Testimony in Opposition to bills which would weaken or repeal the Food Store Item Pricing Law

Testiomony in Opposition to S.77, S.1844, S.1848, H.987. H.993, H.994, H.995, and H.1869

Before Chairman Sal N. DiDomenico and Chairwoman Linda Dorcena Forry, and members of the Joint Committee on Community Development and Small Businesses

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 S.77, S.1844, S.1848, H.987. H.993, H.994, H.995, and H.1869 which would severely weaken or eliminate the popular item pricing requirement in supermarkets 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 eight 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, special event sales, and end- aisle displays offering sales; advertising 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 make sure they have access to the very basic, easy to-find and compare price information.

To help consumers navigate the market place and to empower them with information to be active participants in our market economy we adopted 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 had been in the news a while back 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 in 2009, 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.

How these bills 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.
•    Shoppers 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.)
•    Shoppers 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.

The 8 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. 987/S. 1844 – Item Pricing Elimination via Fee Waiver and Installation of Aisle Scanners

These item pricing bills would allow any food store or retailer with a food department to pay a waiver fee of as little as $500 (and only up to $1000) to the state to buy their way out of the item pricing requirement of the state food store law.  They then have to install self-service price scanners one every 5000 sq. feet, they would no longer have to put price stickers on items.  This aisle scanner technology is disfavored by shoppers and has proven very unreliable in tests. (7.23.2009, Consumer World, Survey: Shoppers reject aisle scanners; prefer prices on items)

Specific provisions of these bills will adversely affect shoppers:
 
The bills would take away a longstanding consumer right – to have the price right on the item – which two out of three shoppers say is the way they prefer to learn what something costs.  The approach these bills use to take away that right sets a bad public policy precedent. Put simply, the waiver provision of these bills says to retailers if you pay the state some money, you no longer will have to comply with that law.  Consumer rights should not be auctioned off like surplus state property. 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?  

With only one aisle scanner every 5000 sq. feet, shoppers will have to walk two or three aisles over just to verify a price.  Five thousand square feet is twice the size of the average larger home.  Imagine having to walk through all that space just to find the price checking machine.  Last session’s version of the bill called for aisle scanners every 2500 square feet – still not in every aisle, but at least more conveniently located.

The aisle scanners prescribed in these bills are not required to print price stickers.  This is in conflict with the Attorney General’s regulation that requires all such machines to print them.  These bills only require that one machine in the entire store have that capability.  That means shoppers will have to comb the entire store to find that one machine.  This is an unreasonable provision that will only inconvenience shoppers.  The whole point of allowing scanners to substitute for price stickers is that they be able to print stickers so shoppers can affix them to products themselves if they so desire.  The momentary display of a price on an aisle scanner doesn’t help the shopper recall the price of each item while shopping, at the cash register to catch overcharges, and once they get home to check against their receipt.

The inspections and $200 fines that apply to aisle scanners in the grocery department of stores like Wal-mart, CVS, and Target do not apply to any of the other aisle scanners in other parts of those stores, so there is less incentive to have those other scanners operating properly, though they are no less important.

The bills provide that stores 5000 square feet or less do not have to install any aisle scanners in order to stop putting prices on items.  Shoppers in these stores may not find prices since shelf labels are often outdated, or not under the right item.  Shoppers are being asked to give up an important tool – item pricing – and to get nothing in return as a substitute.  That simply is not a fair deal.  Not having even a single scanner in stores 5000 square feet or less means shoppers will have a harder time finding out the price in stores like CVS, Walgreens, Store 24, Cumberland Farms, and small grocery stores.  Any store, irrespective of size, that wants to stop item pricing should be required to have a least one printing aisle scanner.

Stores that continue item pricing would no longer have to put up a small price shelf label or sign with the price big and bold, at least 1 inch high, for any items that are exempt, making prices harder to read and to find for shoppers.

Stores that continue to item price would not have to put the sale/card price either on the item or on the shelf.  How is a shopper to know the sale price then?

Stores that continue item pricing would be allowed to stop price marking thousands of new items because definitional changes, and additional exemptions or loosened exemption criteria in these bills.  For example, new exemptions include: all snack foods regardless of price or size sold near the checkout, and all meat, fish, produce, deli, and bakery items. [The latter group erroneously was missing the word “unpackaged” before them.]  Disposable paper and plastics products and light bulbs would also be exempt in food departments.

The bills completely exempt warehouse clubs like BJ’s from any price marking requirements, inspections, or oversight of grocery items.  That means shoppers could find no prices on items or on shelves, and would have no recourse.  That means shoppers could find wrong prices on items or on shelves, and have no recourse.  That means shoppers would not even have access to aisle scanners in the grocery department because they are not required.  That means shoppers would not even be entitled to an itemized sales receipt because no part of the food store law, including the section on receipts, would apply to warehouse clubs.  Warehouse clubs as a class account are among the biggest offenders of the current pricing law.  In one two year period, BJ’s racked up 2800 violations and nearly $150,000 in fines.  They are the last category of store that should be granted special treatment. Consumers who shop at warehouse clubs are entitled to the same protections they would have at conventional stores.  To not require similar types of price disclosure at warehouse clubs, puts all other retailers at a competitive disadvantage.

The bills completely exempt grocery items found in other stores like Home Depot and Staples because they redefine a food department as a store with at least 200 food items (instead of the current 10).

The checkout scanner accuracy standard was reduced from 98% to 95% erroneously, offering consumers less protection than historically provided.

Inspections of stores are reduced from no more than once a week to no more than once a month.

The maximum inspection fine of $2500 has not been increased in a quarter of century.  For many stores, the current fine is viewed as a cost of doing business, and many gladly pay it rather than comply with the price disclosure law.  Increasing the individual fine from $100 to $200 accomplishes nothing in the way of deterrence unless the cap on fines is also raised substantially.  Without high penalties and strong enforcement, compliance will be low.  It is also unclear if fines for aisle scanners are included or excluded from the general inspection cap.

The consumer’s right to sue a store for violations under Chapter 93A has been eliminated.  If inspectors are only required to test stores once every two years, empowering the customer to seek meaningful redress is all the more necessary.

Multiple consumer protections that could have been added to these bills were omitted, such as requiring daily testing of aisle scanners, including a scanner functionality guarantee, requiring self-audits of sale prices before a sale beings to ensure that prices have been accurately entered into the checkout system, etc.

The bills fail to merge all item pricing regulations into one comprehensive state law, treating all sellers equally, and putting them all on a level playing field.

H. 993 – Eliminate Item Pricing in Stores Under 35,000 Sq. Feet

This bill would allow any supermarket or food department under 35,000 square feet to stop putting prices on products if their scanners are at least 98% accurate, and they install one in-aisle, do-it-yourself printing scanner every 5000 square feet.

As noted above, item pricing is an important consumer protection for shoppers and its value does not vary by the size of the store.  Consumers who shop at smaller stores should be entitled to the same rights as those who shop at megamarkets.

These bills seek to exempt stores that are anything but small.  A 35,000 square foot store is approximately 10 times the size of a CVS drugstore.  Some full-size supermarkets would even qualify for exemption under this bill such as the Bread and Circus in Brighton (20,000 sq. ft.) and the Johnnie’s Foodmaster in Charlestown (20,000 sq. ft.).  These are not small mom & pop businesses with tiny stores that might need a break. They are part of large corporations, with many store locations.

To be exempt, the stores must install self-service price scanners.  There is no requirement that signs be placed on the shelves of most items displaying the price, let alone in one-inch high numerals.  Consumers would be forced to cart their goods over to aisle scanners just to learn the price.  And, there is no requirement that the card price as well as the non-card price be displayed by these scanners.

The number of items exempt from item pricing if the store wants to continue marking prices 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.  The fewer items with prices, the more difficult it is for shoppers.

The bill also sets up a study committee and a pilot test for item pricing removal in as many as 50 stores.  Over the course of the summer of 2007, a similar committee met repeatedly to discuss such a test, and the pilot ballooned from 15 stores to 150 stores.  Ultimately the group could not agree on how such a test should be carried out.

S. 1848/H. 994/H. 995 – Exempt More Food Departments,  No 93A Enforcement

These bills raise the threshold for requiring a food department to price mark groceries from stores having at least 10 food items to only those with 200 or more items.  That means that fewer stores will be covered by the law and grocery items in many stores currently required to be price marked, no longer will be.

S. 1848 also requires printing aisle scanners, but give shoppers no price information at all on the shelf, thus requiring all items to be checked at a scanner several aisles away just to determine the price.  For stores that continue to item price, thousands of additional exemptions are added, including all end-aisle displays and all sale items.  Since there tends to be a greater number of sale items that don’t ring up properly at the checkout than regularly priced items, catching instances of overcharging on sale items will be nearly impossible without having price stickers on those items.

H. 995 eliminates the requirement of the store having to keep a price list, thus if there is a question about a scanned price, no reference will be available to determine the correct price.  It also eliminates the consumer’s rights under Chapter 93A to enforce violations of the law.

H. 1869 – Repeals Item Pricing

This bill simply repeals item pricing in food stores and food departments and offers no alternatives for price disclosure for shoppers.  Such a bill is completely contrary to the tradition in Massachusetts that sellers are required to disclose information to buyers and prospective buyers so they can make informed buying decisions.

S. 77 – Narrows Item Pricing to Only Include Grocery Items

This bill would water-down the supermarket item pricing law to only require stores to put prices on grocery items, rather than on all items in their stores.

Over the years, supermarkets have evolved and now carry many lines of products, many of which are not grocery items.  The consumer’s desire for “one-stop shopping” has helped bring about this trend, as well as the promise of higher profits that supermarkets can achieve when selling non-grocery items.

Nonetheless, the typical shopper puts dozens of items, grocery and non-grocery, into his or her shopping cart, and has 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 Pricing 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)
•    It helps keep prices more competitive as consumers are able to easily use price as a factor in purchasing decisions. The market then interprets those purchasing decisions keeping some pressure on overall price inflation.

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.