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Some Grocery Products Are “Price-Fixed” Preventing Deep Discounting

groceriesThis week we reveal a dirty little secret in the grocery business.

We’re in the midst of a nasty period of inflation putting pressure on many families’ grocery budgets. But in some cases, the problem is being exacerbated because of a little-known manufacturers’ policy that prevents stores from deep discounting certain products.

First, a little history. When MrConsumer was a teenager, he remembers going to wholesale showrooms with his mother to buy CorningWare at 40% off. You could not get a discount at retail stores in New York because that brand was “fair-traded” — meaning that it had to be sold at full retail price.

Those days are gone, but the concept lives on in modified form under the retail concept called “resale price maintenance” (RPM). For years, high-end products like Sony, Apple, or Bose commanded (and still command) premium prices and are rarely advertised at deep discount. These brands are likely subject to “MAP” — minimum advertised prices. That is a related pricing scheme allowed by federal antitrust law [see pages 3-7] that permits a manufacturer to unilaterally “announce” the lowest price at which it will allow its products to be advertised. Retailers who violate “MAP” could lose out on advertising funding (co-op ad dollars) or be cut off as a distributor of the brand. However, mandatory minimum pricing contracts between manufacturers and retailers while no longer per se illegal, risk legal challenge.

In many court cases, MAP was justified in part because it was applied to sophisticated products that required salespeople at department stores to educate shoppers about the benefits of the particular brand, and the employment and training of these workers was a costly proposition. MAP gave retailers more margin to afford those extra expenses.

MrConsumer has long suspected that MAP had crept into the grocery business, where supermarkets were expected not to advertise certain famous brand products below a floor set by the manufacturer and certainly not be used as a loss leader to build store traffic.

Take this example of regular liquid Tide in the 92 oz. bottle. During early November, checking some supermarket and retail ads around the country, the price was never advertised below $11.95 (give or take a few pennies) except when it typically came with a retailer-supplied manufacturer’s $3 off coupon offered directly to customers. In that case, the price was never advertised below $8.95.

Tide from Amazon
Tide in three stores

How is it that all these independent sellers serving different parts of the country have identical sale prices and not one of them is lower? They are certainly not allowed to conspire with each other. So Tide had to be subject to MAP, I speculated. But how to prove it? Then along came Sam’s Club with the smoking gun.

*MOUSE PRINT:

Tide Sam's Club

There it was in black and white — Sam’s Club disclosed that Procter & Gamble, Tide’s manufacturer, had prevented it from advertising their price for this Tide product (a warehouse size) because their price was lower than the minimum price they were allowed to promote.

Gotcha!

We wrote to P&G to confirm this, and asked some very pointed questions. How do they justify applying MAP to grocery items (since there are no high-priced salespeople in store aisles needed to educate shoppers)? What other P&G products are subject to MAP? How common is MAP in the grocery business? And much more.

P&G has not responded despite multiple requests.

We believe that Tide and P&G are just the tip of the iceberg. The question is which other major consumer products manufacturers are preventing retailers from advertising deep discounts on grocery products at a time when shoppers’ budgets are being increasingly strained by inflation?

What are your thoughts? Should manufacturers be able to dictate sale prices to stores thus limiting discounts?

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Partially-Filled Movie Candy Boxes Case Settled

Back in 2017, we showed you how those outrageously priced boxes of candy you get at movie theaters were only partially filled. (See original story). It is called “slack fill” when packages have nonfunctional empty space in them to give the consumer the impression that the package contains more content than it actually does.

Rossen Reports Movie Candy

Now, four years and several lawsuits later, a settlement has been reached. If you bought a cardboard box of Raisinets®, Buncha Crunch®, Butterfinger Bites®, Tollhouse Semi-Sweet Chocolate Morsels®, Rainbow Nerds®, SweeTarts®, Spree®, Gobstopper®, Sno-Caps®, and Runts® candy between February 9, 2013 and September 23, 2021, you are entitled to an up to $8 refund (50 cents per box).

The deadline for filing a claim is December 27, 2021.

Going forward, the settlement requires Ferrera (the manufacturer of most of the products in question) to fill a larger percentage of each package or provide some other statement on the box regarding the amount of candy inside.

*MOUSE PRINT:

Each of the Ferrara and Ferrero Defendants may choose, in their sole discretion, the specific measures to take to achieve these aims, which may include, for example: (i) including an actual size depiction of an individual piece of the Covered Product’s candy accompanied by the term “actual size” on the product label, (ii) providing a fill line on the product label, (iii) targeting a fill level for the packaging that, measured from the top of the candy, with carton sides held rigid, would be higher than the current fill level, provided that such fill level does not interfere with the functioning of any container reseal mechanism; or (iv) including any other label statement or image, in addition to the net quantity of contents statement, that provides a piece count, volume or amount.

Of course, leaving the remedy of how to correct their past practices to the company itself may result in the least effective method to benefit customers.

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Thanks for Nothing — Fall 2021

We continue our series of little annoyances about ads and offers that are often real head-scratchers and might make you chuckle.

Example #1 — $10 Off at Amazon

MrConsumer recently received an email from Amazon with a genuinely great-sounding offer that promised $10 off if you tried their delivery service that sends your order to a pick-up location rather than to your home.

Amazon $10 off

The email had a time-stamp of 6:21 p.m. Coincidentally, I was checking email when the offer came in and immediately clicked the “Claim $10 off now” button. The result:

Offer over

What? Offer over? It arrived in my mailbox less than a minute earlier.

*MOUSE PRINT:

Offer limited

So this was a speed test? I had to click even faster than less than a minute after receipt? Thanks for nothing, Amazon.


Example #2 — Pants Under $5 at Gap

It looked like such a great deal — a pair of Dockers slacks for less than $10 and with a coupon, the price came down to $4.97. Who could resist? The disclosure at the bottom of the ad killed the deal.

*MOUSE PRINT:

Gap pants deal

What? Order the pants in October but they won’t arrive until February … if you’re lucky? Thanks for nothing, Gap.


Example #3 — Advertorials Fool Google News

When searching Google News for consumer stories one expects to find legitimate consumer news. But, here’s an excerpt from one recent search.

Google News

*MOUSE PRINT:

All three of these “stories” appeared at local newspaper sites around the country but are really advertisements for keto and CBD pills masquerading as reviews of these products. They were able to fool Google’s algorithm that presumably tries to distinguish between bona fide news and advertisements. (And if you think Bing is any better, think again.) Thanks for nothing, Google (and Bing).


Example #4 — Proof Apple Products Are Overpriced

Apple products tend to be very expensive whether it is a new iPhone for over $1,000 or one of their new laptops just unveiled last week for about $2,500. Also introduced was this polishing cloth said to be good for cleaning all Apple display screens.

Apple cloth

Of course, you should only use genuine Apple accessories with your Apple products. And at “only $19,” imagine the profit that Apple is making on this schmatta (Yiddish for “little piece of cloth or rag”). Thanks for nothing, Apple.


Example #5 — Hanukkah, Passover, It’s All the Same

Speaking of Yiddish, for some people, it is hard to keep all the Jewish holidays straight in their mind. But those folks are the last ones who should design Jewish-themed products or advertise chazarai (Yiddish for “junk”) like this on a national website.

chazarai pillow

Thanks for nothing, Bed, Bath & Beyond and Designs Direct. But do enjoy Hanukkah in December, and Passover (“why is this night…”) in April.


If you find an example of an offer suitable for our “Thanks for Nothing” series, please email it to edgar (at symbol) MousePrint.org . Thanks.

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