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. Read on…
A new retailer opening stores across Wisconsin this summer is offering prices on some products that its competitors cannot match, because by doing so they are breaking an obscure state law that sets minimum prices on everything from groceries to gasoline.
Likely in an attempt to break into the new market, Meijer is allegedly advertising and selling products for less than cost. In Wisconsin, however, that practice is illegal under the Unfair Sales Act – also known as the minimum markup law.
The violation, if true, could result in Meijer being fined per infraction for engaging in an action that state statutes call “deceptive” and “unfair.”
“The practice of selling certain items of merchandise below cost in order to attract patronage is generally a form of deceptive advertising and an unfair method of competition in commerce,” the statute reads.
A good example of the problems caused by this law is plainly seen in Walmart’s popular $4 generic prescription drug program. While the large retailer offers low-cost medication to its customers nationwide, Wisconsinites have to pay more for certain prescriptions thanks to the minimum markup law.
In every other state, businesses are allowed to use below cost sales as a competitive tactic to attract customers to their businesses.
hwendt12 says
Interesting! I wonder if Walgreens is gonna get in trouble, too? They always have loss-leaders in their ads, especially back to school supplies! Hmmmm….