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With Massachusetts’ Blessing, All States Prepare To End Item Price Labels. It Begs The Question: What Will Price Mean?

Written by Mark Rasch
May 23rd, 2012

Attorney Mark D. Rasch is the former head of the U.S. Justice Department’s computer crime unit and today serves as Director of Cybersecurity and Privacy Consulting at CSC in Virginia.

Legislatures first enacted requirements that grocery stores and other retailers individually price items because they simply didn’t trust the barcode and other price-scanning technology. With Massachusetts the last jurisdiction set to remove such legal requirements, we are faced with a new problem. The technology is fine, but now the government doesn’t trust the retailers.

My grandfather grew up in Germany during the Depression. With hyperinflation eroding the value of the Deutschmark, he told stories of shopping several times a day and running ahead of the poor clerk with the labeling device to avoid the inevitable price increases and get the “best price.” With the advent of UPC codes and scanners in the 1970s, grocery stores could replace individual prices on each can of corn and bottle of soda with a shelf tag, which would list the price of the item to be scanned at the register. Legislatures were concerned that this would lead to inaccurate pricing at the register, because they didn’t trust the scanners to perform properly, in addition to being worried about price manipulation by retailers.

They were also concerned that such practices would disempower the consumer, who would not have the real ability to run back to the shelf each time they wanted to check a price. The Michigan legislature, for example, noted when it passed a law mandating individual pricing in 1976 that the “removal of prices from items and the reliance on a computer code as a means of pricing does not adequately permit a consumer to monitor the price.” Consumer protection organizations were concerned that the price charged at the register would not reflect the “true price” of an item, as reflected in the price stamped on that item. It was the technology they did not trust.

Over the course of some 40 years, we have become inured to the technology. Remember how awkward and out-of-touch President George H.W. Bush seemed in 1992—20 years ago—when he said he was “amazed” by the then 20-year-old technology of barcode scanners? The technology is commonplace and accepted. That is why the Massachusetts House of Representatives has recently passed H 4089, which removes the requirement that supermarkets and other retailers individually price items but does require such retailers to display and charge the “correct price.”

The Massachusetts law defines the “correct price” as the lowest of (1) the advertised price, (2) the price displayed at the store or (3) the price charged at checkout. The law also requires grocery or food stores to disclose the correct price and “All prices represented to the consumer for the same item shall be consistent with each other and the correct price.”

Great. But what is the “price” of an item? New technologies enable the prices charged, and the display of those prices, to change instantly. Ask anyone trying to purchase a plane ticket from New York to Detroit what the “price” of that ticket is.

Technology has brought us back to the where the “price” of an item can depend on supply and demand, the volatility and perishability of the product, the price sensitivity or gullibility of the consumer.

Barcode scanners are only the first step. Obviously, technologies such as RFID can enable retailers to change the price of entire grocery carts of items instantaneously. Loyalty programs enable differential prices for members and non-members. Coupons can enable for even lower prices to particular consumers. We could even have paired pricing. Buy Dole bananas and get Reddi-wip whipped cream, Hood ice cream and Hershey’s chocolate syrup 20 percent off. The shelf price, like the unit price, becomes dynamic.


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