AG Vs. Retailers Over Price Displays

November 12, 2002
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LANSING — With the election over, eyes will now be focused on the short legislative session in Lansing where many lawmakers will be lame ducks.

And two of those pupils will belong to Governor-elect Jennifer Granholm.

About three weeks before the election, Attorney General Granholm urged lawmakers to beat back bills that would eliminate item pricing on general merchandise for the state’s retail industry and replace a long-held practice that originated from the Item Pricing Act with electronic shelf labels or ESLs.

ESLs have small digital or plasma display screens that sit in front of shelved products. These are operated by wireless, low frequency signals emitted from a computer, which let retailers make easy and instant price changes.

Granholm feels that allowing retailers to adopt ESLs will diminish consumer convenience and confidence and increase costs to shoppers, possibly to predatory pricing levels. She duly noted her concerns in a “White Paper” she sent to lawmakers and consumer groups.

“With ESL technology, retailers could, through the use of instantaneous price changes, quickly find the maximum price consumers are willing to pay for a product — and then increase the price to that maximum,” she said in a statement.

“This is a classic example of a bait-and-switch tactic which could be used to exploit Michigan consumers and make a quick buck.”

But the Michigan Retailers Association disagrees.

Eric Rule, MRA director of governmental affairs, wrote in the September issue of Michigan Retailer that ESLs would lower costs for retailers and reduce prices for consumers. And he didn’t find anything new about the recent claims Granholm made.

“Historically, the state attorney general and consumer groups have ignored retailer and consumer savings by labeling reform efforts as anti-consumer,” wrote Rule.

“With term limits ousting so many legislators from office, however, this may be the best chance in years for legislators to vote for reform.”

Even more so, Rule wrote, if Republicans lost control of the House and Senate.

Also, the bills were introduced and primarily sponsored by GOPers. Joanne Emmons of Big Rapids introduced the Senate version and Michael Bishop of Rochester was the primary sponsor of the House bill. Could passage of these bills be part of a political gamesmanship, similar to what happened in the state two years ago during the last lame-duck session?

If so, Rule’s treasure becomes Granholm’s trash. While Rule sees the lame-duck session as a time for lawmakers to right a wrong, Granholm sees it as a time for irresponsible action.

“It’s unfortunate that this legislation, that hits consumers in their pocketbooks, would be considered at a time when many of those voting on it are unaccountable for their actions,” said Granholm.

Makers of ESLs, however, argue that retailers can increase their average revenue by more than 2 percent and net margin by 9 percent with the product. The gains would come from not having to have employees change prices on every single item when prices change.

But one unnamed manufacturer may have revealed a bit too much information about its ESL for Granholm’s comfort by saying that a “customer would be able to point a device similar to a key fob at an electronic label and it would flash back a specific price based upon that customer’s value to the store and his or her shopping habits.”

“Using databases to track daily purchases, including items purchased for medical or sensitive personal conditions, and then charging differential prices based upon a customer’s ‘value’ is offensive and wrong,” said Granholm.

The bills that Granholm and the MRA will be watching are House Bill 5544 and Senate Bill 1211.  

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