Evening star. [volume] (Washington, D.C.) 1854-1972, 1954-07-25

are tossed about whenever q fair
trade law is sought. Opponents call
it price fixing" and monopoly"
But what is fair trade. actually?
It is simply q method Of guaran-
teeing that the consumer may buy
reputable, well-known merchandise
from responsible retailers at the low
est price commensurate with sound
economic practices.
It works like this: The manufac-
turer of a "name-brand" article
which is selling in q competitive
market determines the best possible
price at which his product can be
soda price which will cover the
normal costs of getting the product
to the buyer, which will give the
manufacturer and the average
efficient retailer small prcflt-and
which at the same time will meet
the competition.
Price Must Be Low
II the product is a good enc and
the price Is right, it will provide
return to the manufacturer which
encourages him to improve the
product and which encourages both
manufacturer and retailer to pro-
mote the product vigorously. The
consumer benefits by being offered
wide selection Of high quality,
competing products. sold by retailers
who stand behind their merchandise
and offer the services consumer
has . right to demand.
The price, incidentally, must be
low. AS Justice Brandeis pointed
out In indorsing fair trade. "the
independent producer Is engaged in
business open to competition. He
establishes the price at his peril
the peril that. If he sets 1t too
high, either the consumer will not
buy. or. If the article Is nevertheless
popular. the high profits win invite
even more competition"
Fair-trade laws are not new. Cali
fornia has had such law since
1881. England has had them even
longer. They are popular wherever
enacted. They obviously fulfill a
real public need.
Maryland and Virginia are among
the fair-trade States. But the Dis
trict of Columbia, operating under
foreign" government on Capitol
Hill, lacks such q law. The result
Is growing chaos in the local retail
field and threatened chaos in the
As fair-trade States. For price,
juggling firms are opening Washing
ton Offices with the avowed purpose
of sabotaging State fair-trade laws
through mail-order sales.
DwindIine Outlets
The picture that meets the Dis
trict customer today Is one Of mis-
leading selling practices among the
price-manipulating stores and a
dwindling number of reputable
brand-name products in q dwindling
number Of retail stores.
The pricing practices of the cut
rate stores must be misleading for
simple reason. They must pre-
sent the impression that all their
merchandise is sold near or even
below wholesale prices. But at the
same time their prices must be high
enough to cover an overhead-plus-
profit which varies little from store
to store. So they advertise we'll
known products for amazingly low
rates and make up the losses with
inflated prices on other goods un-
loaded on the unwary buyer.
AS matter of fact, the we'll
advertised bargains" are designed
especially to lure the consumer to
o store where he ordinarily would
not trade. The bargain Is called a
'1oss-leader." The seller is willing
to take loss on it because he is
confident he can sell other higher
priced merchandise to the buyer
before he leaves the store. The
buyer Is stung on his total purchases.
But that's only half the story
The cut-rate store uses the most
popular. best-known products for
loss-leaders. But the reputable mer-
chant cannot meet the loSs-leader
price and maintain his other low
prices. so he discontinues the sacri-
feed brand. Soon only the cut-rate
stores carry the product. Sales fall
of. so the manufacturer stops push
Ing his product in the area. Then
the price-cutter, who lives on the
advertising and brand promotion of
the reputable merchant and manu-
facturer. finds that the product no
longer has loss-leader value, so he
drops It,
The consumer. as result, loses
his chance to buy q needed, reliable
product.
The Sunbeam Story
This is not just fairy story. It
Is happening in Washington today.
Take the case of Sunbeam, maker
Of Mixmasters. Shavemasters, Toast
masters. etc. Price cutters here have
used those well-known products as
loss-leaders, selling the Shave
master. for instance. with only
5 per cent markup, although the
fair-trade markup is 80 per cent.
A retail store cannot break even on
as per cent markup. Merely to
cover the cost Of staying in BUSH
ness. a markup, according to several
Nationwide surveys. must be around
IS per cent. This figure varies little
from store to store. So q seller who
Is willing to take a substantially
smaller markup on one item must
recover his losses on another-or
60 out of business.
Large department stores here do
not want to juggle their prices. so
they have dropped Sunbeam prod
ucts or have kept only one or two
appliances on hand for special de-
mand. Sunbeam products normally
would have GOA outlets In Washing
ton. But today 20 discount and
loss-leader houses account for 90
per cent Of the dwindling sales