The Federal Trade Commission is considering a change in its rules to permit supermarkets and other food retailers to attract shoppers by advertising items that they don't have on their shelves.
The FTC said that allowing supermarkets to run ads about goods that aren't available could save consumers money. The commission is considering either amending or abolishing its advertising regulations governing retail food stores.
FTC officials said that the current supermarket advertising rule is burdensome for industry and that "market forces" would compel supermarkets to stock what they advertise without the need of government regulation.
An FTC official said that if the supermarket advertising rule were abolished, the agency could still take action against a specific company under another statute prohibiting deceptive business practices. That statute also regulates non-food retail advertising practices.
But, consumer groups yesterday voiced concern about the possible change.
"The risk in changing the FTC rule is that consumers might be lured into a more expensive supermarket than where they would usually shop," said Mark Silbergeld of the Consumers Union. "The shoppers then not only would not realize the advertised savings, but would end up spending substantially more.
"Why even have a store? Why not just advertise?" Silbergeld asked. "This is one more act proposed by the commission in total ignorance of how people operate their businesses. Ads are used as a come-on to get people into their stores."
The FTC now requires that if a food store advertises an item for sale, the item must be in stock and must be conspicuously available at or below the price advertised.
The 1971 rule came after many problems with stores running ads for goods that proved unavailable, wasting shoppers' time and forcing them to buy more costly substitutes or to look elsewhere.
The FTC said it has only issued 10 legal complaints under the regulation, the last in 1978. As a result, agency officials said they are questioning whether the costs of record keeping, inventory and other work to comply with the rule may outweigh the savings to shoppers of making sure advertised items are always available.
The costs of industry compliance with the rule are passed on to the consumer and may exceed the benefits, the FTC said in a staff report. The rule, the FTC said, "causes shoppers to pay over $200 million a year to obtain benefits worth, at most, $125 million a year."
Consumer benefits from the supermarket regulation average out to a savings of about 2 cents per shopper per week, according to one private survey of shoppers and a second study of food marketing reported by the commission.
The FTC also estimated that the extra record keeping, inventory expenses and spoilage involved in making items available amounted to costs of 3.5 cents a week per shopper. Industry officials have estimated the costs as high as 5 cents per shopper per week.
"The FTC discovers once more that it costs more to tell the truth," Silbergeld said. "In valuing money more than truth, they might change the rule."
The FTC said that one survey did indicate that consumers were not willing to sacrifice price or service for improved product availability. But, the agency said it wants to get more information from the public before making a decision. The deadline for public comment is in early February. "We need to get more information about all of these estimates before we make a final decision," FTC staff member Lewis Frank said.
The FTC is asking consumers for written comments on the rule and for alternatives.
The regulation covers about 165,000 grocery stores across the country, although the 29,000 supermarkets are affected the most, according to the FTC. Supermarkets with annual sales of $2 million or more generally advertise between 50 and 200 items weekly.
Assuming an average of 135 advertised items per supermarket, on any given day supermarkets could have as many as 100 million advertised items on their shelves. Technically, each item not available or not priced at the sale level constitues a violation of the rule with a potential fine of $10,000.
Under the current rule, food retailers could defend against charges of insufficient advertised items by keeping records showing that the items were ordered in time and delivered in quantities adequate to meet reasonable demand.