ORC Overblown?

Author: 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

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...
Ligowave Wireless Profile - Ubiquiti Competitor on Aug 27, 2018
Ubiquiti has become the most common choice for wireless in video surveillance (see Favorite Wireless Manufacturers) but not without controversy and...
Directory of Video Surveillance Startups on Jul 18, 2018
This directory provides a list of video surveillance startups to help you see and research what companies are new or not yet broadly known entity...
FST Fails on Jul 17, 2018
FST was one of the hottest startups of the decade, selected as the best new product at ISC West 2011 and backed with tens of millions in...
Arecont Acquisition By Costar on Jul 11, 2018
Arecont Vision acquisition by Costar Technologies has been approved by the court, concluding the bankruptcy process triggered by Arecont's...
UK VSaaS Startup Ocucon on Jul 03, 2018
Decreasing exposure to fraudulent slip-and-fall insurance claims and lawsuits is one of the oldest selling points of video surveillance for retail....
March Networks Targets Cannabis Market on May 10, 2018
Will the next March Networks customer appreciation event be held a steakhouse or at a Taco Bell at 2 am? Can March sell the types of systems to the...

Most Recent Industry Reports

ACRE-Acquired Open Options Access Company Profile on Dec 17, 2018
Who is the company ACRE is acquiring? In this note, we examine Open Options line for best customer fit, key features, pricing, and main...
Open Options Acquired By ACRE on Dec 17, 2018
ACRE is doing deals again. A year after they sold Mercury, they are buying another access control company - Open Options. In this note, we...
8MP / 4K Fixed Lens Camera Shootout - Dahua, Hikvision, TVT, Uniview on Dec 17, 2018
8MP / 4K fixed lens models are now common in lower cost lines, with nearly every Chinese brand and their OEMs now offering multiple options. To...
Network Cable Shootout - Belden, Commscope, Hikvision, Honeywell, NavePoint CCA, Windy City Wire on Dec 17, 2018
Every IP camera install needs UTP cabling. But how much of a difference is there between dirt cheap generic cables found online and the bigger,...
Hikvision Government Parent Holds Communist Party Congress on Dec 17, 2018
The Communist Party committee of Hikvision’s government parent, CETHIK, held a Party Congress earlier this month where senior executives, including...
Imperial Capital Security Investor Conference 2018 Review - ADT, Resideo, Alarm.com, Arlo, Eagle Eye, ACRE, More on Dec 14, 2018
Imperial Capital Security Investor Conference is an event matching industry executives with financiers that frequently leads to future funding...
Cisco Meraki New Cameras and AI Analytics on Dec 14, 2018
Meraki has released their second generation of video surveillance with 3 new cameras, AI-based video analytics, and 2 cloud-based storage...
Foolish Strategy: OEMing Facial Recognition on Dec 13, 2018
Almost as 'hot' as face recognition marketing right now is OEMing facial recognition. Last year, they were a who's who of company's with...
DVR Examiner - Video Recovery from Recorder Hard Drives on Dec 13, 2018
Bypassing passwords and long download times on-site, DVR Examiner collects and organizes video evidence directly from a hard drive extracted from...
2019 Access Control Book Released on Dec 12, 2018
This is the best, most comprehensive access control book in the world, based on our unprecedented research and testing has been significantly...

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