In a Thursday, Nov. 6, Food Section story concerning individual price marking, a word was dropped from a quote changing its meaning. The quote, from a Giant company official, should have read: "'We hope to moderate price increases with this system . . . but we are not sure if it will mean lower prices or fewer price increases,' said David Rutstein, a company vice president."
"An analysis of the savings each shopper might realize if prices were removed from individual grocery items in the new computer-assisted checkout supermarkets shows that at most they would amount to $2.27 a year, at the least $1.13," The Washington Post reported in 1975.
TODAY OVER 2,000 stores across the country have computer assisted checkouts and some of them, in Georgia, Missouri, Florida, Claifornia, Texas, Indiana and Washington, already have eliminated item pricing. The use of these scanners has increased slowly because of their cost.
Locally Giant has installed them in all of their stores, Safeway in some. Only 17 state and local jurisdictions have laws mandating individual item pricing.
The $2.27 savings when individual price marking is eliminated, computed by Donald Snyder, an economist with the Public Interest Economics Center, are five year old figures. But even allowing for inflation the figures would not be significantly higher today.
In 1975 Giant was one of the few supermarket chains which had begun to install the computer terminals that "read" the Universal Product Code -- those blocks of parallel lines and numbers on packages. The code makes it possible to eliminate individual item pricing. As a test, in its Severna Park, Md., store, Giant removed prices from each item, leaving prices on shelf markers. Reaction from consumer and labor groups was swift. The unions were afraid they would lose jobs; the consumers were afraid they would lose the ability to compare prices. Giant finally capitulated and restored the prices on the individual items.
The study on which Snyder based his findings was one commissioned by Giant to determine "tangible dollar savings which might result" from installation of scanners. It indicated that 23 percent of the savings would result from the elimination of price marking. But Snyder, reviewing the study, said only half of those savings can be attributed to original price marking. The other half is for remarking prices on items already on the shelves.
Suddenly Snyder's findings are of importance again because Giant opened a new breed of store in September in Clinton, Md., in which item pricing has been eliminated again. Giant says it does not know how Snyder's figures would apply to the Clinton operation because "it's a whole new kind of store and we have nothing on which to base our figures."
When the store opened, Giant president Israel Cohen said individual price marking is " a tremendous labor cost that adds nothing to the intrinsic value of the item. We've got to convince the shopper that it's not necessary."
A savings of $2.27 a year -- or even double that figure -- may not be worth it to an individual shopper; but multiply that by the number of Giant shoppers times 52 weeks and it becomes a matter of some significance to the chain. Yearly annual savings figures are difficult to come by. Giant says it does not know but has estimated the savings at anywhere from $1 million to $10 million.
Cohen said if the Clinton operation, which the company calls a test store, is successful, Giant would convert all of its 126 stores to the same concept. The store -- another just like it opened last week in Waldorf, Md. -- combines the traditional supermarket with the warehouse merchandising of canned and packaged goods. The dry goods are stocked in their shipping cases; small items are dumped in bins. In addition the store carries for fewer items.
Cohen said any savings Giant can realize by eliminating individual price marking "will be reflected in the prices." Two weeks ago another Giant official told a meeting of consumber groups he could not promise any kind of price reductions. "We hope to moderate price increases with this system . . . but we are not sure if it will mean lower prices or price increases," said David Rutsen, a company vice-president.
Giant told a gathering of Maryland state legislators essentially the same thing at their Clinton store on October 21. The legislators, members of the Economic Affairs Committee, were invited to the store for a briefing. They did not appear to be very receptive to the company's test. Part of this seems to be due to a committment made five years ago by the former president, the late Joseph Danzansky, when the Severna Park store removed the individual prices. According to the committee chairman, Sen. Harry McGuirk, Danzansky promised the senators if they would not enact manatory price marking legislation the chain would not remove prices from any of its other stores. "We have held back," McGuirk said, "because Danzansky gave us a commitment."
The Giant officials at the Clinton meeting were surprised by McGuirk's remarks and professed ignorance of the commitment. One official described their ingorance as "unfortunate."
The legislators told the Giant officials that they were going to have to prove customers would save. "The burden of proof is on Giant," said McGuirk. Sidney Kramer, the Montgomery County senator, said, "You are going to have to show us the percentage of savings."
When Giant officials siad it would take three to six months to get figures, Kramer replied, "You have effectively 90 days to show us something. I assure you there's going to be legislation."
Giant sought to reassure the legislators that the store "is a test. We have made no decision."
Safeway has no plans to eliminate individual price marking it says.
Consumer groups as well as the retail clerks union are mobilizing once again, as they did five years ago, to prevent Giant from removing individual prices. The union claims even though they are not losing jobs, their hours have been cut back. Both groups are convinced that they will never realize the savings if there are any and even if they do, they won't be worth the loss of price consciousness. They are concerned, they say, because computers make mistakes; it's impossible to tell when prices have been marked up; there is no way to comparison shop and there is no way to check the accuracy of the register tape. Ellen Hass, consumer director for Community Nutrition Institute and a leader in the fight against Giant five years ago, said: "Prices on individual food items are the most fundamental means of offering the consumbers the right to know. It is essential that this basic informational right be safeguarded particularly during these high inflationary times."
Giant says the computers are "9999.7 percent accurate"; that with good shelf marking of prices shoppers can see the prices and if they want to compare prices they can mark the products with a grease pencil provided by the store. The register tape from the computerized system offers a more detailed record of each purchase than the traditional tape. In addition the electronic equipment provides much better inventory control.
In some parts of the country where prices have been removed from individual items, consumber groups are organizing; in others supermarkets have taken prices off without any apparent protest from shoppers, consumer groups or labor unions. When scanners were introduced in Seattle, a few years ago, the prices were removed. According to Daniel Puzo of the Los Angeles Times: "One major reason for the conspicuous lack of oppositon to item-pricing removal in Seattle is the popularity and pervasiveness of the box store which comprises 10 percent of the market. These discound food outlets do away with all the frills of palatial supermarkets and display a limited assortment of items in their original packing crates and boxs. Only a shelf marker indicates the price.
"In several ways it is easy to see how the prevalence of box stores soothes some of the doubts about scanners. The box stores' main aim was to cut operating costs and thus pass on the savings as lower prices to consumers."
According to Puzo only now is a local Seattle consumer group raising doubts about the importance of individual pricing.
The situation is quite different in California where several stores are experimenting with individual price removal for a specified period of time while surveys are conducted to determine shoppers' reactions. Last fall the supermarket industry defeated statewide item pricing legislation so labor and consumer groups have turned to local governments.
Now the American Coupon Club, which publishes a magazine for couponers and refunders, has taken up the battle cry. The October issue of the club's magazine, which has 50,000 subscribers, features a blindfolded shopper and a cart full of groceries with question marks. "Shopping Blind!" says the caption. "Crisis Report: Supermarkets eliminating item pricing in Atlanta, Indianapolis, St. Louis and other cities. Here is our plan for doing something about it!"
The magazine, which is published by Martin Sloane, who writes a syndicated newspaper column about couponing, contains letters from shoppers who have had serious problems with scanner errors; a discussion of the dangers of eliminating item pricing; list of the tactics supermarkets are using to "keep [shoppers] quiet" while prices are removed; a call to subscribers to work for item pricing legislation and a pull out "position paper" that can be reproduced and sent to state legislators and other interested parties.
According to Sloane the magazine has already received 5,000 letters asking for a copy of the position paper. Sloane says his mail runs "50 to 1" in favor of item pricing. "Of those who are alerted," Sloane said, "the overwhelming majority would prefer to pay for the service just as they would prefer to pay for bags."
Sloane, who is scheduled to meet with New York congressman James Scheuer about federal legislation for mandatory item pricing, said several congressmen are very interested in the issue.
Sloane said he is "taking a lot of heat from the Food Marketing Institute," the trade association of the retail and wholesale food business. "FMI" asked us to hold off," Sloane said. "Give us a chance to experiment."
The industry tried that four years ago. At the time they commissioned a study in Michigan comparing shopping behavior in stores employing scanners without prices to those with prices. The results showed that conventional store shoppers remembered correct prices more frequently than "without prices" shoppers; "without prices" shoppers make significantly larger errors in price retention; conventional store shoppers have greater home price awareness.
Because of these findings the grocery industry subcommittee that had reviewed the study recommended that prices not be removed. The recommendation was not binding but 94 of the country's largest food chains, Giant included, concurred.
Since that time several opinion surveys have reinforced the Michigan State work.
But many chains, in a profit squeeze, are hoping either to change public opinion or to push through this economy measure with the idea that the public will grin and bear it because it has no alternative.
Giant's consumber advisor, Odonna Mathews says "the consumber will demonstrate the success of the (Clinton) store. Definitely if people don't like it and don't go back there the prices will go back on."