Opposition to bills which would weaken or eliminate the food store item pricing law

Opposition to bills which would weaken or eliminate the food store item pricing law, HB 198, HB 200, HB 202, HB 208, HB 212, HB 3544, HB 3545, HB 3648, HB 3649, HB 4094, SB 98, SB 189 and SB 123
Before the Joint Committee on Community Development and Small Businesses

SUBMITTED TO: Chairman Michael O. Moore, Chairwoman Dorcena Forry, and members of the Joint Committee on Community Development and Small Businesses
SUBMITTED BY: Deirdre Cummings, Legislative Director
DATE: July 27, 2009

RE:     OPPOSITION TO BILLS WHICH WOULD WEAKEN OR ELIMINATE THE  FOOD STORE ITEM PRICING LAW,  HB  198, HB 200, HB 202, HB 208, HB 212, HB 3544, HB 3545, HB 3648, HB 3649, HB 4094, SB 98, SB 189 and SB 123

My name is Deirdre Cummings, and I am the Legislative Director for the Massachusetts Public Interest Research Group (MASSPIRG).  MASSPIRG is a non-partisan, non-profit member supported public interest advocacy organization. MASSPIRG strongly supports maintaining the current Food Store Item Pricing Law, and opposes HB 198, HB 200, HB 202, HB 208, HB 212, HB 3544, HB 3545, HB 3648, HB 3649, HB 4094, SB 98, SB 189 and SB123 which would severely weaken or eliminate the popular item pricing requirement in super markets and food departments in other retail stores, and replace it with inferior pricing alternatives.
 
The food store item pricing law requires supermarkets to put price stickers on most items in supermarkets.  It is a long-standing, efficacious, and overwhelmingly popular consumer protection.  While MASSPIRG does not categorically oppose the adoption of new pricing technology, we do oppose legislation that would allow stores to substitute a pricing mechanism that offers less consumer benefit than what we have today. In considering any change to our current retail pricing system, it must first provide equal or better benefits to the consumer to be considered as a substitute. The thirteen proposals before you today do not provide equal or improved consumer benefits.

Background:
First, as a consumer advocate, I give special weight and importance to the basic premise that consumers have the “right to know.”  Information that is accurate, comparable, and meaningful is the tool that consumers use to exercise their “clout” in the marketplace. When basic consumer information is misleading, absent, random or not in a form which can be compared, the consumers’ power in the market place is unfairly and needlessly compromised. When the consumer’s power or “choice” is compromised, the industry (retailer, manufacturer, and advertiser) is then better able to take advantage of the consumer. 

Basic, unadulterated price disclosure is more important today than it has ever been. Consumers are inundated with multi billion dollar marketing strategies to get us to buy their products – just take supermarkets for example. It is not by accident that the milk – one of the most common supermarket items is found in the further most spot in the store it is a plan to get us to buy more on the way out; the store brand or generics are on the top or bottom shelves, and the check out is loaded with items they hope we will throw in our carts. Stores offer all sorts of sales and plans to get “bargains”: shopper saver cards, 10 for $10, 3 for price of 2, earn 25 points to get free turkeys ect. We have 1 day sales, 3 day sales, end aisle displays offering sales, signs on the floor, on the shelf and hanging from ceiling. These may be good sales or may not – but in order for the consumer to wade through all these marketing strategies – we need to provide them with some basic, easy to use price information.

To help consumers navigate the market place and to empower them with information in order to be an active participant in the market economy we have a set of basic price disclosure laws – with out which, the “free market” is compromised.

Consumers’ power in the market place is further compromised if we don’t get what we pay for or are overcharged. Price accuracy and the ability for consumers to have a check on what retailers charge us is also a fundamental consumer protection.

Unit Pricing
One important consumer protection today is the almost 30 year old practice of unit pricing (the practice of disclosing the cost of an item by a basic “unit”). Unit Pricing came into being when packages started appearing on the shelf in many different sizes and an increasing number of brands, which compromised the consumers’ power to compare prices.    

The concept is simple but extremely important to the consumer. This basic “right to know” principal allows the consumer to weed through the flashy advertising, packaging and placement of that item and easily and accurately use price as one of the factors in comparing products and deciding what product to purchase.

Item Pricing
Separate from the Unit Price Law is another consumer protection law which states that all items be marked with a price tag. These two requirements offer different consumer conveniences and consumer “tools”. The item price tag gives consumers the ability to double check what they are being charged at the register to the price tag on the item. And is the only way they can check to see if they are being overcharged. CVS has been in the news recently for overcharging consumers at the register and for continuing to overcharge days later despite being made aware of the error. The price tag is the only way the consumers can catch many types of overcharges. The item price tag helps the consumer locate the unit price tag on the shelf (they match the retail price).
The item price tag enables a consumer to tally up the items in their cart at any given time and allows them to double check their receipt. The item price tag helps us compare prices – both on the shelves between brands but increasingly between what we may have already put in our shopping cart to the ever increasing end aisle sales. Typically, shoppers will come upon a display of so called “sale” items, the price tag allows us to compare the price of a competing brand in our cart to the price of what is on sale at the display.  The item price tag deepens consumer price sensitivity – if every time I see a can of tuna and I also see the price, it is easier for me to associate the two. Over time, I may become more aware of even slight changes to price. To use a personal experience, the item price tag also allows me to easily know what I paid for something last week. For example, I saw coffee on sale this week and I wanted to know how it compared to a sale on that same item last week. I checked my can of coffee in the cupboard I bought last week and learned it was a “better” sale.  Lastly, we know from surveys that consumers overwhelmingly like the individual price tags on their supermarket items.

Consumers want price stickers
The results of a survey released last week, conducted by WBZ Call for Action and Consumer Word, a public service and consumer education web site, last year, confirmed the public’s support for the price sticker. The survey findings were similar to findings of the same survey in 2003. Findings of 2008 Call For Action phone survey:

•    66% of those surveyed said their preferred way to determine prices is the sticker
•    When asked how or why the sticker is important – the findings were:  find the price easily (92%); compare the prices of several items (69%); make sure the correct price is charged at the register (69%); and double-check the price on their sales receipt against the price on the item at home (74%).
•    88% said that even if it costs stores two or three cents per item to individually price-mark merchandise, the benefits of having the price on the item were worth the cost.
•    92% disapproved of substituting self service scanners around the store for individual prices on items.           
•    96% of shoppers disapproved of substituting self-service price check scanners that print price stickers for the current system in which stores put on the price stickers themselves.
•    95% would prefer that stores like Target, CVS, Home Depot and others who have installed the scanners go back to putting prices on items.
•    95% would support keeping the law that requires most items in supermarkets be price marked.

Over time, the item pricing laws has been amended to accommodate the retailers – we have exemptions for frozen food, candy bars, loose goods, and 400 “ pick your own items ” at each store’s discretion, for example. Even with these modifications the item pricing laws are a critical consumer tool which empowers consumers in the market place and must be protected.

The 13 item pricing bills being heard today undermine, roll back or eliminate a vital consumer protection and consumer empowerment tool. We urge you to oppose them.

H. 200 Item Pricing Waiver

This bill grants all retailers, including supermarkets a “waiver” from important state consumer protection item pricing and the AG’s retail pricing requirements if stores pay a “waiver fee” of $2500 to $5000 per store to the state annually. Small stores under $5 million in sales would pay no fee.

In order to qualify for a waiver from the requirement to put prices on goods, in addition to paying a waiver fee, a store need only install one do-it-yourself price check scanner with a grease pencil attached (for price marking) every 5000 square feet in the store, or one in every other aisle.  Only one scanner per store need be able to print out prices.

There is no requirement that price signs be checked for accuracy before a sale begins, and the price on required signs or shelf labels need only be 3/8 of an inch high – not easy to read.

Stores would not have to demonstrate that their scanners were at least 98% accurate in order to qualify for a waiver.  Rather, they could fail two accuracy tests subsequent to receiving a waiver before the discretionary penalty of having to item price again for six months is imposed.

For stores that continue to item price their goods, the categories of exempted items is greatly expanded to include all sale items (where most scanner overcharges occur); all items in end-aisle or freestanding displays; small, lightweight or items under 75¢; an additional five percent of the store’s inventory; and many other categories.  This will make it more difficult for shoppers to find prices even in stores that still item price. The statutory exemptions conflict with those defined in the Attorney General’s 2003 item pricing regulation (940 CMR 3.13).

The bill does not give a consumer any immediate redress when the store fails to post required price signs at the point of display, nor if aisle price check scanners are not functioning properly.

Finally, the bill sets a bad precedent by, in essence, proposing to sell off consumer rights to those who can afford it. What’s next, having two sets of public health regulations based on how much money businesses and or retailers can pay for licensing fees? Or the Do Not Call list applying to only those telemarketers who cannot pay the state a high “registration” fee?   Further, the proposal appears to conflicts with the Attorney General’s own item pricing regulations, and it may, in fact, strip the AG of authority in this area.

H. 202, H. 4094, S. 123 – Allowing Stores to eliminate price stickers if they use self-service price scanners

These bills allow supermarkets and other retail stores to stop item pricing if they install self-service price scanners in some aisles. Unlike the AG’s regulations, the scanners are not required to print price labels. Other concerns include: prices on sale items would not have to be in scanners or items not include a price sticker; shelf prices may be smaller than the currently required 1 inch height and they only need to include regular price not “sale” price; and whole sale clubs may be exempt from pricing rules because of the use of the word “retailer” versus “seller” as the whole clubs have argued they are not “retailers”.

Of great concern, the enforcement in these bills have been significantly scaled back which in turn will lead to even less compliance than we have today for an even  weaker law. Specifically, stores with aisle scanners could be inspected no more than once a year in most cases (with not even one inspection required).  Fines would go down 90% to just $250 for the first inspection (accessed via a complicated and time-consuming criminal lawsuit), compared to a $2500 maximum weekly civil fine today issued as parking ticket type violations by inspectors.  A meager one-time $250 fine is nothing to a store that takes in millions of dollars of sales a year

How this bill would impact consumers:

It will be harder to find out the price of items; and sale items may not have the sale price displayed on the shelf, nor scan the sale price or “card price” at aisle scanners.

Shopping will take longer if you have to lug a cartful of items to a scanner several aisles over to verify prices.

Catching overcharges at the register will be harder with no prices on items.

If a scanner is broken, or price signs are missing or incorrect, the customer has no immediate recourse or rights.

You will not be able to check your sales receipt at home for overcharges because the items will have no prices on them to compare to.

Without stronger enforcement and higher fines, compliance will drop, meaning that aisle scanners may not function properly, and price signs could become outdated. (Similar aisle scanners have been shown to be unreliable in other stores with 70% failing to comply.)

You will become less price aware without the ability to see what you paid for items in your cupboard.

In stores that still item price, 1000s of new items will not be required to have prices.

HB 212, S 98, HB 208, HB 3649 Eliminates Item Pricing in Stores based on Size

This allows supermarkets under 50,000, 35,000 and 15,000 square feet to be exempt for item pricing if they install one aisle scanner every 5,000 square feet and if the stores scanners are 98% accurate.

This assumes that the accuracy is the only rational for item pricing – rather than the information provided the consumer through price disclosure. This also assumes that consumers who shop in markets that are not greater than 50, 35 or 15 thousand square feet do not need the same basic consumer protection and disclosure than those who shop in larger stores. MASSPIRG disagrees.

Further – according to a June 2002 report entitled “New Supermarket Openings, Good News for Boston’s Neighborhoods”, by the Boston Redevelopment Authority, lists Boston supermarkets and their square footage. Of the 36 supermarkets listed, only 2 were larger than 50,000 square feet. All the other supermarkets – from Foodmaster in Charlestown, to the Stop and Shops in JP and West Roxbury to Bread and Circus in Brighton were all under 50,000 square feet. It just does not make sense that those consumers should not get the same consumer protections than those that shop at the Super Stop and Shop in the South Bay Mall. A full list is attached to this testimony.

Recent surveys have showed that the reliability of the aisle scanners is horrible. As many as 70% of currently installed aisle scanners have been shown they do not work or meet the current AG requirements. We should not replace the price sticker for a high tech machine that may not work more times that they do work.

The number of items exempt from item pricing is also substantially increased by: eliminating the need to put prices on sale items (a category where many overcharges occur), taking size and price limits off the candy exemption, increasing from 60 to unlimited the number of end-aisle/freestanding displays that are exempt, increasing from 400 to up to 2500 the number of “pick your own” exemptions, exempting all food and groceries in warehouse clubs, and all non-grocery items in aisle scanner stores.

Some of the bills establish a study and pilot test for item pricing removal. I have been part of many discussions and or working groups to study the issue and each time we end up at the same place with consumer voices and retail voices unable to agree on even the terms. The effort to remove the price sticker is not supported or pushed by consumers. We ought not to allow the trading of a consumer benefit without getting something of equal or better value in return.

HB 3544/HB3545 Exempts Food departments, Eliminates chapter 93A Enforcement

These bills raise the trigger for covering a food department from one having 10 food items to only those with 200 or more. This effectively means more stores with grocery departments will not need to put stickers on their grocery items.

These stores will not need to keep price lists of goods that are exempt (currently required), and exempts large items in all stores.

Most disturbing, HB 3544 rolls back in enforcement by eliminating the consumers’ current right to enforce the law under the state consumer protection statue, chapter 93A and limits ability of the Division of Standards to issue fines in exempt stores.

HB. 198

This bill eliminates the food store item pricing law.
 
SB.189 Study of Mismarked and Mispriced Items

This bill, while good intentioned, requires the Offices of Consumer Affairs and Attorney General to study the effect of incorrectly priced goods on consumers and retail stores. This is a waste of time as previous studies, pilots and commissions on this issue over the last 15 years have proven.  Now more than ever we should focus on ensuring clear, meaningful and accurate price disclosure. Just because the price tag is low tech, it doesn’t mean it is broken.
 
HB 3548 Item Pricing Requirement to only apply to Grocery Items

This bill would weaken the supermarket item pricing law by only requiring stores to put prices on grocery items, rather than on all items in their stores.

Supermarkets today are truly super with stores carrying everything from books, to beach furniture, to hardware supplies. Shoppers put dozens of items; grocery and non-grocery, in his or her shopping cart, and have the same need to know the price of the items being selected for purchase irrespective of category.  It is no less important for the consumer to know how much that the bag of sponges costs, as does the bag of potato chips.  Particularly when so many items are being purchased at once, it is more difficult to remember prices of items in one’s cart unless they are price marked individually.  Further, without having prices on items, the customer will have no way to spot and challenge potential overcharges at the cash register, nor have the ability to compare one’s sales receipt at home again the prices on the items.

No proposed alternative provides all the benefits that item pricing provides:

•    It is shoppers’ primary and preferred way to find out the price of goods.
•    It helps identify advertised goods by having a reduced price/sale sticker on the item.
•    It allows shoppers to compare prices in the store away from the shelf where the item was located without having to go back to the original shelf location.
•    It helps a shopper add up the approximate cost of goods in his/her basket.
•    It is the surest way to spot an overcharge at the checkout merely by comparing the price on the item itself with the price on the scanner display.
•    It helps shoppers spot overcharges when they get home by comparing the price charged on their sales receipt with the price marked on the item.
•    It helps shoppers remember prices by merely checking the item in their cupboard before shopping (to help spot price increases or decreases at the store)

As stated in previous sections – Item Pricing is all about letting the free market work properly. When basic consumer information is misleading, absent or not in a form which can be used, consumer choice is impaired. When consumers cannot make meaningful choices, sellers – retailers, manufacturers, advertisers – gain and unfair advantage that allows them to warp the marketplace and take advantage of the consumer.
For these reasons stated throughout this testimony – I urge you to oppose these measures which undermine consumers’ clout in the market place. Now, more than ever, as we are barraged with more and more sophisticated marketing strategies we should be focused on measures to enhance consumer information – and not diminish it.