Retail Pricing, Fair Trade Laws, and the Rise of Walmart

Photo by Nicole Y-C on Unsplash

Today, retail pricing, the price you see in stores, is determined by Retailers-not Manufacturers. For example, if you go to Kroger for a 12-pack of Sprite, the price you pay isn’t set by Coca-Cola-it’s set by Kroger.

This wasn’t always the case.

In the past, it was legal for manufacturers to determine retail pricing. Often times, manufacturers offered a lowest acceptable retail price-and it was small retailers who pushed for that ability. Here’s the quick story about how that happened.

Early retailing is a family affair

Edna Gleason, was a self-educated but state-certified pharmacist who owned three drugstores across California. In the early 1900s, pharmacists were predominately small businesses. A family would own a store, where they would mix drugs and sell a variety of home care goods. Edna and other local pharmacist bought most of her goods from a wholesaler, who bought the goods from the manufacturer. Both links in the retail value chain have cost-which meant a mark-up. The result was a modest selection, with two price mark-ups. It was a simple business considered by most to be key to self-sufficiency.

Then came Chain Stores and Pineboards-large, wall capitalized corporate structures that entered new markets and…