Testimony of the Retailers Association of Massachusetts
Jon B. Hurst, President

Before the Joint Committee on Community Development & Small Business
July 27, 2009

RE: Item Pricing Reform Legislation   

      
The Retailers Association of Massachusetts (RAM), established in 1920, is a statewide trade association of over 3,100 member companies.  Our membership ranges from independent, “mom and pop” owned stores to larger, national chains operating in the general retail, restaurant and service sectors of the retail industry.  The industry's contributions to the Commonwealth include over $112 billion in annual sales; over $5.7 billion in annual sales and use taxes collected; 17% of all Massachusetts jobs; and operations in over 38,000 locations across the state.

We all know that these are difficult economic times.  Massachusetts retailers today are facing increasingly higher health insurance, energy and labor costs, while simultaneously seeing decreasing sales due to slumping consumer confidence.  Consumers and families have decreased their spending and are watching every penny.  The impending sales tax increase will further decrease sales in the Commonwealth.  With all of these factors in play there is a need now, more than ever before, for government to enact policies that will reduce the cost of doing business here.  A complete reform of the state's antiquated food item pricing law is a good place to start. 

But given all of these economic pressures, as we proceed with any pricing reform, RAM strongly urges the Committee to be mindful that the focus of these efforts should be to provide relief to those burdened by the current food item pricing statute. 

RAM firmly supports efforts to update and coordinate our multiple levels of pricing laws in the Commonwealth.  The many bills before you today may each go about trying to change our pricing laws in different ways, but they all are founded with a common goal – to update our laws so as to provide for better pricing accuracy and consumer service, better competitiveness for our local employers, and lower costs for Massachusetts consumers and families.  It is amazing to think that in 2009, in the 21st century, with all of our technological advances, the state still requires that a sticker be placed on an item to tell us how much it costs.  And it is even further amazing to 
think that if a small child happens to walk down a grocery aisle and playfully pull a sticker off an item that the store is now in violation of the law.    

Massachusetts is alone in having three different retail pricing laws, which creates complications for store owner and consumer alike.  Dating back to 1971, the Attorney General has had an item pricing regulation (940 CMR 3.13), which predated computers and scanning technology.  This regulation was intended to ensure that store clerks working on the manual cash registers universally used at the time were not charging prices from memory, or discriminating on prices charged to one consumer versus another.  In the mid 1980's, the Legislature passed a food store and food department item pricing statute meant to create some limited exemptions from item pricing requirements for those stores implementing scanning technology.  In 1998, the Legislature passed the Consumer and Merchant Protection Act, which required state and local enforcement of 98% scanning and pricing accuracy in all stores using scanning technology.  In 2003, the Attorney General updated the antiquated 1971 regulation to allow non-food stores to not individually price all goods if they used clear and conspicuous display pricing coupled with consumer self-scanners with printers every 5000 square feet of selling space, and complied with the 98% accuracy standard of the '98 statute.

The current AG regulation, combined with the pricing accuracy statute, represents the most consumer friendly pricing law in the country.  It moved Massachusetts an important step beyond Michigan as the only states which still require item pricing in retail stores.  The consumer reaction remains positive, and the placement and usage of self-scanners in stores in Massachusetts far exceeds any other state.  Pricing accuracy has increased, and consumers are always aware of the actual selling price of any item.  Simply put, the pricing regulation that governs non-food retailers and allows for the use of self scanning technology works, and it works well.  It is now the model we should follow and apply to food stores and food departments.

The updating of the regulation did not help food stores or food departments, particularly those smaller grocery stores that are seeking to keep prices low and stay competitive in this marketplace, as they remain governed by the food statute.  In addition, general merchandise stores with food departments that have installed the new technology to comply with the regulation remain unable to use it effectively in the portions of the store with food items. 

Retail employers in Massachusetts are struggling to remain competitive with the company down the street, across the state border, on the Internet and in the mail box with catalogs.  Keeping prices low is far and away the most important factor in keeping competitive and keeping the doors open.  Due to the high cost of living in Massachusetts, it is imperative for our employers, our employees, and our consumers that we seek to remove unnecessary barriers which keep costs too high.  Antiquated item pricing requirements are one such barrier that must be modernized. 

An op-ed in the Wall Street Journal on March 10, 2007 by Professor Paul Rubin (Economics & Law) of Emory University gave the results of his survey of grocery stores in Massachusetts, Michigan, and certain municipalities in New York versus the other states without item pricing laws.  The study showed nearly a 10% difference in the cost of groceries between item pricing jurisdictions and those without those requirements.  With our best and brightest continuing to leave the state and our working families struggling to live paycheck to paycheck, requiring price stickers on most grocery items is not a requirement we can still afford to legitimately defend.  We certainly cannot defend these laws when far more accurate, consumer friendly, and lower cost new technologies exist.

RAM respectfully urges the Committee to advance reform legislation that provides item pricing relief to food stores and food departments, modeled after the non-food item pricing regulation, and we stand ready to assist you in this process.   Thank you for your consideration.