This year, the popular television show The Sopranos, a fictional account of a mob family, comes to an end. Unfortunately, in the real world, organized crime is not ending, it’s booming, especially in the retail environment. A 2007 National Retail Federation (NRF) organized retail crime (ORC) survey of loss prevention executives found that 79 percent of respondents said their companies were victims of ORC, and 88 percent rated the problem between important and severe. (For 2006, only 41 percent found the problem significant or severe.) Seventy-one said the problem for them is getting worse, not better.
While retail crime comes in many forms such as shoplifting, credit card fraud, and internal theft, ORC is a different beast. Unlike shoplifting, ORC involves professional thieves operating as a network of “boosters” and “fences” who steal, repackage, and resell staggering amounts of stolen goods daily.
“They can hit anywhere from eight to 15 retailers a day,” states Karl F. Langhorst, CPP, director of loss prevention for Randall’s and Tom Thumb Food Markets in Texas (a subsidiary of Safeway). “Boosters come into retail establishments with a shopping list from their fences, who in turn sell the goods for typically 20 cents on the dollar of the retailer’s cost.”
Hot on today’s “shopping list” are electronics, DVDs, CDs, razor blades, liquor, over-the-counter medicine, baby formula, health and beauty care items, and meat, among other goods.
“Typically, teams of three or more people operating with a strategy, steal hundreds of dollars of merchandise, then go onto the next store,” says Joseph J. LaRocca, NRF vice president of loss prevention. “Their victims are retailers of every kind and size, regardless of what merchandise they sell.”
ORC hits the bottom line of every possible type of retail establishment, including supermarkets, chain drug stores, independent pharmacies, mass merchandisers, convenience stores, and discount operations.
Stores collectively lose billions to shrink (ORC is part of that mix). As this issue went to press the 2006 numbers, due out in June, were not yet available. For 2005, the NRF put the industry loss at $37.5 billion. “The ultimate costs are passed onto consumers in terms of higher prices,” of course, comments LaRocca.