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Meijer recently opened stores in Wisconsin, and they’ve gotten in some trouble with the state for selling products at prices that are too low.
“Too low?” I know what you’re thinking, but in Wisconsin, selling loss leaders is against the law. Loss leaders are products sold below cost to attract customers to the store in the hope that they buy more products in the same shopping trip.
It certainly makes some sense, which is why it's illegal in about half the states in the country. Loss leaders benefit large corporations and penalize small businesses in the marketplace, encourage local monopolies, etc. Is there no limit to laissez faire for some of you? We're already in the time of the greatest divide between wealth/poverty in the country since the depression, how exactly is repealing loss leader laws going to benefit our local economy, Wisconsin-based companies, small businesses, etc.? Or do you just want to pay a few cents less for salsa and FTW? That is, until smaller companies are bullied out of the picture and those loss leaders are no longer necessary....
It certainly makes some sense, which is why it's illegal in about half the states in the country.
Wrong -- it's illegal across the board in exactly one state, and I'll let you guess which one.
Quote:
Originally Posted by cheese plate
Loss leaders benefit large corporations and penalize small businesses in the marketplace, encourage local monopolies, etc. Is there no limit to laissez faire for some of you?
I don't think it's unreasonable to let retailers determine the asking price of the goods they're selling.
Quote:
Originally Posted by cheese plate
We're already in the time of the greatest divide between wealth/poverty in the country since the depression, how exactly is repealing loss leader laws going to benefit our local economy, Wisconsin-based companies, small businesses, etc.? Or do you just want to pay a few cents less for salsa and FTW? That is, until smaller companies are bullied out of the picture and those loss leaders are no longer necessary....
Newsflash: small businesses use loss-leader pricing too. It's one of the oldest marketing strategies in the history of marketing.
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Quote:
Originally Posted by cheese plate
It certainly makes some sense, which is why it's illegal in about half the states in the country. Loss leaders benefit large corporations and penalize small businesses in the marketplace, encourage local monopolies, etc. Is there no limit to laissez faire for some of you? We're already in the time of the greatest divide between wealth/poverty in the country since the depression, how exactly is repealing loss leader laws going to benefit our local economy, Wisconsin-based companies, small businesses, etc.? Or do you just want to pay a few cents less for salsa and FTW? That is, until smaller companies are bullied out of the picture and those loss leaders are no longer necessary....
This. They are used to crush the little guy and stifle competition.
Quote:
Originally Posted by Drover
Newsflash: small businesses use loss-leader pricing too. It's one of the oldest marketing strategies in the history of marketing.
Yup, and those businesses really can't absorb the cost like the big guys. We need more competition, not less.
Yup, and those businesses really can't absorb the cost like the big guys. We need more competition, not less.
Exactly!
And 22 states have loss-leader laws: Arkansas, California, Colorado, Idaho, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Montana, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.
That would be nearly half the states in the country.
This. They are used to crush the little guy and stifle competition.
I suppose that's true, if you believe the only value a business has to offer is lower prices through higher volume. Small businesses can still compete in the marketplace through such means as specialization, better/higher quality product, emphasis on customer service/satisfaction, civic engagement, stressing community roots, etc.
Loss-lead pricing is primarily used to increase business volume. Last time I checked, businesses were allowed to use marketing strategies to increase their volume, even if that means they take away volume from competitors. That's the very nature of competition.
Quote:
Originally Posted by timberline742
Yup, and those businesses really can't absorb the cost like the big guys. We need more competition, not less.
Oh yeah, that's right. We need more competition and we're going to achieve that by stifling competitive business practices. We need to keep prices higher to encourage competition to keep prices lower. I guess.
Quote:
Originally Posted by cheese plate
Exactly!
And 22 states have loss-leader laws: Arkansas, California, Colorado, Idaho, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Montana, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.
That would be nearly half the states in the country.
Some of these states may have laws against selling certain crucial commodities below cost such as gasoline. None of them have laws that cover almost all retail sales like Wisconsin does.
So - a monopoly is good for the economy. Sounds good I guess, but goes against everything I ever learned via my business degree and everything I've gleened in the decades since. Certainly a monopoly is good for the monopolizer, and every large business kinda works toward that end, but it's poor for everyone else.
If you really think that eliminating these laws will equally benefit both small local businesses and large corporate entities, well, I hope no one is currently relying on your economic acumen.
So - a monopoly is good for the economy. Sounds good I guess, but goes against everything I ever learned via my business degree and everything I've gleened in the decades since. Certainly a monopoly is good for the monopolizer, and every large business kinda works toward that end, but it's poor for everyone else.
If you really think that eliminating these laws will equally benefit both small local businesses and large corporate entities, well, I hope no one is currently relying on your economic acumen.
If that's what you got out of my post, you need to re-read it. Or just read it, period, becaause I make none of the assertions you attribute to my post.
Please provide one example of where loss-leader pricing has led to anything close to a monopoly in what was previously a competitive marketplace.
If that's what you got out of my post, you need to re-read it. Or just read it, period, becaause I make none of the assertions you attribute to my post.
Please provide one example of where loss-leader pricing has led to anything close to a monopoly in what was previously a competitive marketplace.
I am struggling to think of many metropolitan areas where there are grocery monopolies. My initial thought was Kroger's control over the Cincinnati market after Winn-Dixie (Thriftway) closed their stores. However, Meijer's, Aldo, Walmart and a couple of smaller competitors are keeping Kroger's in check.
Loss leaders and other low pricing keeps a lot of low and moderate income families able to afford their food.
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