Organized retail crime: Whose fault is it, anyway?

A while back we ran an interview I did with John Talamo, VP of loss prevention for Limited Brands (which owns Victoria’s Secret, Limited, Express, and Bath & Body Works, among other brands). I have a lot of respect for Talamo. He’s really at the forefront of the battle against organized retail crime (sophisticated groups of professional shoplifters and fencing operations), and what’s more, he’s not afraid to talk about it and share best practices. I went into the interview with a few basic assumptions: 1) that organized retail crime is a bad thing; 2) that the people who do it are criminals; and 3) that retailers can and should do whatever is in their power to stop it.

Silly me.

After the article, I got an e-mail from Arshad Noor (who works for an identity management and compliance company called StrongAuth), basically telling me that I hadn’t done my job in questioning Talamo. He says that the pricing model of stores like Victoria’s Secret (which had almost $3 million in bras stolen in the year previous to my interviewing Talamo) “encourage organized crime,” and that I should have looked more broadly at the true cost of pricing strategies to society. I said at the time that I would try to find a way to raise his points, but it somehow fell off of my to-do list. Well, that interview I did must really be eating at Noor, because he recently e-mailed me again reminding me of his questions--among them, these:

* How much theft of their products could Limited Brands have prevented by pricing these bras at $24 [the price consumers may pay for stolen merchandise] in the first place?

 * What is the growth in market-share they could have achieved by pricing their products at $24? 

* What are the costs to society that could be avoided (prosecutors, police, jails, courts, etc.) if these criminal activities did not occur due to the lower profit incentive for criminals? 

* Are companies such as Limited, the music, video and software industry encouraging crime with inflated prices of their products and passing the buck to society for the consequences?

It’s a similar argument to one we sometimes hear about anti-counterfeiting efforts: “the brands” create demand for their products through effective marketing; not everyone can afford to pay for the mark-up; so counterfeiting becomes inevitable, or at least a necessary part of the game. In other words, quit yer whinin.

I see Noor's point, to some degree. Yes, it’s hard to feel sorry for a company with a net income of $676 million and year-to-year sales growth of 10 percent, which sells products that the majority of people in the world can’t afford. But I don’t agree. The fact is, Limited Brands’ niche in the marketplace is selling things like $50 bras. To suggest that they ought to sell them for less, simply to avoid having them stolen, seems crazy. As for the “costs to society,” I’m not sure how helping the law enforcement community investigate and prosecute crimes that have already occurred is particularly burdensome.

But maybe I’m missing something here. So tell me--Is Limited really failing to address the root causes of its problem with organized retail crime? Or is suggesting otherwise just a way of blaming the victim?

-Sarah Scalet

Copyright © 2007 IDG Communications, Inc.

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