Joe Rinzel: Wisconsin’s minimum markup law is prime for reform
We’ve witnessed another Amazon annual Prime Day — which offered deeply discounted products to shoppers around the world — but could it be illegal in Wisconsin? While that’s uncertain, what is clear is that Prime Day highlights the absurdity of the state’s minimum markup law, which unfairly puts traditional retailers in Wisconsin at a disadvantage by prohibiting them from offering the same bargain prices as online sellers.
Wisconsin can trace the roots of this antiquated law back to the 1930s, when the Great Depression prompted state lawmakers to look for ways of buoying local businesses. The result was the passage of the Unfair Sales Act — better known as the minimum markup law — which forces sellers to maintain artificially high prices. By forbidding retailers from selling goods at below cost, the government hoped it would keep competitors from undercutting one another.
But instead of fostering competition and keeping businesses afloat as originally intended, today the minimum markup law discourages businesses from opening up and offering attractive prices. When grocery chain Meijer tried to open stores in Wisconsin in 2015, it was met with complaints filed to the Department of Agriculture, Trade and Consumer Protection for offering prices deemed “too low.”
Minimum markup does not just keep large businesses from opening up shop in the Badger State. Businesses of all sizes continue to struggle with this law. A study analysis of Wisconsin and the other 14 states with similar laws found the presence of a minimum markup does not increase the number of small businesses in a state. While the law was intended to bolster business, Wisconsin retailers are paying the price.
Of course, consumers are paying, too, as the law forces artificially high prices for items on store shelves. This means shoppers in Wisconsin cannot take advantage of “doorbuster” sales, such as those commonly found on Black Friday, because retailers can’t offer the same deep discounts as they can in most other states. For families on a budget, this may mean driving to Minnesota or Illinois to benefit from these deals.
In a modern economy that places a premium on convenience, this Depression-era relic no longer works. Today, consumers can just as easily shop online as they can at their nearest convenience store — illustrated by the 100 million products sold during this year’s Prime Day alone. Many traditional brick-and-mortar retailers in Wisconsin are struggling to compete with online shops and this is even harder when they barred from offering splashy sales.
Even beyond Amazon, though, the marketplace for buying and selling is increasingly taking place online, putting brick-and-mortar retailers at a distinct disadvantage. E-commerce spending jumped <&underline>16 percent</&underline> f rom 2016 t o 2017 alone, and is poised to make an even larger leap this year. Traditional Wisconsin retailers should not be hamstrung by outdated regulations that online sellers do not — apparently — have to abide by.
As our economy continues to undergo a dramatic digital transformation, it is critical that Wisconsin’s leaders look for opportunities to help struggling Main Street retailers compete alongside Internet sellers and grow in their communities. By jettisoning antiquated minimum markup rules, state lawmakers can take an important step toward leveling the playing field and helping Wisconsin businesses compete in a changing retail landscape.