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Testimony in support of maintaining the current Food Store Item Pricing Law
Before Chairwoman Harriet Chandler, Chairman Anthony Petruccelli, 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 public interest advocacy and watchdog organization with over 50,000 members across the Commonwealth. MASSPIRG strongly supports maintaining the current Food Store Item Pricing Law, and opposes HB 157, HB 166, HB 179, HB 193, SB 135, SB 141, 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. MASSPIRG does not oppose stores adopting newer pricing technology such as electronic shelf display systems and self service price scanners with certain controls. However, 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 six proposals before you today do not provide equal or improved consumer benefits.

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’ll 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 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.

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. The tag helps the consumer locate the unit price tag on the shelf (they match the retail price). It also enables a consumer to tally up the items in their cart at any given time and allows them to double check their receipt. In addition, the 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.

Over time the item pricing law has been amended to accommodate the retailers – we have exemptions for frozen food and 400 “items” at each store’s discretion.

Item pricing is a critical consumer tool which empowers consumers in the market place and must be protected.

That said – MASSPIRG would certainly be in favor of any system – even new- which is better, or more effective, at communicating basic information to consumers.

 

The item pricing bills being heard today undermine, roll back or eliminate a vital consumer protection and empowerment tool.

HB. 179 Item Pricing Waiver

Substantively, the amendment extends the current food store item pricing law (MGL ch. 94, sec.183B-E) to all retailers, and adds a new law granting all retailers, including supermarkets a waiver from important state consumer protection item pricing requirements (having to put prices on goods) if stores pay a “waiver fee” of $2500 to $5000 per store to the state annually.

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 can not 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.

HB. 166 Electronic Shelf Labels

This bill would require all supermarkets and food departments to substitute electronic shelf labels for both the current paper “unit price” labels (which show the retail price and price per ounce on the shelf) and for the “item price” label (the sticker on individual items). Also required are aisle scanners every 25 feet.

The electronic labels do not offer consumers an equal or better retail pricing system. Below are the consumer benefits of the price sticker compared to electronic shelf tags, and end aisle scanners.

Consumers want price stickers

The results of a survey commissioned by Consumer World, a public service and consumer education web site, released on May 5, 2003, demonstrate the public’s support for the current Item Pricing Law and its opposition to the adoption of the proposed Electronic Shelf Label bill before you today.

  • 94% of shoppers surveyed said that item pricing done by the store was useful because it helped them: find the price easily (87%); compare the prices of several items (64%); make sure the correct price is charged at the register (77%); and double-check the price on their sales receipt against the price on the item at home (67%).
  • 74% of shoppers 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.
  • 56% of shoppers disapproved of substituting electronic shelf price displays for individual prices on items.
  • 66% 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.

HB. 157 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 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.

CONSUMER BENEFITS OF THE CURENT ITEM PRICING LAW:

Allows consumers to compare and locate prices. The most fundamental aspect of the item price tags is that it empowers the consumer with basic information about the product in which he/she can use in making their “choice” of what to buy. This is the basic tenant of a market based economy – consumers can be full participants only when they have access to meaningful, timely and comparable information. (for example – price information is not helpful when it is not available at the time the consumer wants to compare or make a choice).

Often, supermarkets do not place all the brands of a type of product in a single location in the store. A price tag on a product allows a consumer to, for example, pick up a jar of mayonnaise in one aisle and compare it to an end-aisle display of mayonnaise, or to compare the price of non-frozen orange juice to the price of frozen orange juice. In addition, just finding the price of an item would be more difficult under the ESL system only. Currently, it is often difficult to find the orange and white price and unit paper stickers on the shelf – the sticker may not be directly under the appropriate product. Making it more difficult, the ESL, like the paper tags will need to use product abbreviations which often bear little relation to the name of the product.

Reduces the likelihood of consumers being overcharged. Individual price stickers allow consumers to catch the frequent scanner errors—many of which are overcharges—that occur at the register. If individual price labels were no longer required, consumers would have a difficult time identifying such errors. Studies have shown that pricing errors occur most frequently on sale items. Since consumers buy sale items at a much higher rate than non-sale items, it is more likely that a consumer’s basket will contain items that have the highest scanning error rates. Although prices would be consistent with electronic shelf labeling (that is, the price on the shelf would be the same as the price that is rung up at the cash register), these prices would not always be accurate.

Facilitates price competition among stores. Not only do price tags enable individual consumers to compare prices, but the aggregation of individual consumer choices based in part on price also forces stores to compete on price.

Enables consumers to match unit price information with the item itself. Many consumers use the individual price tag to help them locate the unit label on the shelf, which then allows them to compare prices by unit.

H. 193/S. 135 Eliminates Item Pricing in Stores under 50,000 Square Feet

This allows supermarkets under 50,000 square feet to be exempt for item pricing if they install an 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 50,000 feet do not need the same basic consumer protection and empowerment 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

http://www.cityofboston.gov/bra/PDF/ResearchPublications//pdr_556.pdf 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.

Finally, it appears the bill fails to provide for any standard or conspicuous price disclosure at all – not signs or shelf labels. And eliminates consumers’ right to sue for violations under chapter 93A.

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.

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