This holiday season was a smashing success for retailers, as shoppers closed out 2017 with record-breaking spending of more than $800 billion. However, many Wisconsin brick-and-mortar retailers missed out on the surge, unable to compete against the deals shoppers find online because of antiquated state laws such as minimum markup. In 2018, lawmakers should help modernize Wisconsin’s retail law and bring shoppers back to local businesses.
The growing shift online has put a strain on traditional retailers across the country, as internet shopping spiked 18 percent this holiday season compared to 2016. With more shoppers looking online for the best deals, retailers in Wisconsin need any advantage they can get to attract customers. Unfortunately, the state’s minimum markup law prevents Wisconsin’s Main Street businesses from fully participating in a 21st century retail marketplace driven by increasingly competitive pricing from huge online retailers.
The outdated law restricts all retailers in Wisconsin from pricing items at below cost, which is why Badger State residents cannot enjoy the same low prices at their local stores that shoppers can get across the border in Minnesota and most other states. Minimum markup is a relic of the Great Depression, when lawmakers were rightly concerned that large retailers could use their pricing power to corner the market by driving smaller competitors out of business.
While this type of law made sense in 1939, it is an anvil around the necks of retailers in a modern digital economy. And state policymakers should address it quickly if Wisconsin’s Main Street merchants are going to see more holiday seasons.
The fact is, Wisconsin businesses are no longer simply competing against others in their towns or neighboring communities or even across the state’s borders; they are competing against the world, and they need help. In a global marketplace, small-business owners in Green Bay or Eau Claire cannot keep up with the Amazons and Overstocks of the world if they cannot offer more competitive deals because of a minimum markup law that raises prices nearly 10 cents on the dollar.
And as Wisconsin works hard to position itself as the innovation hub of the Midwest, modernizing outdated state laws to facilitate business growth, competition and innovation is increasingly important.
Last year, Wisconsin jumped from 37th to 26th in the Information Technology & Innovation Foundation’s State New Economy index, which ranks states on factors from economic dynamism to innovation capacity. The recent rankings show Wisconsin is making significant strides that will allow its businesses to compete and unlock new benefits for consumers in a 21st century economy — but there is more work to do. The innovation investment dollars coming into the state, for instance, will be lost if Wisconsin does not update its tax and regulatory system for the future.
A modern economy means modern laws. Not only does this mean modernizing outdated laws such as minimum markup, it also means forward-thinking policies regulating the coming wave of innovation, such as driverless cars and drones. And to bring about those policies, lawmakers must appreciate that the success of the state’s economy depends on its ability to compete in a global marketplace.
As we enter the new year, state lawmakers should consider helping Wisconsin’s Main Street merchants — and the customers they serve — by helping them compete in a modern economy. The first step in that direction is to modernize the old laws on the books. Wisconsin cannot meet the demands of today’s economy if businesses and consumers are held back by 1939 thinking.
Rinzel is a spokesperson for Americans for a Modern Economy, which aims to modernize antiquated regulations and laws.