Organized Retail Crime: Protecting Businesses
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Organized retail crime (ORC) is not new but this form of high-stakes stealing has reached devastating heights over the past two years and continues to be a financially destructive problem for retailers. Goods stolen from stores increased to $94.5 billion in losses in 2021, up from $90.8 billion in 2020, according to a new report from the National Retail Federation (NRF). Inventory shrinkage led to $400 million more in profit loss year-to-date as compared to the year prior. While retailers have taken measures to prevent and combat ORC, 34 states have passed laws to crack down on ringleaders, and some business owners are hoping that Congress will pass stricter national laws.
As a retail business owner, there are a few things you can do to protect yourself. Adding security to your store and merchandise and buying the right business insurance are key.
What Is Organized Retail Crime (ORC)?
An organized retail crime ring steals large quantities of merchandise on store shelves and later sells them online, at flea markets and through other retailers. Sometimes, thieves change the bar codes to pay low prices. Or, they return stolen merchandise for cash or gift cards, without employees realizing the goods were stolen until after the fact.
There are often two or more people involved, and in the most intricate scams, the ringleader finances the thieves' attacks on stores, sometimes across state lines, while one or more thieves carry out the attacks.
Here’s more about ORC:
- Eight in 10 of the businesses affected reported an increase in violence and aggression associated with these crimes too, and the assailants are often armed.
- In addition to guns, mace and pepper spray have been employed by the thieves as well as taser stun guns.
- 86.2% of retailers surveyed by Buy Right America said an ORC criminal has verbally threatened an employee.
- 75.9% said an ORC criminal has physically assaulted a store employee.
- 41% said an ORC criminal has used a weapon to harm a store employee.
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How Stores Are Protecting Themselves Against Organized Retail Crime?
Stores are beginning to see that they are not immune to organized retail theft rings, so they are now locking up more items than ever and hiring more security guards. Larger retailers like Target and Macy’s have set up security operation centers (SOC) where evidence of theft is gathered and authorities are alerted.
Some stores are adding physical security solutions, like security tags, barcodes and chips, to things like gift cards, apparel and other items. They are also training sales staff members on what to do in crisis situations, like pressing a button to alert the security operations center (SOC) to start videotaping the robbery. Only if the situation escalates into violence will the SOC contact the police, who will not come out otherwise. License plate recognition (LPR) is another way SOC centers are preventing crimes or catching thieves, when suspicious vehicles enter or leave the parking lot or the front of the store.
So, consider employing these tools for your retail business:
- Locked cases for commonly stolen merchandise
- Security Operation Center (SOC) that can respond to a crisis immediately and alert police
- License Plate Recognition (LPR) technology in parking lots and at the entrance of the store.
- Security tags for apparel and other items that are easy to steal from a store, such as radio frequency identification, or RFID technology, to track shoplifters, an estimated 15 percent of retailers have adopted it, according to retail security experts.
Who Is Behind Organized Retail Crime?
Often, the people behind ORC rings are also involved in more nefarious activities like money laundering, human trafficking, terrorism and narcotic sales. They usually have several sources of illicit income that includes robbing stores and selling the wares on the Internet.
In 2021, there were alarming reports of very young people carrying out these crimes, one as young as 11 years old!
As we spiral downward into what the news is calling a “mild recession,” we can only expect more instances of organized retail crime, especially around Thanksgiving, Black Friday, Cyber Monday and Christmas.
Commercial Insurance To Protect Shops Against Retail Raiders
You would be ill advised as a shopkeeper if your insurance agent has not encouraged you to buy the following types of retail theft coverage, which can save you thousands of dollars if you are the target of ORC:
- Commercial property insurance will protect your inventory and display contents against organized retail crime, fire, storm damage, theft, vandalism, or damage from vehicles and more.
- Liability insurance, or general liability insurance, will cover your business against accidents that affect customers or other visitors to the store, including injuries related to retail crime, for which you are legally responsible. Liability insurance won't cover employee injuries. For that you’re required to have workers compensation depending on how many employees you have and the state your business is in.
- Business interruption insurance: If your business is closed for a period of time after a heist, this coverage will pay for lost revenues while you’re shut down. Damaged cases will have to be replaced before opening the doors.
- If you buy a business owners policy (BOP) you will get all of the coverages above at a cheaper price than paying for each separately.
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If you own a shop, your retail business is at risk of an organized retail crime attack. Take preventative measures with your merchandise and utilize the latest technology to track criminals. Most importantly, make sure you have the right insurance coverages in place at the lowest price. Compare business insurance quotes, and see who’s willing to give you the best protection for the best price. Start by entering your zip code below and answering a few questions.