Thursday, March 02, 2006

Michigan says Wal-Mart violated pricing laws

CHICAGO (Reuters) - Michigan's attorney general said on Wednesday he was taking legal action against Wal-Mart Stores Inc. for not properly marking prices on merchandise in its stores.

Attorney General Mike Cox said the legal action was in the form of a "Notice of Intended Action," which is a necessary step before a company can be sued by the attorney general under the Consumer Protection Act.

Wal-Mart, which has been accused of improper pricing in states including California, has 10 days to make substantial compliance efforts, or be sued, Cox said in a statement.


  1. I've been following these stories on Wal*Mart for awhile. This kind of crap happens in every mass retail's all a result of human/mechanical error. I have to wonder if this really happening in specific demographics or if specific demographics are just the ones more apt to notice and complain about these issues.

    As an analyst, it is part of my job to make sure that our items are scanning correctly at the register. If there is a discrepancy, I communicate it and the price changes go into effect immediately. Perhaps Wal*Mart needs some better analysts? Ones that are more attentive to detail?

    Given the fact that the conglomerate of Wal*Mart has thousands more SKU's to manage than I do, one would expect the error factor to inflate proportionally.

    In Wal*Mart's defense (gulp, I can't even believe I'm saying this!), due to their sheer size and volume, errors are more likely to appear on the radar than in a smaller channel. All in all, mistakes happen, more often that you would know (we sold 15 rolls for -34 dollars...huh what??)...not all companies can have gifted and meticulous analysts to spot this crap I suppose.

    So maybe I'm not defending Wal*Mart...they need to hire more quality analysts, that's all!!

  2. Fore a second there it almopst sounded like you were defending Wal-mart, but I see where you are coming from on this. The bigger the organization, the harder it is to keep everything straight.

    The Michigan case is a classic "swat at a fly, swallow a camel" situation. Michigan's attorney general feels the need to fight Wal-Mart at a statewide level (and possibly build his career with a high-profile case) but he's focusing on the smallest detail instead of trying to solve other, more glaring legal problems that need to be fixed more with them.

  3. Are there any/many national chain stores that still price merchandise on the merchandise?

  4. There are a handful of chains that still mark each piece of merchandise, but the numbers are dwindling. Generally, the more upscale the store, the more likely the item will have a price label.

  5. Steven--don't you mean the more upscale the store, the less there will be price labels? It's a lot cheaper to use stickers than to electronically track everything.

    There's a chain around here called Marc's that hand-stickers everything, and then hand-keys in all the prices at the register. Hello inventory control issues!! How on earth do you track in-stocks, fill-rates, and turnover that way??

    All their stats must be based on shipped vs returned, but there's huge fudge factors involved there...mis-ships, theft, shoplifting, damaged goods, returns...

    I'm a retail information nightmare today...I'll shut up now, I swear!

  6. Carrie,

    Thats interesting stuff! You've got a lot of business knowledge.


  7. I remember my first job was at a Rite Aid.(in 1983) Everything had to have a sticker on it, down to each pack of gum. I remember on truck day spending hours in between customers, hand pricing everything....but this was before scanners and things being priced electronically as Carrie mentioned. It is rare anymore for me to find a store that has anything priced. Usually, if found at all, I'll find that sort of pricing in a mom and pop shop.

    I just found it interesting that they would nit pick this particular law in this day and age when most stores price electronically, and then have a price listed on the shelf. Problem usually occurs because a store doesnt straighten shelves or put things back in the right place again....hince giving the allusion of one price when the product doesnt belong there. Sounds like perhaps a chance for Michigan to update their law perhaps.

  8. Carrie: No, you read me right the first time. You have a point in that a lot of smaller operations do track everything by hand like Marc’s. That has got to be a nightmare at inventory time, I agree.

    But most of the middle market and extreme value retailers of any size have shifted to POS and shelf labeling. Most times when you see individual item tags in those stores, they were manufacturer applied or basic informational labels, like the little green tags Wal-Mart uses sometimes, or Target’s clearance tags.

    As you shift into the upmarket stores, there is very little shelf labeling. For example, Neiman Marcus merchandise tends to be individually marked, with few, if any, shelf or rack labels concerning price.

    Ken: She’s pretty cool, ain’t she :-)

    Muddy: I’m on Wal-Mart’s side on this one, for the points you mentioned. It’s hard to keep all those shelf labels straight. Though I sympathize with the frustration of grabbing an item and having it scan differently, they’re fighting a losing battle at the store level. It’s hard to find good help at those wages and most sales associates just don’t care about housekeeping at stores like they used to. That said, they need to be as diligent as possible at the store level to mitigate this.

    I think this case is clearly a career builder for Michigan's attorney general :-(

  9. Steve, I have to agree with you. There are many things wrong at Wal-Mart; the proper marking of prices isn't the most pressing issue.