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, several insights were shared by attendees of a breakout titled 'ORC: Fact or Fiction?' 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 Video Surveillance News In Your Inbox
Get Video Surveillance News In Your Inbox

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 : PRO Members only. Login. or Join.

Related Reports on Retail

11 Facial Recognition Providers Review (Secutech) on May 09, 2019
Adding to our 19 Facial Recognition Providers Profiled report from ISC West, IPVM focused on facial recognition technology for our Day 2 coverage...
Restaurant Security Manager Interview on May 06, 2019
Wright’s Gourmet House in Tampa, Florida has been around for over 50 years. During most of that time, there were no security measures in place. Now...
19 Facial Recognition Providers Profiled on Apr 23, 2019
IPVM interviewed 19 facial recognition providers at ISC West to understand their claimed accuracy, success and positioning. 9 from China, where...
Cambium Wireless Video Surveillance Profile on Mar 27, 2019
Cambium Networks, spun out of Motorola Solutions in 2011, says "outdoor durable radios are in their DNA" and they are targeting video surveillance...
Solink Raises $12 Million - Company Profile on Feb 12, 2019
Most industry professionals have never heard of Solink, a company whose tagline is: It's time to revolutionize the way business uses...
CES 2019 Show Report on Jan 10, 2019
IPVM was at CES 2019 for the second year (see our CES 2018 Show Final Report) and is reporting on announcements and interesting news from the show...
Intel Neural Compute Stick 2 / Movidius AI Test on Nov 21, 2018
AI is a major trend in video surveillance with manufacturers paying significant attention to Intel's Movidius Myriad chips. Indeed, Avigilon has...
Kogniz Silicon Valley AI Startup Profile on Nov 07, 2018
Kogniz is a Silicon Valley company that aims to bring AI analytics to security and surveillance, centering on their own smart cameras: We spoke...
ADI's Financials Revealed + W-Box Growth Priority on Oct 15, 2018
  ADI is one of the most powerful distributors in the security industry but how big are they? How much profit do they make? How much do they sell...
Why Vivint / Best Buy Failed on Aug 31, 2018
DIY has bested Vivint. In 2017, Best Buy and Vivint partnered with Vivint employees on the floor of 400+ Best Buy stores, helping customers with...

Most Recent Industry Reports

Repositionable Multi-Imager Camera Shootout - Avigilon, Axis, Dahua, Hanwha, Hikvision, Panasonic, Vivotek on Jun 19, 2019
Repositionable multi-imager cameras are one of the fastest growing segments in video surveillance, with a slew of new offerings being recently...
Genetec Synergis Cloud Link - Complex, Costly and Confusing on Jun 18, 2019
Genetec's Synergis Cloud Link is complex, costly and confusing compared to competitor access control architectures. Inside this note, we examine...
Startup Vaion Launching End-to-End AI Solution Backed with $20 Million Funding on Jun 17, 2019
An EU / USA video surveillance startup, Vaion, founded by ex-Cisco Senior Directors is launching an end-to-end VSaaS platform with $20 million in...
Biometrics Usage Statistics 2019 on Jun 17, 2019
While face and fingerprint recognition are used regularly for smartphones, it is not as common in physical security. In this note, we examine...
The Scheme Hikvision and China Importers Use To Avoid Tariffs on Jun 17, 2019
Hikvision and numerous China importers are avoiding 25% tariffs by including an SD card slot in their IP cameras to claim they are 'digital still...
Sighthound Transforms Into Enterprise AI Provider Profile on Jun 14, 2019
Sighthound is now rapidly expanding its R&D team, building an enterprise AI service. This may come as a surprise given their origins 6 years...
ADT Eliminating Acquired Brands, Unifying Under 'Commercial' Brand on Jun 14, 2019
ADT is eliminating the brands of the many integrators it has acquired over the past few years, including Red Hawk, Aronson Security Group (ASG),...
NSA Director Keynoting Dahua and Hikvision Sponsored Cybersecurity Conference [Canceled] on Jun 13, 2019
The technical director for the NSA’s Cybersecurity Threat Operations Center will be keynoting a physical security cybersecurity conference that is...
Farpointe Data Conekt Mobile Access Reader Tested on Jun 13, 2019
California based Farpointe Data has been a significant OEM supplier of conventional access readers for years to companies including DMP, RS2, DSX,...
Embattled $400 Million China Funded Philippines Surveillance System Proceeds on Jun 13, 2019
An embattled 12,000 camera surveillance system project that will cost ~$400 million will proceed.  The project contract was awarded, had its...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact