The beating heart of the profit center of the little grocery store was the tiny ten foot square liquor department and Dan the Store Manager who understood human behavior.One doesn't see them in Chicago anymore; the neighborhood chain grocery store large enough to have a meat department with four full time butchers but too small to have a parking lot. Profit margins at these stores were slim and far too slim for modern high volume corporate tastes. A careful manager who closely watched the details (like how much was trimmed off the celery) could make these stores a success. But a cunning manager could make such a place even more.People used to wonder how the store could even have a liquor department to begin with. Just on the next block was a cut rate liquor store that was fully as large as the grocery store. True, the liquor store had a cut rate bar attached to it with a loyal clientele large enough to create a tiny local skid row. That liquor store was a sort of mirror image of the grocery store. It had a tiny ten foot square food department that sold white bread, cold cuts, and cheap pastries that comprised the diet of the confirmed alcoholic. But it also had everything the grocery store had in its liquor department and at cheaper prices. So why did the grocery store's liquor department survive in the local free market?
When Dan managed the store the neighborhood was changing. The neighborhood had originally been Norwegian with a large number of eastern Europeans who had washed ashore there from successive waves of European wars and political strife. Now the children of these people had left them behind and moved to the suburbs and the young families one saw were mostly Puerto Rican. Dan himself was an ethnic German from Serbia who had served on the wrong side during the war and had washed ashore in this neighborhood himself. He knew his people and knew that while people from the old country had to have their beer and bottle of wine (or pint of bourbon) they would never have been caught dead going to a liquor store because that would have been disreputable. Much better to stick a bottle of Mogen David or a six-pack of Old Style short necks on the bottom of the bag of groceries.Wholesale liquor salesmen would come by, of course with discounted wine and beer and Dan would purchase great lots of these. The salesmen would then set up an island of the product and decorate it will little American flags or Santas or whatever the season called for. Dan would stand there and chat with them and smile and as soon as they were going we would take down the little flags or Santas and the price cut signs and throw them in the trash and re-stamp everything back to their normal prices. This was part of his profitability secret. He knew that the old people would always buy from him.But there was something else that he knew. Unlike the liquor store down the street, whose booze was hidden from view from the street by mesh shutters, Dan's liquor department was in full view. The reason that the liquor store looked like a fortified stronghold was that its management did not want to tempt the down-in-their-luck alcoholics after hours. Dan, on the other hand, counted on this happening and it was a fact that some drunk would launch a cinder block through his plate glass window every three or four months. The white port and gallons of Earnest and Julio's finest were, after all, on display just an arm's reach from the sidewalk. When the window was smashed in the middle of the night and the cops came, Dan was always called in from home to guard the store and wait until the board-up service arrived. The regional managers would suggest each time that he mask the alcohol with large window signs or maybe a tinfoil window covering and sometimes he would even smile and put these up only to take them down as soon as the suits left.For when Dan was called in at the dead of night, he didn't just sweep up the broken glass and then wait quietly. As soon as he sent the police away, he would quickly take cases of his highest end liquor, cigarettes, and nylon stockings and bring them to the back room, where he would hide them in the crawl space above the bathrooms. When a store was broken into, it was corporate policy to send an inventory crew over first thing in the morning to assess the losses. While the actual loss from theft from these events was a gallon or two of port, the auditors would find that thieves had made off with many cases of expensive easily fenced stuff. The loss would be assessed and moved off of Dan's balance sheet and on to the part of the corporate balance sheet for recording this kind of inventory shrinkage. Not long after the auditors left and about the time the glazier was putting the last screws into the new window frame, Dan would get out a ladder and take the hidden cases of whiskey, cigarettes, and nylons back into stock, where they would now fetch a profit of one hundred percent. This was enough to dramatically improve the total profit margin of the store and in due time Dan was promoted to a much larger store with a parking lot in the suburbs. His successor was outraged the first time a drunk broke his window and he covered the window in front of the liquor department in tinfoil from top to bottom. This permanently solved the break-in problem, but he could not understand why his store was so much less profitable than his predecessor had been.Now was Dan stealing? In the case of selling alcohol to little old immigrant ladies and men he would argue that he was charging what the market would bear. If these people never saw their beverages go on sale, this was a sort of tax they paid for not wanting to go to the liquor store down the street. Regarding hiding stock from the corporation, Dan used an existing corporate fund for theft and 'inventory shrinkage' as a resource to increase his profitability, spreading the cost of this to the company as a whole. It was capitalism in the predictable exploitation of human desire and weakness and the active spreading of risk away from oneself. And Dan, the son of generations of clever and prosperous hard working peasants, did this quite well.But was he right?