Taking the “Organized” out of ORC

February 1, 2010

With simple point of sale integration, the 3VR system is helping Redner's to reduce internal and external transaction fraud.

Forget the occasional pack of gum or candy bar. Retail theft goes beyond that and more. It’s all about organized retail crime (ORC), which poses the most significant threat to the economic welfare of the $4.7 trillion retail industry in the United States. A report from the ASIS Foundation, “Organized Retail Crime: Assessing the Risk and Developing Effective Strategies,” states that U.S. retailers lose billions of dollars to ORC each year. ORC affects all segments of the industry, including drug stores, supermarkets and mass merchant chain stores. Some of the “hot” items targeted by retail criminals are goods that command near-retail resale price, including designer clothing, DVDs, CDs, over-the-counter medicines, beauty care items and infant formula.

During the past decade, according to the ASIS report, industry leaders and retail associations have increasingly acknowledged ORC as a growing problem, fueled, at least in part, by the emergence of Internet auction sites, lack of effective legislation to increase criminal sanctions for ORC and the ability to reintroduce stolen goods back into legitimate supply chain channels.

In terms of the financial impact of ORC, there are many difficulties in identifying the scale of this business issue. First, says the report, there are definitional issues: the total dollars involved differ depending on how you group various types of crimes together. In addition, the financial impact of ORC incidents is often given in broad ranges. For example, in one recent bust made in Polk County, Fla., 18 individuals were arrested and goods were recovered from multiple retailers. The cost of the goods stolen, however, was between $60 and $100 million.

In addition to the financial impact of ORC, it’s also a safety issue. Organized theft of certain products, which are reintroduced into the inventory supply chain, can present hazardous risks to consumers. For instance, baby formula has been a consistent target of ORC enterprises. In many cases, groups resell the product back to into the retail distribution chain. If the formula is tampered with, re-labeled incorrectly, or stored in adverse conditions, it can cause health issues.

How can this business problem be addressed? A comprehensive examination of ORC, its harmful effects, and the industry, legislative and law enforcement initiatives will most likely to curtail it, the report authors suggest. Or, in the case of Redner’s Warehouse Market, leveraging technology is helping it to stay three steps ahead of ORC.

Three Steps and More

Oftentimes, criminals feel emboldened by the thought that they can outsmart security systems or simply act faster than security personnel can react. Redner’s Warehouse Market, an East Coast retail chain with 38 stores and 13 convenience outlets in Maryland and Pennsylvania, has been successful leveraging technology to stay ahead of anyone who is trying to rip them off.

The retail chain is using a searchable surveillance solution to enhance security at 13 of its grocery and convenience stores. The system is helping to reduce losses, improve crime investigation efficiency and cut down theft of all kinds.

“Internal theft is a problem for us,” says Cory Deily, director of security and loss prevention for Redner. “Thefts are monetary losses, no matter how you look at it. But taking the time to investigate is another loss for me. This helps us to cut down on our internal theft and know that we are on top of things.”

The system, from 3VR Security, Inc., includes directional and motion search functions, and it has helped Deily to cut the time spent searching through video by security personnel by 50-75 percent on average, and accelerating the turn-around time in which Deily can respond to incidents and submit evidence to the police. For example, he says, a major security problem in the grocery industry involves people entering a store, filling up a shopping cart with merchandise and then simply running out. Rather than sifting through footage second by second, Redner’s staff uses the system’s directional search capabilities to find the video footage of the individuals exiting the store. He then saves the video to a CD or uploads it to an FTP site. This cuts the crime response time to half of what it would have taken with previous security systems, Deily says.

Deily says that he has found the system’s facial search capabilities especially useful in searching for known criminals and alerting staff of their presence on-site. For example, Deily has been able to use the system to identify and tag members of local ORC groups and alert store security when they enter any Redner’s outlet.

Diane Ritchey was former Editor, Communications and Content for Security magazine beginning in 2009. She has an experienced background in publishing, public relations, content creation and management, internal and external communications. Within her role at Security, Ritchey organized and executed the annual Security 500 conference, researched and wrote exclusive cover stories, managed social media, and authored the monthly Security Talk column.

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