In a Safeway store on Georgia Avenue in Silver Spring, Helen Gross saw a clerk erasing the prices that had been marked on cans of tuna.
The cans had been priced at 3 for $2. The clerk was marking a new price of $1.05 on each. Helen wrote: "This is the Safeway that advertises that it won't change the price of merchandise already on the shelves. Then they have the nerve, the gall, to pack our purchases in a bag that is imprinted with the inspiring leg-end, 'STOP INFLATION. Between us, we can be inflation fighters.' Is there no way to protect ourselves against such price increases?"
I took Helen's complaint to Safeway's local spokesman, who pointed out that Safeway had been "one of only a few national chains - and the only local one - to institute the policy of not marking up prices of items already on the shelves."
This policy was in effect from July of 1974 until November of 1976. At that point, said the Safeway spokesman, "Escalating costs, including costs of labor, transportation and energy, dictated a return to the traditional price-marking procedures."
The spokesman added, "The change in policy was printed in advertisements in local newspapers in late 1976." And for good measure, he explained, "The tuna your reader complained about is regularly $1.05 a can. It had been marked down to 3/$2 on a two-week special. When the two weeks were up, it went back to $1.05."
I'd like to add a couple of comments of my own and offer an answer to Helen's question, "Is there no way to protect ourselves?"
The policy of not marking up goods already on the shelf has some merit but has little to do with inflation.
A customer who finds evidence that he must now pay $1.39 for something that was 97 cents last week is understandably irked. He doesn't like to be reminded about the extent to which inflation has been robbing him. In his anger, he may blame high prices on the store in which he happens to be at the moment rather than on the complex circumstances that cause inflation. So the policy of not marking up goods already on the shelf is a good public relations move.
However, it contributes much less to the fight against inflation than a casual observer might think. A merchant who sells off his inventory for less money than it will take to replace it soon learns that he is en route to insolvency.Somewhere down the line he must generate enough cash to restock his shelves. So the likelihood is that if he sells off one batch of goods for a little less than the going rate, he will have to sell the next batch for a little more than would otherwise have been necessary.
So when prices are relatively stable, it is a good policy not to mark up goods already on the shelf. But in a period when prices are zooming, such a policy becomes impractical.
Supermarket chains almost always earn a profit of less than 2 percent on their gross turnover. In some cases, they earn as little as 1 percent - one thin dime on $10 worth of business.
In 1 or 2 percent too much for a food store to earn? Does the American supermarket give the consumer an efficient system of food distribution?
In my opinion, supermarket profits are reasonable. The stores distribute food efficiently and at the lowest overhead consistent with American standards of wages, sanitation, quality and convenience. I think the food shopper should keep his eye on the bottom line profit figures rather than on individual markup policies.
My answer to Helen's question will seem quaint to some, especially to younger readers, but a few old-timers will nod in argeement: If you think the price of an item has risen too high, don't buy it. Nothing brings prices down faster than consumer resistance .
Once upon a time, we made a distinction between necessities and luxuries. Now the distinction has become blurred. Everything we want has become a necessity, and in our eagerness to buy we drive prices ever higher.
True, we are often forced to buy necessities, regardless of price. But in those instances in which we have a choice, we can be more effective in the fight against inflation than even Mr. Carter can be. All we have to do is exercise enough self-discipline to say, "No! It costs too much."
Sudden thought: What if the food industry reacts as the Washington Gas Light Co. has? What if Safeway and Giant were to say: "Since you've begun eating less, we're going to have to charge you more for it." Horrors!