EXHIBIT II PERCENTAGE COMPARISON OF AVERAGE B.LS. FOOD PRICE INDEXES FOR 15 STAMP 3-Atlanta, Bothmore, Boston, New York, Philadelphia, Pittsburgh, Scranton, Cincinnati, Cleveland, Detroit, Houston, Kansas City, Minneapolis, St. Louis and Portland 2 Washington, DC. Chicago, Los Angeles, San Francisco and Seattle MON STAMP EXHIBIT III Albert Haring Wallace Q. Yoder PRICE OF REGULAR GASOLINE AT STATIONS EXHIBIT IV PRICE OF REGULAR GASOLINE IN RURAL AREA FILLING STATIONS NON STAMP STATIONS (2) ko stoop colity was erbert during the 1947-5h period in Chinago and Washington in the food field and for Chicago, Washington and Hew York Straps and dy dots and geantal merchandise Fiction are Detroit Boston Minneapolis Rochester and Denver far foods and he foregoing five cities plas 15:00 and viduston for drugs and dry goods and general merchandise Special Tabletion by Chun & Bradstreet. Inc EXHIBIT VII VALUE TO CUSTOMER OF 1200 SEH GREEN STAMPS, 1956 Mr. ANFUSO. Thank you very much. I am afraid there will not be too much time for questioning if we are going to listen to the other witnesses. Mr. COOLEY. Suppose you have two drugstores in a rural area. One of them uses stamps, the other does not. The second store, realizing the competition is too keen, starts using stamps, so both are using stamps. Where is the value to anybody? Mr. PHILLIPS. The answer to that, sir, lies in the fact that the pulling power of the stamps varies just as the pulling power of other promotional things vary. In other words, those two stores could not be offering the same kind of stamps. Mr. COOLEY. Why? Mr. PHILLIPS. Because the stamp company would not let them both use the same kind, if they were competitors. This is just like a newspaper. It cannot sell the same place space to two different rent competitors. There is only that one space available for sale, and therefore, trading-stamp companies offer their services to people who are in competition. And the whole impact of the trading stamp is that two people who are not directly in competition could not offer exactly the same thing. One would have one kind of stamp; the other would have another kind of stamp. Mr. COOLEY. What is the real value of the trading stamp in our distribution system in this country? Mr. PHILLIPS. I think the major advantage of the trading stamp is, as I suggested here, that it is an important way a retailer has, as in many other things, to attract people to his store. That is the key thing which the trading stamp does. If it fails to do that, it is of no value to him. Just like advertising of any kind, the purpose of it is to attract people to the store. Mr. ANFUSO. In the example given to you by Mr. Cooley, the competitor, in order to meet that competition, also uses stamps. He can use another company's stamps and then it equalizes. Mr. PHILLIPS. Not if the stamps have different pulling power, which is frequently the case. There are in the United States, I think you mentioned this morning, three to five hundred stamp companies. Those vary widely in their ability to attract people to the store. They vary widely just like motorcars put out by different manufacturers. Mr. ANFUSO. Your company may offer more in exchange for the stamps than the other. Mr. PHILLIPS. Exactly. Mr. ANFUSO. That is where the competition lies? Mr. PHILLIPS. Exactly. There is just as keen competition among stamp companies-just as keen competition-which leads directly, Mr. Chairman, to another point that was made this morning. About 5 percent, I think it was said, of the stamps were not redeemed. That is a large profit to the stamp companies. We must remember that these companies are in competition for the sale of their services. If one starts making a lot of money everybody will get into the field and they will reduce the price at which they license their services to the various retail stores. Mr. ANFUSO. Thank you very much. Mr. Galub, from Schenectady, N. Y. STATEMENT OF WILLIAM GALUB, PRESIDENT OF CENTRAL MARKETS, INC., SYRACUSE, N. Y. Mr. GALUB. My name is William Galub. I am president of Central Markets, Schenectady, N. Y. We operate a chain of 18 supermarkets in and around the capital district of your State. First I want to thank you gentlemen and ladies for hearing my side of the stamp controversy. I want to make one thing clear before I read my statement into the record and have you ask questions. I am just a plain grocery boy. I don't know the finer elements of the legal profession, or the political profession, or I am not as thorough as the learned professor. I am speaking here as a grocery boy who is a merchandiser, who talks straight from the shoulder, who likes to talk bluntly of what he has learned in his own field of endeavor. I am what I would term average home folk who represents the average of small business in and around our country and who have found in stamps a most worthwhile avenue for helping business. I might add also at the beginning here, that I did not know any of the details of Dr. Phillips' presentation but it will be amazing to you, as it is to me, in how many ways his survey coincides with that taken in our own local area, taken for this particular hearing. With that I would like to begin reading my statement. I term it "Trading Stamps-a Merchandising Miracle." The Federal Trade Commission, in putting its stamp of approval on trading stamps after exhaustive study, now fully confirms what those of us interested in trading stamps have said right along-that trading stamps, in principle and practice, are a legitimate, volume building promotional tool. In fact it is more than that-it is a modern merchandising miracle that truly gives more to all. Just as mass production and mass distribution lower unit costs through increased efficiency and volume, so do trading stamps perform the same miracle in foods. Despite organized vilification, propaganda, legislative action, and assorted prophets of doom, the America public has increasingly recognized the stamps real value as a plus saving of 2 to 3 percent, and has been accepting them at a steadily increasing rate. Furthermore, to low and medium income families it has been a big boon, providing them with many household items they might not have been in a position to purchase. Historically, every new merchandising advance in our industryand the same would undoubtedly hold true in most others has been the whipping boy of those who hope to keep the status quo. Originally it was the chainstore tax; then the attempt to block the dynamic development of supermarkets; then it concentrated on the attempts to halt the development of nonfoods in supermarkets and efforts to maintain high prices through fair trade, and so forth. Today, one of the favorite whipping boys is the discount department store. Trading stamps, no less than any of these examples, has met the same opposition by those who might be competitively affected. Today, despite all the ammunition shot at trading stamps, the majority of the families in this country save them at an ever-increasing rate. These whipping boy tactics remind us of what Abe Lincoln once said, that "You can fool some of the people some of the time, but you can't fool all of the people all of the time." The buying public is far too smart to be continuously fooled. Since this investigation is, as I understand it, a broader one into the reasons behind the price spread of foods, and since trading stamps is only one area, I believe it would be consistent to include here some important factors that also have a bearing on both the trading-stamp question and the overall price-spread question. |