Freedom for Prices

The backers of Fair Trade pricing, who have been fighting a losing battle against discount houses, last week were dealt one of the hardest blows of all. General Electric Co., the biggest U.S. appliance manufacturer, abandoned "suggested" list prices for major appliances (e.g., dishwashers, ranges, air conditioners, etc.), "to meet highly volatile and competitive conditions."

G.E. admitted that it was merely recognizing the fact that almost nobody buys at list price any longer. From now on, G.E.'s 60 distributors may recommend (but not enforce) the retail prices to be charged in their areas. But G.E.'s small appliances such as toasters and irons, which do not involve trade-ins or instal. lation and are thus more easily price-controlled, will still be Fair Traded.

G.E.'s announcement came the same day that Federated Department Stores, Inc., second biggest U.S. department-store chain, announced that it will cut Fair Trade prices at all its 34 stores to meet competition from the discount houses. Federated was not the first to challenge the discount houses on their own ground. Since summer, Detroit's big J. L. Hudson Co. and St. Louis' three biggest department stores have widely advertised that they will meet the lowest prices in town on any item, whether Fair Traded or not (TIME, Sept. 20).

The growing wave of price cutting by department stores and G.E.'s retreat from a one-price policy point up the astonishing growth of discount houses. They now have 85%-90% of major appliance sales in the U.S., according to the National Retail Dry Goods Association. Since 1939, said NRDGA, department-store sales of electrical appliances have fallen from 70% to 5%.

Will G.E.'s move help department stores and other franchised dealers? Some thought not. Said R. H. Macy & Co. Appliance Chief Elliott Walter: "The G.E. announcement is not important. List prices have not been observed for years. G.E. has just recognized a fact which has existed." But many a marketing expert thought the price break at G.E. could touch off a price war among major appliance makers that could wreck the whole foundation of Fair Trade pricing.

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