Retail Data Collection: Why Loss Management Is Bigger Than ORC

Forbes

26-06-2025

A 30-year veteran in retail technology, Sensormatic Solutions President Tony D'Onofrio is leading the charge to redefine retail.
Over the past few years, organized retail crime (ORC) has become retail's most high-profile adversary—rightly so. Loss due to theft and fraud has risen since 2022, with ORC theft becoming the top concern for retailers, according to National Retail Federation data cited by Capital One.
This troubling trend puts everyone at risk and threatens to undo the progress retailers have made to improve in-store experiences, so naturally, it has topped headlines and executive priority lists of late.
Retailers have invested substantial sums in tools designed to protect merchandise from bad actors, whether through insight or impediment, and many have seen improvements in their loss prevention performance as a result.
However, there's more to retail loss than ORC, and retailers can capture more value from these systems when they start looking beyond bad actors and assessing total retail loss.
A Tangled Web
Retail operations are complicated webs of interconnected processes, priorities and practices. Each decision affects countless other business areas, often in ways that are hard to predict or even see once they happen. That's as true in loss prevention as anywhere else.
To successfully tackle ORC, retailers need data and insights to understand sweet-hearting, shipment delays, spoilage and more. They'll need to turn their attention to controlling total retail loss, connecting the dots across their operations to figure out how decisions in each business area drive waste in all the others.
Losses—whether in retail or any other industry—come from every area of the enterprise. Yes, missing merchandise and stolen intellectual property drive up losses, but so do plenty of other things, like:
• Spoiled or otherwise damaged merchandise
• Over- or understocking
• Human errors, process inefficiencies and unnoticed delivery discrepancies
• Mismanaged labor
• Executive decisions
• Incidents that damage brand equity
Connected systems have made it easier for retailers to understand how all these factors contribute to losses within their operations. But they can only do it when they have a comprehensive record to work from. That can be a problem for retailers who have turned to data for the explicit purpose of combating ORC, as many have done in recent years. When enterprises build systems to solve a specific problem or utilize a specific tool—rather than to gain a defined outcome—they lose out on critical context.
Retailers whose systems are laser-focused on criminal activity often omit critical touchpoints and data sources, obscuring the complexity of the ways loss actually happens within their supply chain. They are unable to obtain the comprehensive visibility needed to successfully control crime-related losses and other waste drivers within their operations.
More To Manage
Without data about all the potential bottlenecks and operational breakdowns that exist in the businesses, it's impossible to conceptualize the actual impact of any single root cause of lost revenue.
To take the next step toward controlling ORC and all the other loss drivers within operations, retailers will need to extend data collection and analytics tools to cover new areas of operations. Ideally, retailers will find a way to collect and analyze data about their:
• Manufacturing Facilities And Transit Networks: Without insight into how much shrink is related to subpar merchandise, retailers are less prepared to distinguish between stolen products and those that simply needed to be discarded—or never arrived in the first place.
• Storage Locations: Mismanaged storage facilities can be hotbeds of labor and inventory losses. If retailers don't know what is in storage or where it's stored, they can't be sure whether lost items are truly gone or just hidden in plain sight.
• Policies, Processes And Best Practices: Back-end challenges tend to show up in sales records and customer satisfaction performance. Manual cycle counts, inaccurate or inefficient tagging, and ineffective people management contribute to lost productivity and revenue.
• Corporate Oversight: Accountability from top to bottom is key to holistic understanding. Executives and decision-makers need to find ways to track and quantify the impacts of their technology, people management and process decisions as precisely as they do inventory or associates' hours to get a sense of how their actions drive waste.
• Shoppers' Behaviors And Sentiments: When losses seem to be spiking, 'red' shoppers might not be to blame. Well-intentioned consumers might be leading to dipping sales or higher-than-average inventory losses. Even the best-meaning visitors can inadvertently damage inventory; it's a loss, but it's not malicious nor criminal. Along the same lines, failing to meet customer expectations can turn into reputational damage and lagging performance.
Though addressing the drivers of loss is complex, getting started on the journey is relatively simple. Retailers don't need new technologies; they just need to take full advantage of what they're already using to turn in-store operations into data-driven insights, like radio-frequency identification (RFID) and video analytics.
By bringing together data from across the business, retailers can see more clearly how, when and where losses happen. From there, they can find the right balance within their overall loss prevention strategy, giving each driver of loss its due based on its relative impact on the business.
And, sure, some will find that combating theft should continue to be a top priority. More will find that bad actors are a smaller problem than they thought—or that changes to an area of the businesses they hadn't considered can help control losses more effectively than more direct tactics.
Regardless of which group a retailer falls into, they will no doubt uncover opportunities to do better for their shoppers and the business.
Holistic Insight For Holistic Improvement
Addressing the challenge of ORC means broadening retailers' perspectives of loss. Retailers will need to embrace a comprehensive approach that extends beyond traditional theft prevention strategies to quantify and contextualize total retail losses.
This broader perspective will enhance their ability to combat waste, no matter where it starts, paving the way for end-to-end efficiency, better decision-making, happier customers and stronger bottom lines.
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