Signs in Star Market stores here have told shoppers not to buy certain items because the store thinks they are too expensive.
It is not an idea whose time has come. Star is virtually alone among the nation's supermarket chains in "jawboning" its suppliers.
But that hasn't kept the chain from threatening these suppliers with such exposure and worse, if they don't adhere to the president's wage and price guidelines or come up with a plausible explanation for why they aren't.
Tom Stemberg, a Star vice president, says the practice has been successful beyond anything he imagined. "It's amazing how almost all of the suppliers coming in now have price increases right in line."
Stemberg credits the "example" Star made of Pepsi-Cola for the cooperation they have been getting recently from most of the manufacturers.
Shortly after President Carter's inflation speech in October, many food manufacturers sent out what many wholesalers and retailers considered unjustifiably large price increases. Said Stemberg, "The day the president went on TV, price increases came in like crazy. There must have been 650 price changes in one week. We used to get a 100 or 200."
According to the Nov. 13 edition of Supermarket News, an industry weekly, "retailers and wholesalers across the country have been hit by many price increases in the past few weeks."
Not everyone who complained about the increases believed they had anything to do with fear of mandatory price controls. In Washington, a vice president for Giant, one of the areas two largest food chains, said the increases they had been getting were not out of line. "We haven't been able to determine that anyone is trying to run away with prices," Gerson Barnett said.
Star does not agree. When the local Pepsi bottler announced an increase far beyond what Star felt was reasonable, and refused to rescind it, Star put a sign on the shelf next to the Pepsi bottles advising its customers to buy something else because the soft drink cost too much.
It was quite effective, according to one observer: "The day the sign went up in one store they sold only one bottle of Pepsi."
Pepsi must have felt the pinch as well, even though a company spokesperson, Rebecca Gocke, said Star's action "wasn't justified." Gocke said the reason they rolled back the prices was because "the higher cost kept us from being competitive." Within a few weeks the local Pepsi prices had been rolled back -- a quart bottle from 65 cents to 59 cents and a two-litre bottle from $1.19 to $1.09 -- making them once again competitive with its arch rival, Coca-Cola.
"Star as 'buying agent' for close to a million shoppers each week, bears large responsibility in holding down our customers' cost of food. We should exercise this responsibility as we buy your products."
Star's efforts to pressure its suppliers into controlling their price increases began with a letter from the company president to all Star's suppliers on Nov. 10:
"Frankly we have been deluged with a rash of price increases which seemingly resulted from fear of mandatory wage and price controls. Some of these increases approach 15 percent on top of several increases taken earlier this year. Many far exceed increases in ingredients, transportation, packaging and labor costs...
"We shall ask for cost justification of any increases which seem exorbitant.
"When increases appear out of line after our investigation, we shall, by various means, encourage our customers to buy alternative brands.
"In extreme instances, brands with extreme exorbitant list costs will be discontinued.
"I know you share our inflationary concerns, and will act accordingly."
In a Nov. 18 newspaper advertising supplement, Star published a letter to its customers. It suggested some shopping tips to help fight inflation and said: "Unfortunately, many of our suppliers seem so concerned about mandatory price controls that they have tried to rush through exorbitant price increases to 'beat the freeze.' As your buying agents, we CANNOT, and WILL NOT accept some of these increases.
"We shall ask every Star supplier to cost-justify any and all price increases to Star. If, in the judgment of Star's buying group, an increase is not justified, we shall do our best to recommend alternatives to you, pricing them as attractively as we are able to do."
Stemberg said, "Last time around, in '72-'74, the supermarket was perceived as being in a conspiracy with the manufacturer. We really are on the consumers' side if the manufacturer's policy causes customers undue aggravation. The response from consumers has been very gratifying."
He also said the efforts brought results: "Several other suppliers have rescinded price increases in response to our letter, and obviously, because of the (local media) publicity Pepsi got, the leading, supplier of peanut butter and the leading supplier of apple juice have rescinded their increases. Some of them called up and said: 'Gee, we hadn't thought of it that way and we'll try to hold the line.'"
But "some of them haven't given us satisfactory answers, so we have asked them for more detailed cost justification."
In some instances, Star has not been satisfied, and it has "stopped ordering from certain no-name and house-brand suppliers. We have dumped suppliers right and left," Stemberg said. But he admitted "that's a lot easier to do than with heavily advertised brands. What we can do with those is inform the consumer.It's their privilege in a free society to buy it -- to make a bad decision."
Currently, Star is "negotiating with one leading juice supplier, a leading cookie/cracker supplier, several frozen-food suppliers and a few others. They are asking for cost increases of 12, 14 and 15 percent. But they are now, thank God, in the minority rather than the majority," Stemberg said.
"The one we could not conclude satisfactorily wrote us a letter telling us he had no reason to justify any increases to us because he snuck them in before the president went on television, so we have quietly snuck his item out of our stores. It was just one item, a starch for clothing."
If there are retailers elsewhere in the country making similar efforts to hold down costs, the word has not gotten out, though Star Markets' sister firm, Jewel Foods of Chicago, is putting pressure on its suppliers on an informal basis.
According to Gerald Hansen, vice president of Jewel's grocery merchandising, "We have been pushing back on our suppliers, telling them that we expect them to substantiate any price increases, but we aren't asking them to show us their figures. It's very difficult for us to evaluate whether or not their cost increases are justified."
Hansen said he isn't sure what more Jewel would do but expects the company to "get to a position where it will take a stronger stand. It's necessary to do that."
One wholesale food distributor who services most of New England has sent letters like Star's to the manufacturers and processors with whom they do business. Said Raymond Laurans, president of Roger Williams Foods: "We told them if their cost increases were unexplainable or unwarranted we would slow up the movement of their items by not giving them full cooperation in merchandising. We would not feature the items of these operators at store level, and would not display them or give them any prominence."
The result, Laurans said, has been detailed explanations of large cost increases from some companies, justifications which seem "very reasonable."
But he thinks there are problems with the government's guidelines. Companies are permitted to make increases well above the guidelines on particular products as long as their overall line is in compliance. "That's a pretty big loophole," Laurans said, "because a company can selectively put the biggest increases on the best-selling items."
Despite the problems, Laurans still thinks thee is some value to his company's efforts and Star's."It has a ripple effect," he said.
Stemberg agreed. "I've heard from suppliers that other supermarkets have asked for similar justifications."
Star has also heard from President Carter. In a letter last month he commended the company for "... the leadership you have demonstrated in developing the concept of guideline information on prices in your Star Markets. By providing point of purchase information on whether a product complies with voluntary price guidelines you are helping to marshall wider support for our struggle against inflation by giving consumers a choice..."
Steve Hiemstra, an official with the Council on Wage and Price Stability, which plans to monitor prices, likes the Star Market idea, too. "It seems to me, the whole hope of this program is people trying to question and to get their suppliers to hold back prices," said Hiemstra. "Pressures from consumers are the best hope for this program."
The council has plans to publish a list of those companies that do not adhere to the guidelines, in the hope that the public will choose to buy alternative products. Hiemstra refused to describe such action as a boycott, or even economic retribution.
"I think consumers should be economically rational and buy those foods that have not increased in price a lot," he said. "It's just good consumer economics that I'm suggesting.
"To the extent that people complain about rapid increases, and even more importantly if they stop buying products that rise more rapidly in price, perhaps the program will have some impact," Hiemstra said.