Kwik Trip Uses Gimmick to Skirt Minimum Markup Law

Recent promotional event at Kwik Trip
Recent promotional event at Kwik Trip

It could just be a case of a convenience store cleverly skirting the onerous requirements of Wisconsin’s minimum markup law, but in this case the store is a really, really big fan of the law.

Kwik Trip, a convenience store chain headquartered in La Crosse, has vehemently opposed a recent legislative effort to repeal the state’s Depression-era law which requires retailers to not sell their goods below a state-established minimum markup. But now the store is offering a special deal at some locations that would appear to violate the spirit, and maybe even the letter, of the law.

Among the many items normally found in a well-stocked convenience store, Kwik Trip also sells take-and-bake pizzas. Much like a frozen pizza, the refrigerated pizza is fully assembled and ready for buyers to pop into an oven for a quick meal. Right now, Kwik Trip is selling these pizzas for $4.99. They normally retail at Kwik Trip for $7.99.

But that deep discount isn’t all there is to it. When customers buy a pizza on sale, they can get a 12-pack of Coca-Cola (or any Coke product) for only $0.99. The 12-packs normally sell for $3.99 at Kwik Trip.

A random informal survey of other stores in southeast Wisconsin revealed no other retailer selling a 12-pack of Coca-Cola for $0.99.

FullSizeRenderThat could be a problem for Kwik Trip, because state law says retailers cannot sell below their own acquisition cost for a particular item. The fight to repeal this mandate, which simply prohibits consumers from getting a good deal, has been led by state Sen. Leah Vukmir and state Rep. Jim Ott, both Republicans, but has so far failed to move in either chamber of the Republican-controlled legislature.

Selling an item for a token price is one potential way to thwart the letter of the minimum markup law if the argument can be made that one is meeting a competitor’s price. But in this case, no competitor has been spotted offering either take-and-bake pizzas or Coke 12-packs at these prices.

A complaint was filed against Kwik Trip in October 2015 alleging the retailer was violating the minimum markup law, also called the Unfair Sales Act, because it was selling Pall Mall cigarettes for $61.61 per carton.

When legislators in 2006 considered repealing the minimum markup law, Kwik Trip sent them a letter that read in part:

Kwik Trip, Inc. is a family-owned business based out of La Crosse, Wisconsin. Our company operates over 350 convenience stores in Wisconsin, Minnesota and Iowa and employs over 7,000 individuals. Kwik Trip, Inc. strongly supports current law as it relates to the Unfair Sales Act.

That fight in favor of the status quo, and in opposition to the free market and (legal) good deals for consumers, continues today. According to the Government Accountability Board’s lobbying disclosure database, Kwik Trip is registered as a lobbying principle opposed to both AB 452 and SB 371, the two bills that would repeal the Unfair Sales Act. Those same records also reveal that the company spent about $13,920 lobbying against the reforms in 2015.

A top executive at Kwik Trip, Steve Loehr, was the recent chairman of the National Association of Convenience Stores and in January the Wisconsin Grocers Association, another group opposed to repealing the minimum markup law, gave him an award.

Twice the non-partisan Federal Trade Commission has been asked by Democrats to review the Unfair Sales Act and assess whether or not it truly helps consumers. Both times the FTC has declared that the law is not in the best interest of consumers. “We believe that the Wisconsin Unfair Sales Act is contrary to the public interest,” wrote the director of the FTC’s Chicago office in 1987. More recently, in 2003 the FTC headlined its review of the law this way: “Wisconsin’s Unfair Sales Act Likely Raises Gas Prices.”

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