Trading Stamps and Their Impact on Food Prices

Excerpts from the report Introduction: Trading stamps are not new; they have been used by retailers as a promotional device for more than half a century. Their phenomenal growth during recent years has been due largely to their wide adoption by food retailers, mainly supermarkets. Because of the importance of food in our daily lives, the question of who actually bears the cost of trading stamps is one that concerns all of us. This question is one of the most controversial issues in the history of food retailing. The widespread use of stamps by supermarkets, together with the lack of specific information about the effect of stamps on retail food prices and about the nature and scope of the trading stamp industry, led the Agricultural Marketing Service to conduct research in these areas. This research had two basic objectives. The first was to determine the overall scope and operations of the trading stamp industry. To do this, a survey of trading stamp companies was conducted during the spring and summer of 1957. Information was obtained as to the total gross revenue from stamps by stamp issuing companies, the proportion of stamp revenues from food stores, and other major characteristics of the industry. The second objective was to determine the effect of the use of trading stamps on retail food prices. Analysis of a special tabulation of food prices collected by the Bureau of Labor Statistics (BLS) provided information on this point. Also, a special survey of shelf prices in supermarkets was made to supplement the BLS data.