Crazy Eddie's "Culture of Deceit"

This is a comment left in response to the post Crazy Eddie's Low-Price Guarantee highlighting a column by Hal Varian:

Professor Hal R. Varian:

My name is Sam E. Antar and as Eddie Antar’s cousin and CFO of Crazy Eddie I helped mastermind one of the largest securities frauds of the 1980’s. Much attention has been paid to Crazy Eddie’s famous price policy – “Shop around. Get the best prices you can find. Then go to Crazy Eddie's and he'll beat it!” Even more attention has been paid to its legendary commercials featuring Jerry Carroll.

However, many people do not know the real story behind Crazy Eddie’s aggressive sales tactics. Yes, we “offered” the best price and at times it was sometimes true. However, most customers never purchased the items that they initially came into Crazy Eddie to buy. We had an entire procedure built around Crazy Eddie lingo code words described below to maximize profits for the company.

We had in Crazy Eddie lingo called an “SW” or “switch the customer” policy which was to initially seek to sway the customer to purchase a more profitable item that offered “better value.”

If the initial sales person could not SW the customer he would “TO” the customer to let another more experienced sales person “take over” the sales pitch with the customer in order to “guide” them to the more profitable purchase.

If the customer was still insistent on buying the items that they had originally come into Crazy Eddie to purchase rather than lose the sale we would sell them the merchandise but try to sell them high profit accessories and long term warranty contracts to make up for the low profit of the units purchased.

If the merchandise was not in stock we would sneak the display item off the shelf and “lunch it” or repackage it and sell it as brand new.

Finally, if a customer decided not to purchase a product for any reason after going through various phases of this process Crazy Eddie has a “NAD” or “nail at door” policy where a sales person located at the exit would try to “kosher” the customer.

The Crazy Eddie Empire was built on deceit. The massive financial fraud that followed was based on a culture of deceit the permeated from the Antar family that ruled Crazy Eddie.

There are many lessons to be learned from the Crazy Eddie frauds. Specifically as it relates to your commentary I would suggest something I learned in my first day in economics class, “There Ain't No Such Thing As A Free Lunch.”

Company’s have costs and must earn a profit. Yes, some companies can make money more efficiently than others. However, as a former criminal I can assert that old line, “If it looks too good to be true, it is probably is.”

Respectfully,

Sam E. Antar (former Crazy Eddie CFO & ex-felon)
http://www.whitecollarfraud.com/

Comments

[ken melvin]

I believe in god and his markets.

[evagrius]

Gee, sounds like the Bush policies.

( Are we out the door yet?)

[yartrebo]

"However, as a former criminal I can assert that old line, “If it looks too good to be true, it is probably is.”"

In the modern world many things have outrageous markups from manufacturing to retail, often over 1,000% and sometimes 10,000%. This leads to a very wide range of prices, such as anywhere from $10 to over $100 for sneakers and many other types of clothing. CDs show even more variety, with the price being anywhere from $.20/disc for blanks to $1 for very cheap public domain music to $10,000+ for expensive software. Unless I'm very observant (and I'm not), it can be very hard to even get a ballpark estimate of what an item 'should' be retailing for.

[cm]

yartrebo: It depends on your frame of reference whether the concept of what an item "should retail for" is even valid.

[ken melvin]

Always ask the clerk if it's on sale.

[maria]

You never really know what a item is worth until the vendor is desperate to sell and marks it down as far as he thinks possible. Often more than 50%. The best question to ask is not if it's on sale, but "how desperate are you to get rid of this inventory?" LOL.

[Sam E. Antar (former Crazy Eddie CFO & ex-felon)]

The point about “low price guarantees” that people need to understand from the retailer’s point of view in that it is a game of averages no different than hoping people do not send in mail-in price rebates.

Most consumers who are complacent in knowing they have such a guaranty will not investigate further or be willing to accept the retailer’s “credibility.”

As a criminal I learned to use people’s humanity against them. For white collar criminals good traits that people have, such as trust, are weaknesses to be exploited.

While not all deceitful conduct rises to the level of criminality, it would be wise to assume that the basis of a deceitful person’s effectiveness is the trust of the person being misled.

I do not mean to say that “low price” guarantees are inherently deceitful. However, if such guarantees are 100% exercised it is a complete impossibility to maintain such guarantees since prices would dwindle down to zero.

Sam E. Antar

Former Crazy Eddie CFO & Convicted Felon

PS: I did make the post and it is referenced on my web site and blog which lists various references.

[Peter Schaeffer]

Sam E. Antar,

Your candor and honesty is much appreciated.

[Sam E. Antar (former Crazy Eddie CFO & ex-felon)]

Peter,

I hope this is not taken the wrong way and is properly understood.

People are often moved by a person’s apologies. As a criminal that used words for deceitful purposes, apologies for me are irrelevant. We must look at a person's actions. We often see apologies accompanied by empty promises of future behavior. While no one can ever be perfect (no moral equivalence implied between a criminal act and common mistakes) we must look at how people respond to their mistakes in their future actions and not just by their apologies.

Therefore, I thank you for your kind words about my candor.

Respectfully,

Sam E. Antar (former Crazy Eddie CFO, convicted felon and criminal)

[Hal Vairan]

I have to admit that I've never seen a Crazy Eddie ad -- the headline editor at the Times chose that headline, not me. Thanks for filling me in on some of the history of this chain.

However, I would like to point out that many retailers offer real price discounts during sales and operate without heavy-handed bait and switch tactics. Also, I've certainly had stores match prices without any fuss. So not all apples are rotten.

[Sam E. Antar (former Crazy Eddie CFO & ex-felon)]

I certainly agree with Professor Hal Varian.

The actions of the very few criminals like me give our great capitalist economic system a black eye and are no indication of the behavior of the great many hard working honest business people.

Respectfully,

Sam E. Antar (former Crazy Eddie CFO & convicted felon)

[apple morgan]

Crazy Eddie was providing the dumb masses i.e. "the American Consumer", just what they demand then and now, it's the same: "More for Less and they don't care how it's done. Today Wal-Mart legally skims millions from taxpayers in the form of their corporate payroll policies that fail to provided a living wage & benefits to the majority of their store employees which forces their employees to rely on tax payer funded welfare & local, state and federal government programs to care for their families, at the same time Wal=Mart puts local business owners out of business, all so that Wal-Mart Owners can line their pockets with millions more than Crazy Eddie Antar ever dreamed about. Nobody will ever go after Wal-Mart because they have a legal method to skim off the American public tax payers, a method which is so obscene that Wal-Mart's corp payroll policies make Crazy Eddies previous actions seem more like the actions of the Pope than a felon. I'd like to see the Crazy Eddie brand name make a come back and put Wal-Mart out of business.