Legal Price-Fixing Hurts Consumers

In 2007,  you would have thought I was a contestant in a year long sale snatching competition at Macy’s.  So much so, that I rose to the level of a platinum credit card holder by years end. 

prod Throughout that year, I reveled in my jaw dropping deals, especially in the children’s Ralph Lauren Polo department.  With my Macy’s 20% off coupons, I enjoyed in some instances, 80% off retail prices when I hit the right sale.  I bought my 3 and 5 year old son’s polo shirts for around $7.00 (reg. $35) and even a sweatshirt regularly priced at $75 for $18.25.  For prices like that, who wouldn’t outfit their kids in the ultra-preppy designer?

That all came to a screeching halt in 2008 and now I am beginning to understand why.  I have visited Macy’s several times over this past year with my 20% off coupons in hand ready to scoop up some more deals only to leave many times over empty handed.  It seems that my coupons no longer apply to any of the major brand name collections.

What happened?

Since 1980, manufacturers have been banned from placing a minimum price on their products.  You may have seen a MSRP price on products ranging from bread to cars, but that Manufacturers Suggested Retail Price wasn’t legally enforceable.  That is until last summer.

In June 2007, the Supreme Court ruled that certain minimum-pricing pacts between manufacturers and retailers are not necessarily illegal and such pacts should be judged on a case-by-case basis. 

What does that mean exactly?

The Supreme Court, specifically Justice Kennedy, feels that these pacts could encourage competition, resulting in higher potential profits to then promote certain brands or offer better services. 

I think I would prefer a discounted price.

So don’t be surprised if some of those brands that you have been accustomed to buying at rock bottom prices, especially on line, are no longer available. 

PG_NWHAMPTONESK_MEDPUSA_PD One such example is Nine West.  In May, the shoe company (I love because they are the only dependable brand that consistently carries size 10.5), was granted their petition to set minimum prices on their products.

Why are companies doing this?

Well aside from increasing profits, companies are afraid of tarnishing their brand’s image.  Their feeling is that the prestige of their product is reduced with each reduction below the threshold of their MSRP. 

This minimum pricing isn’t limited to just apparel and accessories.  It spans the whole of consumer goods and services.  According to the Wall Street Journal, “Consumer advocates say they are seeing the impact particularly in baby goods, consumer electronics, home furnishings and pet food.”

So now I am beginning to understand why my already over inflated favorite name brands are no longer available at such coveted prices.  I can only hope that the pendulum will swing back in the consumer’s direction. 

I’m interested to know if you have noticed this change in pricing.  Leave me a comment and let me know.

To read more about this story in today’s Wall Street Journal, click here.

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Filed under Business, Fashion, fashion blogger, Fashion Sensei, Metro Detroit, News, retail, sale, Shoes, Style

3 responses to “Legal Price-Fixing Hurts Consumers

  1. I have also noticed this. I, too used to be able to get a sweet deal on Tommy Hilfiger and Polo shirts for my son. Now, I know why I don’t have as many Nine West shoes in my closet…I used to load up on them when I could get the great deal (I love coupons!), now not so much. Sad day.

  2. stacy

    Hi there
    I think Ireland must have such company protection in any case, coupled with some retailers taking huge liberties with the exchange rate between UK Pound and Euro. There are often very sizeable differences between a Pound price quoted on a garment and the corresponding Euro amount we are expected to pay. There are very few retailers where the sales really mean, rock bottom prices. That usually only occurs when they are trying to get rid of stock or in the current climate, they are trying to get depressed and worried consumers to part with their cash for an item when they are more worried about the downturn and savings. Designer clothing is never marked down more than 20 or 30 percent, sometimes 50 percent in certain stores. We have several shops, I think like Macy’s where a variety of clothing brands are those cases, often the holding company can dictate sales discounts or come to some sort of compromise which can mean more discounts for us…but only at certain times, with certain stock and certain brands.

  3. courtneyjonesphotography

    The consumer always gets crunched. Thanks for the enlightening story.

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