Stolen: The Price War Retailers Will Never Win

(Note: This is a post submitted by BNET member Lindsay Blakely. To submit your own post, click here.)

Retail stores are, officially, being hit from all sides. Sales are lackluster and consumer confidence is down. But it turns out that on top of trying to just stay afloat in this economic climate, retailers are faced with an increasingly grave problem – organized retail theft rings.

This isn’t just your average case of shoplifting. In fact, retail loss from shoplifting has actually been going down over the last six years, at least according to ADT Security. But the National Retail Federation says in its recent Organized Retail Crime Report (pdf download) that incidents of theft rings have been “rampant” this year, with 85 percent of the 114 retailers surveyed reporting that they have been victims.

Florida’s St. Petersburg Times recently reported a huge round of arrests related to one of the biggest retail theft busts the state may have seen so far. Eighteen people were arrested in connection with a theft network that stole up to $100 million in products in central Florida stores over the past five years. The operation involved rushing into stores, sweeping mostly cosmetics and over-the-counter drugs off shelves and into large bags, and unloading the goods in flea markets and on online auction sites.

Theft rings are by no means a new problem for retailers, but the increase in incidents has many speculating on what’s behind it.

Financial Armageddon points to the obvious, but nonetheless convincing, explanation that when the economy is down, crime goes up: “It’s hard to dismiss the connection between incentives (e.g., like the need to feed your family) and human behavior (just think about all the bad loans that the financial community made because of the fees and bonuses involved and the sense that they couldn’t lose because the risk was supposedly shifted elsewhere).”

But Margaret Brennan of CNBC’s Retail Detail suggests another theory: “Is this the result of increased accessibility of online resale markets and consumers willingness to buy from non-traditional third party merchants?… Maybe this illegal online market is booming because consumers are now comfortable with buying from eBay or unknown merchants if the price is right.”

In the case of the Florida ring anyway, it’s easy to see why consumers would look past potentially sketchy sellers – the stolen products were on sale for one-third the retail prices. That’s one price war that retailers will have a hard time winning.