Alleviating the Financial and Operational Impacts of ORC

Organized retail crime (ORC) is no longer just a loss prevention issue — it’s a multibillion-dollar crisis affecting consumers, communities, and entire retail organizations. ORC poses a severe financial burden on businesses, directly affecting profitability and operational efficiency. During earnings calls, major retailers such as Target, Walgreens, and Walmart have openly cited ORC as a primary driver of increased shrinkage. Beyond financial losses, ORC threatens employees' safety, drives workforce turnover, and undermines customer trust. To mitigate ORC’s far-reaching impact, retailers must implement new strategies to protect their businesses and ensure a safer shopping environment.

Applying the Lens of Total Retail Loss

Shrinkage is a key component of total retail loss (TRL), described in a report commissioned by the RILA Asset Protection Leaders Council in partnership with Professor Adrian Beck from the University of Leicester in the UK. TRL encompasses all factors that reduce a retailer's profitability, including theft, fraud, administrative errors, and waste/damages.

Retail loss refers to the overall financial impact of missing or devalued inventory, whether due to external theft (shoplifting, ORC), internal theft (employee fraud), operational mistakes (wrong shipment, wrong locations, wrong demand), or vendor discrepancies (shipped less than ordered/billed). Shrinkage specifically measures the difference between recorded inventory and actual stock at good condition levels, making it a crucial metric for retailers to monitor and mitigate.

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Operational Impact

The consequences of ORC extend beyond financial losses to deeply impact retail operations. Frequent theft leads to product shortages, creating gaps on store shelves and frustrating consumers who rely on consistent product availability.

ORC disrupts supply chain operations by increasing cargo theft, raising security costs, delaying inventory replenishment — all of which drive up prices for retailers and consumers. Verisk CargoNet reported record-breaking cargo theft activity across the U.S and Canada in 2024, with 3,625 reported incidents representing a stark 27 percent increase from 2023. The estimated average value per theft rose to $202,364, up from $187,895 in 2023.

Employee and Consumer Safety

Employees and customers are often put in harm’s way during ORC-related incidents, leading to increased anxiety, stress, and fear for personal safety. Some retailers have even closed their doors or reduced hours due to increased violence and theft.

Rising incidents of theft have contributed to employee turnover, as frontline workers face increased risks and workplace stress. A 2023 survey of 1,000 retail employees showed that 40 percent of employees feel scared to go to work due to increased theft incidents. Increased theft disrupts store operations, pulling staff away from customer service roles to address security concerns. As a result, the overall shopping experience declines, negatively impacting customer loyalty.

Developing Retailer-Driven Strategies

Addressing ORC requires a collaborative, integrated and proactive approach.

• Integration With Existing Retail Strategies: Combating ORC must align with broader retail strategies, such as enhancing customer experiences, streamlining and protecting supply chains, and improving store operations.
• Collaboration Across Private and Public Sectors: Successful solutions rely on partnerships between retailers, law enforcement, legislators, and technology providers. Sharing data, resources and intelligence is essential to dismantling ORC networks.
• Technology Solutions: Technology is playing a crucial role in combating ORC by improving detection, prevention and response strategies. Advanced tools like stealth sensors, which monitor product movement, detect unexpected door openings, and identify high-risk truck stops and deviations from expected transportation routes, serve as powerful assets in mitigating ORC threats. In addition, retailers are deploying artificial intelligence-powered surveillance, RFID tracking, license plate readers, predictive analytics, and facial recognition monitoring.

As retailers shift from reactive to proactive strategies, they'll be empowered to predict and prevent theft before it occurs. Increased investment in integration, technology, and collaboration across sectors will play a critical role in reducing ORC incidents.

Oscar Arango is vice president of retail strategy at Flock Safety, an all-in-one technology solution to eliminate crime.