Retailers, union clash on item price changes

October 4, 2009
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LANSING — For consumers, being able to check the price tag on an individual item at a store is a convenience. For retailers, however, marking every item carries a costly price tag, a business association leader says.

State law requires that most items on store shelves be clearly marked with a price tag. If a scanner charges more than the tagged price, the seller must pay the difference plus a bonus of 10 times the difference — at least $1 and a maximum of $5.

Sen. Cameron Brown, R-Fawn River Township, has introduced a bill to exempt non-food products from item pricing if the price is clearly marked nearby. It also calls for automated checkout systems to meet accuracy standards.

"This bill can not only save money for businesses in the state, but also give businesses the ability to reinvest that money to create new jobs," he said.

Marv Russow, president of the United Food and Commercial Workers International Union Local 951 in Grand Rapids, counters that the jobs of labelers would be at risk.

"Potentially, these workers could lose their jobs if item pricing is eliminated," said Russow.

Eric Rule, vice president of government relations for the Michigan Retailers Association, says that if item pricing were eliminated, labelers wouldn’t lose their jobs but would be moved to different jobs.

"A retailer in Michigan has the same number of workers as a store in any another state. Stores would be able to move employees to different positions, such as customer service," Rule said.

Russow, however, said he doesn't think stores would reassign employees rather than lay them off.

"My experience in other states has been that they have the same level of customer service, the same level of other positions, and they don’ have this law," said Russow.

Rule also says that Michigan, the only state with such a law, imposes an additional expense on businesses that doesn't exist elsewhere.

"Michigan has built in artificial pricing that increases costs and hurts businesses who want to locate or expand in the state," he said.

"The cost to comply with the law for larger retailers can get into the millions of dollars, and that’s a conservative estimate," he said, adding that some smaller businesses are also adversely affected by the law.

Businesses that failed to comply have been heavily fined. In 2006, drug store chain Walgreen's was fined $550,000. In the same year, retail chain Wal-Mart was fined $1.5 million, according to Attorney Gen. Mike Cox's office.

Supporters of the existing law, including Gov. Jennifer Granholm, say item pricing is necessary to make sure that consumers know the price of what they're buying.

"It's all about consumer rights and being able to protect consumers," said Megan Brown, deputy press secretary to Granholm.

"Item pricing is a necessary benefit to consumer protection," said former Attorney Gen. Frank Kelley, who was in office when the law was enacted. Kelley says that 30 years ago, scanners were highly inaccurate, and that even though they are more accurate today, they need to meet accuracy standards.

"I don't think we would need the law if their scanners, cash registers and other technology have a 98 percent accuracy rate," he said.

The retailers association said that because scanners would be effective, it would support doubling the penalties for stores that overcharge customers with a scanning system. But Kelley suggests that retailers should have to prove themselves before item pricing can be eliminated.

"They have to prove that their scanners can have a 98 percent accuracy rate. Give them one or two years to do that, and if their scanners pass the test, then great. If not, the law should remain in place. Also, we must increase the fines before eliminating item pricing," he said.

Sen. Brown, however, sa id the bill could serve to improve consumer protection.

"By re-evaluating the technology and laws, doubling the fines, having accuracy standards, mandating clear signage and making audits quarterly, we would be doing a lot for consumer protection," he added.

The bill is co-sponsored by Sens. Mark Jansen, R-Gainsville Township; Bill Hardiman, R-Kentwood; Jud Gilbert, R-Algonac; and Roger Kahn, R- Saginaw Township, and is pending in the Senate Commerce and Tourism Committee.

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