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What ever happened to price tags?

Esther Shapiro
Esther Shapiro

Eighty-nine-year-old Esther Shapiro once ran Detroit's office of consumer protection. She's been out of politics for a while, but she still fights almost every day for what she says is a fundamental consumer right -- the right to see price tags on cereal, bread, spaghetti sauce and everything else in grocery stores.

It's a battle she might be losing. Price tags once were mandatory for most grocery stores. Now just few states require them, and they seem destined to go the way of drive-in movie theaters and ice cream fountains.

Knowing how much something costs is pretty basic to shopping, and to fairness. Clear price tag labels -- whether on a jar of spaghetti sauce at a grocery store or on an automobile at a car dealership -- are essential to comparison shopping. And yet, price tags have all but disappeared, Shapiro says. That's why she goes on her weekly shopping trips and makes her stand.

Shapiro does her shopping in Michigan, one of the last states to require price tags on every item in grocery stores, and still makes a lot of "bonus" money doing it. She often finds price tag mistakes on bread, milk, cereal and everything else in grocery stores. In Michigan, state law grants consumers a "bonus" of 10 times the difference every time they spot a price tag error, up to $5. So stores get nervous when Shapiro arrives.

"When I feel like enhancing my income there's always one store I shop at," she says. "They just look at me and pull out the money."

The extra cash is nice, but Shapiro says this isn't really about getting her bonus money. Consumers need price tags to make sure they're not getting cheated at the checkout, Shapiro says.

"It's the nibbling away of those dimes and dollars over a period of time," she says. "It's not pennies. It adds up to a lot of dollars over the years."

Price tag laws ignored

Michigan's item pricing law has been under attack from retailers for years, as is a similar law in Massachusetts. Scattered counties in New York state also require price tags, but beyond that, most states now allow generic shelf price labels.

Retailers much prefer the shelf tags. The practice of pricing and repricing items is labor intensive – and so expensive that some retailers ignore it altogether. Last year, Walmart agreed to pay a $1.5 million settlement after Michigan Attorney General Mike Cox alleged the company didn't have price tags on 80 percent of its items in some stores. Home Depot settled a class-action item pricing lawsuit in Massachusetts by paying $3.8 million in 2002. The Boston Globe reported last year that B.J.'s Wholesale Club had been fined for missing price tags every single time an inspector walked into a store in the preceding three years.

Esther Shapiro
Esther Shapiro

Some retail stores consider such fines merely the cost of doing business, says Edgar Dworsky of ConsumerWorld.org. He was an assistant attorney general in Massachusetts during the 1990s and wrote that state's item pricing law. Rather than comply with price tag laws, retailers have pressured state legislatures to drop them, he said.

Such efforts have successfully chipped away at the item pricing laws in Michigan and Massachusetts. There is a wide swath of exemptions for grocery stores -- items on end-of-aisle displays and frozen foods don't need price tags, for example. In Massachusetts, stores can exempt entire classes of items, such as gum or soda.

Bills introduced in the last legislative session in Massachusetts would allow stores to switch to shelf labels, and exempt stores from class-action consumer lawsuits. Other laws allow stores to drop price tags if they install self-service scanning machines.

That might seem like a reasonable alternative to pesky price tags, but those devices don't work as well as advertised, Dworsky says, largely because many stores fail to keep them operating. A July 2004 survey conducted by Consumer World found that three out of four price scanners failed to comply with Massachusetts regulations. When the state Division of Standards did a similar study in 2005, 10 percent of the machines didn't work at all.

"The truth is, every time you lower the standards for these stores, they perform even lower than those new standards," Dworsky says.

Generally, retailers say the cost of putting price tags on items is prohibitive and hurts consumers through higher prices. A study by economics professors from the University of Minnesota, Cornell and other schools in 2004 puts the cost at 25 cents per item. That's hardly worth the savings of catching the occasional overcharge from mispriced items, the argument goes.

Beyond catching errors

But price accuracy is only one benefit of price tags, Dworsky says. Without price tags, consumers who don't have photographic memories simply can't comparison shop as they wander around a store. Is the jar of spaghetti sauce near the checkout cheaper than the one they already picked up in aisle seven? Who would know? Without price tags, what consumer is smart enough to add up the price of the items in their cart to see if they've got enough money? Price tags also lead to price awareness after consumers bring their groceries home. That box of cereal in the cupboard says it's $3.29, so why is it now $3.49?

But even more basic than that, Shapiro says, is the problem posed by shelf label confusion.

"Items move around," she says. And sometimes, it's hard to know what price goes with what item. Item abbreviations on shelf labels are often written in tiny print, with cryptic abbreviations that are confusing.

"And stores work hard to divert you from thinking about what you are buying, by playing music, distracting you," Shapiro says. "If you aren't given the price … it's very hard to concentrate on getting your money's worth."

Confusion, of course, is good for stores and bad for consumers. A confused customer, particularly one who's in the dark about the cost of an item, will always spend more in a store. Why then, do so few people seem to get upset about the end of the price tag?

"There is a generational gap there," Shapiro says. "Senior citizens were brought up to watch these pennies," but today's generation is not nearly so price-focused, she says.

Could technology save the day?

The death sentence for the price tag will really arrive the day that Universal Price Code bar codes became, well, universal. They eliminate the retailer's need to label items with prices. Items are labeled, of course, but only in a language a computer understands. And there lies, perhaps, a bit of hope for both Shapiro and the younger generation.

Stores are already beginning to implement tiny radio-broadcasting computer chips called RFID for inventory control. Eventually, these will replace UPC symbols as a means for telling store cash registers how much to charge. If RFID is implemented correctly, consumers will have ready access to scanners -- perhaps even on their key chains -- with pricing information. Once the data is received, a small computer could make a whole host of additional information available to consumers. That could ease price comparisons, total price calculations and even coupon management.

Or RFID could be implemented without consumer input and make item pricing even more confusing for consumers. Shapiro is worried about price tags disappearing, not with a bang, but with a register-scanner beep.

"The basic right of consumers (is) to know what things cost," says Shapiro, vowing to continue her price-tag quest. "How do you make your choices if you aren't given that information?"