Black Market Sales in a Burgeoning Dark World
Looking at the impacts the black market has on luxury retail, and society.
With the insurgence of online shopping; brick and mortar retailers are scrambling to keep their customers shopping in-store or at the very least their own online platform, but what if they aren’t just competing with legitimate businesses? What if there is a 2.7 billion dollar per year industry for retail goods obtained in a less than pristine manner. These people make up 20% of the luxury black market through in-store thefts. These thieves come into a store with not only their specific objective but also what’s known in Loss Prevention as Booster Bags, these are bags lined with tin foil to block the electromagnetic waves and shield the thief from getting caught by the security panels. This merchandise may be sold on the Black Market or possibly resold into the Grey Market and brought back into legitimate retailers. The Grey Market is the reselling of over-bought, or underperforming stock being resold to discount retailers for a fraction of their previous price, this information is also not shared with the original designer. This is the case when someone finds Gucci at Marshalls or Nordstrom Rack for 100$, and the brand has not consented to this markdown.
I wondered with the heightened demand (up 5% from last year) if Mark Mazzos the Loss Prevention and Audit Manager at Holt Renfrew had noticed a similar increase in organized retail crime. Mazzos disagreed, he believes as long as there is an opportunity for money to be made there will be people who create micro-businesses selling contraband goods, and that the increase in luxury sales will not affect these illegal reseller businesses as they are already working overtime. He jokes that they are very hardworking fraudsters, I do wonder however if the increased proximity to luxury goods is driving the market instead of hindering it. With this theory in my back pocket, I was shown several surveillance cameras of opportunists (as Loss Prevention calls them) these types of thefts make up the remaining 80% percent of the 2.7 billion lost per year. One of the bolder videos I saw was that of a man last Christmas walking into a Gucci store with a GAP shopping bag, he started off as a customer, but then no one greets him, no one pops their head in the store… nothing. At this point you can quite literally see his mind racing with ideas. A few seconds later he builds up the confidence and takes the opportunity and steals one of the purses on the table and proceeds to shove it in his GAP bag before promptly leaving.
I’m in fashion school, I even work in retail and yet I have never firsthand seen anyone steal such an expensive item, and to get away with the crime is shocking, especially with so many cameras in store! Mazzos goes on to say that you will see much more organized retail crime in high volume, high traffic malls like Vaughan Mills, Eaton Center and Yorkdale rather than opportunists like this man.
As I mentioned in the past I was never concerned with theft, I felt it didn’t concern me and if someone wanted to cheat their way to some kind of grandeur or access then that’s their business and right, as long as they aren’t hurting anyone. I’m also of the mind that Jean Valjean (Les Misérable) acted within his right as a hungry human when he stole the bread, but I guess even more than that I believe that everyone has a right to the resources of our earth and that ownership is an odd concept altogether. It’s a conflicting concept for me, as such a ravenous consumer of all things while also being a closeted socialist; but even I can’t argue that these fraudsters (as they are most affectionately known) affect good, hardworking people in many ways, Mazzos says that our insurance and credit card rates are where they do the most damage to our personal finances. On a larger scale, however, the black market makes it incredibly difficult for the government to calculate national income and this accounts for an underestimation, which leads to incorrect uses of government monies. This lost revenue in taxes can and has destroyed countries especially when the black market becomes emboldened to work more obviously in the public eye.
As for stimulating demand for luxury goods, I believe this is a valid argument; contraband goods reach customers that they normally would have priced out, these customers will then add to the number of people on the street wearing the brand, which as we all know is just free marketing. I once tracked down and bought an Aritzia sweater because I saw a girl shopping at French Connection wearing it (shout out to 2010)! I am constantly seeing friends, classmates, and complete strangers decked out in designer clothing and I’m certain that most of them are saving to afford it. Sometimes the need for designer fashions that I’ve seen styled online or in person are just too strong and I find myself maxing out another credit card for that delicious pair of boots or jeans which I have way too many of anyway. Of course, not everyone is on the bandwagon of consumerism but I feel confident to say that most are (thank you Instagram influencers). It’s hard keeping up though, especially with inflation rates growing faster than pay raises, our government decided to postpone the increase in minimum wage and Chanel is hiking up its prices by 6% in 2 days! You definitely will not catch me buying contraband, if I’m honest its mostly because I wouldn’t know where to look but online shops like Vestiaire make it easier to buy designer for less, the clothes are supposedly pre-loved but I’ve bought enough off there to know that I’m probably inadvertently lining the pockets of the black market, or maybe it’s the grey market? In this situation I’m uncertain but either way, I hardly ever shop retail anymore.
My final thoughts are that 1. I’m probably going to have to get a second job to afford to shop retail 2. The black-market sucks! And 3. The luxury retail world is being destroyed (for department stores) through secondary sellers such as Vestiaire and the black market.
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