Merchandising: Stamps: Taking a Licking

In the housewives’ assault on the high cost of food, one item at the check-out counter has become a highly visible target: trading stamps. Trouble for the $1-billion-a-year industry is coming from all directions.

The Federal Trade Commission has begun an investigation of the role stamps — as well as their trickier cousins, prizegiving promotional games — play in food prices. California’s Governor Pat Brown last week promised to help the F.T.C. by sending along a new state wide study that, he says, indicates that the gimmicks cost shoppers “at least a week’s groceries a year.” New York City Commissioner of Markets Sam uel Kearing Jr. called for an end to stamps altogether; this, he claimed, would reduce grocery bills by 2% to 4% . Esther Petersen, President John son’s special assistant for consumer affairs and a voluble champion of the recent grocery-store boycotts, seemed to be leading the anti-stamp cheers.

“You’re starting to see food ads with price competition in them instead of just stamps and games,” she said.

Confusing the Stories. On the shop pers’ level, the anti-stamp crusade has grown even more spirited. Last week, 100 women and children gathered in an Anaheim, Calif., stadium for a “stamp burning” and fed a bonfire with super market bingo tickets, game cards and trading-stamp books — though most of them were empty.

California’s Blue Chip Stamp Co. got singed in quite another way. A suit against Blue Chip by 11,000 gas stations, charging the company with misrepresentation and monopoly, hit the headlines simultaneously with news on the failure of another stamp outfit, Thrifty Green. Confusing the stories, women stormed Blue Chip redemption centers in the unwarranted fear that their stamps would soon be worthless. The run at one Sacramento center was such that security guards had to hold off the mobs while a fresh supply of merchandise could be trucked in.

Ready to Drop. Because stamps are a nuisance to handle—and cost about 2% of sales—many retailers are happy to give them up when the competition does. The Georgia Association of Petroleum Retailers says that the percentage of stamp-giving filling stations in the state has fallen from about 35% to less than 25% over the past six years. In some Florida markets, 80% of the stations have abandoned stamps.

The pressure is beginning to show up on the stamp companies’ books. Early in the year, the Trading Stamp Institute had predicted a 5% to 7% increase in stamp sales for 1966. But Sperry & Hutchinson Co., whose Green

Stamps account for about 40% of the industry’s business, two weeks ago announced sales up 2% for the first nine months, to $248 million. That statistic does not reflect much of the current anti-stamp furor; many retailers who might be inclined to drop them are unable to do so until contracts expire.

Starting to Fight. Understandably alarmed, the industry has begun to strike back. S & H President William S. Beinecke said that it was “irresponsible” to suggest that the elimination of stamps “would result in a reduction of prices” and laid the blame on “strong inflationary pressures” in the economy. Elton F. MacDonald’s Plaid Stamp company of Dayton said that “the cost of trading stamps has not gone up one iota.” Clarence G. Adamy, President of the National Association of Food Chains, protests that “when we moved into stamps, we didn’t increase our prices. We just promoted like hell to make up the cost in expanded markets.”

The cost of stamps and games obviously does affect food prices—but not nearly so much as the present outcry would suggest. A Department of Agriculture study showed that prices in stamp-giving stores averaged only three-fifths of 1% higher than in non-stamp stores; the study also observed that “consumers who redeem the stamps can more than recoup the price differential.” While that might be a disputable generalization, it does seem certain that when compared with such factors as higher wages and shrinking farm surpluses, trading stamps have been insignificant in the 4% rise in food prices over the last twelve months.