Bargain Shopping for Electronics Just Got Tougher
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According to a report in today’s Wall Street Journal, Sony and Samsung -- two of the world’s largest television manufacturers -- "have begun trying to force retailers to rein in discounts on televisions, threatening to cut off those who sell TVs for below the manufacturer’s minimum prices."
Sony and Samsung have implemented this new policy to reap higher profits – from the wallets of consumers. The same news story also cited other electronics companies that have "tough policies restricting the prices at which their products can be sold…"
Until a few years ago, that kind of vertical price fixing was against the law. Unfortunately, the Supreme Court narrowly overturned the century-old ban on retail price maintenance in 2007. Since then I've been working to restore it.
As the chairman of the Senate Antitrust, Competition Policy and Consumer Rights panel, I wrote legislation to overturn the court's decision. Justice Breyer, in his dissenting opinion, estimated that if only 10% of manufacturers engage in vertical price fixing, the volume of commerce affected would be $300 billion, costing the average family of four an additional $750 to $1,000 for retail goods every year.
My bill, the “Discount Pricing Consumer Protection Act,” will allow retailers to sell goods below a threshold price set by manufacturers. I’m pleased that it was approved by the Senate Judiciary Committee last November, and I’ll continue to work to bring it before the full Senate for debate. Until then, I’m hopeful that Sony and Samsung and other manufacturers who have policies against discounting find that consumers will look elsewhere for affordable products.
As a businessman, I appreciate that retailers welcome flexibility in their business with customers. As a senator representing the people of Wisconsin, I know that discounting and discount stores play a vital role in family budgeting.
St. Swithin
12:45 pm on Wednesday, May 23, 2012
I really don't see why the government needs to step in here. Neither Sony nor Samsung have a commanding market share. Price hikes on their products will just drive consumers to the competition. Also, retailers are using these discounts to make profits on other associated products. If they are forbidden from doing this they will steer customers to brands that are more flexible. This is the free market at work. If ALL the TV makers were doing this then it would be different.
Why do Sony and Samsung care about consumer discounts if they are getting full price from the retailer? The WSJ article suggested it was to help Best Buy and Target. But doesn't Best Buy like to discount their TVs and put a big margin on cables and other accessories?
Bob McBride
2:13 pm on Wednesday, May 23, 2012
When it comes to consumer electronics, Best Buy in particular is taking pretty hard hits from the online sellers (who pretty much took out Circuit City, for instance), who don't have to charge tax or cover the cost of a brick and mortar operation. In order to sell the accessories they mark up fairly heavily (along with the service contracts and extended warranties) they've got to get you in the store and sell you the discounted TV, first. I wonder if Best Buy and, perhaps, Target have approached both Samsung and Sony on this, or if they've just reduced the number of models from those manufacturers in favor of the off-brands they can offer at a lower price? Minimum mark-up would protect them the way it used to protect the Flanners and Sound Stages and other, smaller outlets from Best Buy and Target. What comes around goes around, maybe?
Greg
2:24 pm on Wednesday, May 23, 2012
There are very few good margins in anything, except insurance and health care, oh and banking, so service is key. Best Buy and other B&M retailers have that over online sources, for now.
Steve ®
10:44 pm on Wednesday, May 23, 2012
I got a new LED in November from Best Buy. They had the best price, local pick up, knowledgeable staff at this location which is rare since I usually know more when I walk in the door. Because they also have a huge website they cover both bases.
They also make nothing on the TVs. All the revenue is in all that other crap they want to sell you, cables, warranties, accessories.
Greg
1:18 pm on Wednesday, May 23, 2012
The real issue should be, why can Kohl's Department Stores mark things down 70, 80 or 90%? How much profit are they making when they sell at regular price?
Bren
1:42 pm on Wednesday, May 23, 2012
Greg, I understand that the markup on clothing is between 800-1,500%. A lot of Kohl's clothing comes from Third World countries/factories.
CowDung
1:45 pm on Wednesday, May 23, 2012
What clothing doesn't come from third world countries these days?
Bob McBride
2:15 pm on Wednesday, May 23, 2012
Greg, I don't think Kohl's ever sells at "regular price".
Greg
2:25 pm on Wednesday, May 23, 2012
Herbie didn't buy the Bucks with his good looks.
mau
1:37 pm on Wednesday, May 23, 2012
Is this the same democratic Senator Herb Kohl who's threatening the tax payers that if they don't build a new stadium for his losing team, they will leave Milwaukee. The same democratic senator who wants a new stadium with more luxury boxes for the 1%ers.
Satori
2:29 pm on Wednesday, May 23, 2012
Yes. Not so much a threat but rather a fact. The Bradly Center cannot sustain in it's current state. Whether or not you enjoy having a professional basketball team in our city is your choice, but if you do, we'll need a new arena. This is much more black and white than the political discussions here on patch. Should be easy enough to wrap your head around.
Steve ®
3:32 pm on Wednesday, May 23, 2012
►Sony and Samsung have implemented this new policy to reap higher profits◄
yes we know you think profits are evil for every other business but yours. "reap" give me a break.
This makes no sense. Trying to set MAP pricing on retailers does not gain more profits for the manufacture who still sells to the retailer for whatever they want. The manufacture can only gain profits by having the retailers move more or increasing their wholesale cost per unit and hoping the retailer still moves the same amount of units.
Your war on MAP pricing only hurts us little retail guys. Why do you hate small business Herb?
Craig
9:46 pm on Wednesday, May 23, 2012
Herbie you are as outdated as the VW Beetle. Have you even looked at prices of electronics? I can buy my same Samsung 60" plasma TV for 1/4 what I Paid 4 years ago!
Here is an idea: Pay for your own damn arena!
$$andSense
10:22 am on Saturday, May 26, 2012
Hey Craig, I agree about Herb, but not Herbie. You ever own a VW Beetle (I mean a type 1) ? Easiest and cheapest car to maintain, drive and mechanically tough as nails. Thanks Dr. Porsche! Good mileage too for the time. Just don't get into an accident with one but more survivable than a motorcycle. Kohl = worn out failure, Beetle = German engineeng success.
JV
7:36 am on Thursday, May 24, 2012
Herb, how about the budget? Pass a budget. Introduce a budget. Support a budget. Do something about a budget. You let me worry about my purchase decisions.
$$andSense
10:25 am on Saturday, May 26, 2012
Well said JV. Time for the old coot to move on to something else besides doing nothing for us.
Brandon Karpowitz
10:57 am on Thursday, May 24, 2012
So let me get this straight. Ok to have minimum markup law on our gas in this State. But it's bad for there to be such things on "toys" such as tv's or other electronics. Non-essential stuff.
Got it, that makes perfect sense. Thank's Herb always on the forefront of what's important.
robert heule
4:37 pm on Thursday, May 24, 2012
Mau, Please be patriotic and spell Democratic with a capital D
mau
5:26 pm on Thursday, May 24, 2012
I should refer to our form of government by it's proper term Constitutional Republic. We do not have a democratic form of government and our government is not a democracy.
robert heule
5:56 pm on Thursday, May 24, 2012
I agree that the US is a Constitutional Republic. Twice you referred to "democratic" in describing the Senator's party. I wrote that you should refer to the Democratic Party by spelling it with a capital D. in any event I was just f---in with ya.
Johnny Blade
12:45 pm on Friday, May 25, 2012
Not a single Democrat voted in favor of ending FDA raids on raw milk farmers .. A Bill put forth by Rand Paul .. Thanks a lot Kohl .. you seem to be looking out for the little guy NOT .... retire already