WHO PAYS LIST PRICE?

Everybody Can Now Get It Wholesale

WHEN General Electric gave up Fair Trade and minimum-fixed prices for its wares last week (see Retail Trade), it belatedly recognized a basic fact of modern U.S. retailing. Nobody, or practically nobody, pays list price any more—for appliances, or for autos, furniture, cameras, jewelry, even baby buggies. As one Milwaukee retailer says: "The price tag on my merchandise means nothing."

While no one knows the percentage of total retail sales at cut-rates, merchandisers estimate that 90% of all small appliances are sold below list price, and say that cut-rate sales in other lines are growing fast. Several million young families, whose homes are from 75% to 90% stocked with possessions bought lower-than-list, buy no other way. Thus, while economists worry about the seeming paradox of price rises in the face of a general economic decline, the fact is that the prices contained in the rising Consumer Price Index are not what people really pay. Auto prices last year went up 3-9% at wholesale and 1.5% at retail according to the indexes. But customers got such heavy discounts that they actually wound up paying less than the year before.

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For the death of the old-fashioned list price, the U.S. businessman has largely himself to thank. In the days of postwar shortages, the oldtime salesman gave way to mere order-takers, who sold only on the basis of price. And since the "list price" often differs widely from store to store, customers have lost faith in quoted prices, trust only in their own ability to haggle like shoppers in an Oriental bazaar. Says Aubra Johnston of Chicago's Better Business Bureau: "The so-called manufacturer's list price is for the most part baloney. The manufacturer inflates because the retailer demands it. The retailer says he must have it because the customer wants to believe he has been given a big allowance."

Not even the discount houses had any idea that cut-rates would snowball so far so fast. To compete with low-overhead discounters, even the biggest stores run frequent "warehouse sales," "specials," "closeouts," trading at 10% above cost v. the standard 30% to 40% markups. Originally, the big stores restricted competition to a few fast-selling items; now they match discounters dollar for dollar. Brooklyn's Abraham & Straus, Los Angeles' Barker Bros., Jordan, Marsh Co. have started running almost identical ads proclaiming an old retailing slogan: "We Will Not Be Undersold." Milwaukee's Boston Store last week advertised: "Save 22% to 50% on ... famous Westinghouse appliances." Detroit's J. L. Hudson Co. now tells customers that if they can find a better bargain elsewhere, Hudson's will cut its price to match.

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