Wisconsin Wraps Holiday Shopping in Red Tape

By James Bowers

For brick-and-mortar retailers, Black Friday isn’t the boon it once was. Retail analyst ShopperTrak reported a 2 percent decline in foot traffic early in the holiday weekend, while online sales jumped 17 percent. The trend spells bad news for Wisconsin’s small businesses, many of which rely on face-to-face transactions to support the bulk of their sales – a difficult feat when crowds aren’t out shopping.

To make matters worse, a 1939 law actually prohibits retailers in Wisconsin from offering the same door-buster deals as their online competitors. The state’s ironically named “Unfair Sales Act” makes it a crime for businesses to sell goods below cost. That means door-buster sales on toys, electronics and other common holiday gifts are decidedly less of a bargain than you’d find in other states or online. Even post-Black Friday sales announcements carry a huge caveat for the Badger State – “Prices may vary in Wisconsin.” Adding insult to injury, the law also requires a 9 percent markup on gasoline, and other items like alcohol and tobacco.

According to conventional wisdom, outlawing deep sales prevents large chains from putting their mom-and-pop competitors out of business. If big box stores can’t undercut small business prices, local retailers will stay open and provide the necessary competition to keep all prices low. Unfortunately for consumers, the Great Depression-era “wisdom” doesn’t hold water.

An analysis by the Wisconsin Institute for Law & Liberty found that laws like Wisconsin’s Unfair Sales Act have no effect on the number of small business retailers in a state. It shouldn’t come as a surprise: the law prohibits small businesses from selling goods below the legal markup too. And when an antiquated law virtually guarantees that the deals will be better online, Wisconsinites have little incentive to brave the cold for a 4 a.m. shopping trip. When anchor tenants don’t see an influx of early morning customers, neither do the small coffee shops, eateries, and novelty stores nearby.

Black Friday is far from the only time of year that bargain hunters are left empty handed by the Unfair Sales Act. A recent study on the law’s effect on back-to-school supplies found shoppers in Milwaukee paid 12 to 146 percent more than shoppers in other major Midwestern cities.

It explains why the special interests benefitting from state-sanctioned price inflation are fighting to maintain the law. In an interview with the Wisconsin State Journal, the Wisconsin Grocers Association divulged its fear of a “short-term price war” among retailers who never had an incentive to compete for their customers. If Wisconsin’s Unfair Sales Law protects anyone, it’s the benefactors of crony capitalism.

Unsurprisingly, a whopping 76 percent of shoppers who know about the Unfair Sales Act think it should be repealed. But it’s not for a lack of trying: Wisconsin legislators from both parties have attempted to abolish the law several times since the 1980s. Lawmakers in both the Assembly and State Senate even introduced legislation to repeal the bill earlier this year.

The only thing unfair about sales is punishing businesses that have them. Until politicians prioritize consumers ahead of the businesses that profit from mandatory high pricing, Wisconsin’s antiquated law will ensure every retail holiday looks like Cyber Monday.

James Bowers is the managing director of the Center for Consumer Freedom.