Loss Leader law / wal-mart sale... what's the scoop?

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TAsunder
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Loss Leader law / wal-mart sale... what's the scoop?

Postby TAsunder » Fri Nov 02, 2007 9:04 am

Wal-mart has a nation-wide sale where you get a big discount on some items. For example, an HD-DVD player (HD-A2) for $98.

But the text says the price may be higher in WI. I called wal-mart and the price is $185. That's because of the loss leader laws that prevent selling for a loss to entice customers to shop and to undercut competition.

But the item is also $99 at best buy (out of stock).

So why would the law apply in this case? What exactly are the circumstance when it does? Seems like if your competitor is already selling it for the same price, it should be fine.

My guess is that it's just a corporate policy not to sell for less than cost at any time for any item in those states...

TheBookPolice
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Postby TheBookPolice » Fri Nov 02, 2007 11:33 am

My understanding of that law was that retailers couldn't advertise at-a-loss sale pricing. How else to explain the sales on the day after Thanksgiving?

O.J.
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Postby O.J. » Fri Nov 02, 2007 11:44 am

Certain states have laws against loss-leader sales, others don't. In Wisconsin, this is covered under the Unfair Sales Act, most notably with the minimum markup on gasoline.

http://www.datcp.state.wi.us/trade/busi ... es_act.jsp

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Postby TheBookPolice » Fri Nov 02, 2007 12:24 pm

the lawmakers wrote:Exceptions to the law are made to allow for matching a competitor's price...

So let's reconcile this with Black Friday sales.

At-cost price is X.
Retailer 1 wants to sell it at X-50.
Retailer 2 wants to sell it at a reduced price, but can only go as low as other retailers.
Retailer 2 contacts Retailer 1 to determine sale price.
Retailer 2 marks their product at X-50.95.

This is basically what the minimum markup law requires. How is this not price fixing?

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Postby O.J. » Fri Nov 02, 2007 1:16 pm

TBP, I'm not positive, but this may be an example of Price-Filing, which has been deemed legal if the actions aren't undertaken as a means to restrict trade and ultimately raise consumer prices(the main litmus test for price-fixing).

Section C in the link below addresses this somewhat.

http://www.oldandsold.com/articles11/di ... n-33.shtml

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Postby TheBookPolice » Fri Nov 02, 2007 2:38 pm


TAsunder
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Postby TAsunder » Fri Nov 02, 2007 3:29 pm

TheBookPolice wrote:My understanding of that law was that retailers couldn't advertise at-a-loss sale pricing. How else to explain the sales on the day after Thanksgiving?


Those are "advertised" with fliers though, aren't they?

In this case, though, it would make sense. Wal-mart advertises $98 for the hd-dvd player but doesn't sell it for that in WI, UT, OK. Best buy charges $99 but isn't advertising that (to my knowledge).


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