INSPECTION STANDARD FOR PRICING NEARER

DENISE ZIMMERMAN

SAN DIEGO -- A draft proposal to create standardized inspection procedures across the country for verifying pricing accuracy took another step toward enactment at a meeting of industry and government officials here.

The proposal, which has strong retailer backing, calls for the establishment of standardized procedures for state and local inspectors to follow when auditing pricing accuracy in supermarkets and other classes of trade. Currently, the guidelines vary widely from state to state.

The issue is considered especially important in light of allegations, often reported in the media, of scanner pricing inaccuracies at the checkout.

"All we want is to be treated fairly by Weights and Measures [inspectors] and the media," said Jan Charles Gray, senior vice president and general counsel of Ralphs Grocery Co., Compton, Calif. He addressed about 300 state and local government inspectors at the National Conference on Weights and Measures annual meeting late last month.

The proposal under consideration, "Examination Procedure for Price Verification," is now in its third draft. A fourth draft is due Oct. 1, with a final version to be ready for review by January 1995. The proposal should be available for adoption by individual state legislatures next July.

The guidelines, in part, specifically call for inspectors to use larger sampling sizes, include a wider range of product categories and rely on other new evaluation procedures to determine pricing accuracy at a store.

Although retailers strongly

back the measure, it faces stiff opposition from some inspection officials.

"There has been a real feeling by district attorneys that we were working with [the retail] industry to tie their hands," said Kenneth Butcher, coordinator at the National Institute of Standards and Technology, Office of Weights and Measures, Gaithersburg, Md., a nonregulatory arm of the U.S. Department of Commerce.

At the meeting, Butcher presented an overview of the proposal, which was developed by the NCWM Price Verification Working Group. The group is comprised of supermarket and mass merchandise retailers, consumer advocacy groups, retail trade organizations and state and federal agencies.

Some state officials objected to enacting a procedure that might dictate how they do their jobs.

"We don't want to get locked into procedures that will preclude us from using a number of different ways to resolve the accuracy problem," said Robert Atkins, bureau chief for the Consumer Protection Bureau of the Department of Agricultural Commissioner/Weights and Measures, Los Angeles County.

Atkins told SN after the meeting that he could support a standard examination procedure "as long as it's clearly understood what the intent is and that it preserves our right to [prosecute] on individual circumstances -- without having to characterize the whole chain or whole store."

"Price verification is an ongoing, very important task that we deal with on a regular basis," Robert Johnson, director of work methods at Winn-Dixie Stores, Jacksonville, Fla., and a member of the NCWM Price Verification Working Group, said in an interview with SN. "We have to maintain consumer confidence and we accept that responsibility.

"I think the entire movement has been very positive. Ken Butcher from the Weights and Measures Office, [Working Group chairwoman] Barbara Bloch -- they are totally positive toward developing these standards. There's been good interaction between retail and the Weights and Measures folks," he added.

The presentations made by industry executives at the meeting helped defuse some of the trepidation among inspection officials, Butcher said. The group also heard from consumer advocates who support a uniform examination procedure and a University of California marketing professor's investigation of scanner pricing systems.

"I think the single biggest accomplishment was discussion of the various viewpoints," Ralphs' Gray said. "All those different viewpoints should give everyone pause to reconsider what they think is the correct solution."

Gray called for a more equitable examination procedure that would incorporate random checking of a wider range of products, larger sampling sizes, consideration of undercharges that favor the consumer and "an enforcement policy with a reasonable tolerance level."

He also suggested pricing problems be handled by an administrative hearing process rather than court rooms.

Also at the conference, Jennifer Colman, manager of state government relations of the Food Marketing Institute, Washington, outlined the best practices guidelines for ensuring pricing accuracy established by an FMI committee and available in a workbook to retailers.

Atkins of the Los Angeles Consumer Protection Office said, "I've never seen an industry that's been able to police itself effectively" on price accuracy, but "I think it's helpful that the supermarket industry is doing that [workbook].

"It's going to come down to where the rubber hits the road: Will steps to ensure accurate pricing be implemented by the store managers?" he said.

Profit-sharing plans at some companies can put store managers in a difficult position of conflicting motives, he said: "How are you going to convince a store manager to spend more of his bonus, effectively, to correct something that is, at least, not hurting him?"

Butcher said inspectors were primarily concerned with four key components of the guidelines:

· Sample sizes: The proposal calls for inspectors to check pricing accuracy of 200 items.

· Randomization: The draft encourages a wide range of products to be examined, but some state officials said they prefer to choose which areas to target. For example, some inspectors concentrate on checking sale items only, where they believe the majority of price changes -- and errors -- are likely to occur.

· Accuracy rating: Although the law requires 100% accuracy between advertised and actual prices, the proposal suggests that a 98% accuracy rating be deemed acceptable. "We're reluctant to see printed any kind of stated 'tolerance' that would suggest that somehow we allow a certain amount of false advertising," Atkins said.

FMI's Colman countered, "If an inspector is working with a retailer who is obviously putting in the best practices possible and is consistently reaching high levels of accuracy -- but perhaps cannot reach 100% on a consistent level, which is next to impossible to do -- there needs to be some sort of guideline."

· "Not on Files": The current draft of the guidelines suggests that when a price is not on file in the scanner system -- and a cashier manually enters it -- it should not be considered an error.

"Several inspectors pointed out that they had looked into 'not on file' items and found a lot of mistakes were made there," Butcher said. Butcher said the fourth draft of the proposal will likely reconsider the issue of "not on files" and he encouraged retailers to submit their input to his office. Comments about the proposal and requests for copies should be directed to his attention at NCWM, P.O. Box 4025, Gaithersburg, Md. 20889.