop on Feb 15, 2019
James Lathrop [link no longer available] has been working in casinos for almost 25 years. During that time, he says he has held "just about every...
UK Camera Commissioner Calls for Regulating Facial Recognition on Apr 15, 2019
IPVM interviewed Tony Porter, the UK’s surveillance camera commissioner after he recently called for regulations on facial recognition in the...
Verkada Wins $783,000 Memphis Deal on Apr 29, 2019
The US city, most famous in video surveillance for standardizing on Hikvision, has issued an RFQ for 962 Verkada cameras due Wednesday, May 1,...
San Francisco Face Recognition Ban And Surveillance Regulation Details Examined on May 14, 2019
San Francisco passed the legislation 8-1 today. While the face recognition 'ban' has already received significant attention over the past few...
First Video Surveillance GDPR Fine In France on Jul 08, 2019
The French government has imposed a sizeable fine on a small business for violating the GDPR after it constantly filmed employees without informing...
New GDPR Guidelines for Video Surveillance Examined on Jul 18, 2019
The highest-level EU data protection authority has issued a new series of provisional video surveillance guidelines. While GDPR has been in...
Milestone "GDPR-ready" Certification Claim Critiqued on Aug 12, 2019
Milestone is touting that its latest XProtect VMS is "GDPR-ready" with a 'European Privacy Seal'. However, our investigation raises significant...
UK Facewatch GDPR Compliance Questioned on Aug 27, 2019
Even as the GDPR strictly regulates biometrics, a UK company called Facewatch is selling anti-shoplifter facial recognition systems to hundreds of...
First GDPR Facial Recognition Fine For Sweden School on Aug 22, 2019
A school in Sweden has been fined $20,000 for using facial recognition to keep attendance in what is Sweden's first GDPR fine. Notably, the fine is...
France Declares School Facial Recognition Illegal Due to GDPR on Oct 31, 2019
France is the latest European country to effectively prohibit facial recognition as a school access control solution, even with the consent of...

Most Recent Industry Reports

Hazardous & Explosion Proof Access Control Tutorial on Feb 27, 2020
Controlling access to hazardous environments requires equipment meeting specific ratings that certify they will not start fires or will not...
Motorola / Avigilon Drops ISC West on Feb 26, 2020
Motorola Solutions has pulled out of ISC West 2020 effective immediately, because of coronavirus concerns, IPVM has learned. This is done amidst...
Cancel or Not? Industry Split Over ISC West on Feb 26, 2020
The industry is split, polarized, over whether ISC West 2020 should run or be canceled. New IPVM survey results of 400+ respondents show heated...
Coronavirus Hits Sony, Bosch Says Switch on Feb 26, 2020
Sony's fall in video surveillance has been severe over the past decade. Now, they may be done. In this note, we examine Bosch's new...
Video Surveillance Cameras 101 on Feb 25, 2020
Cameras come in many shapes, sizes and specifications. This 101 examines the basics of cameras and features used in 2020. In this report, we...
Favorite Video Analytic Manufacturers 2020 on Feb 25, 2020
Video analytics is now as hot as ever, driven by the excitement of advancing deep learning offers. But what are actually integrator's...
Latest London Police Facial Recognition Suffers Serious Issues on Feb 24, 2020
On February 20, IPVM visited another live face rec deployment by London police, but this time the system was thwarted by technical problems and...
Masks Cause Major Facial Recognition Problems on Feb 24, 2020
Coronavirus is spurring an increase in the use of medical masks, which new IPVM test results show cause major problems for facial recognition...
Every VMS Will Become a VSaaS on Feb 21, 2020
VMS is ending. Soon every VMS will be a VSaaS. Competitive dynamics will be redrawn. What does this mean? VMS Historically...
Video Surveillance 101 Course - Last Chance on Feb 20, 2020
This is the last chance to join IPVM's first Video Surveillance 101 course, designed to help those new to the industry to quickly understand the...