Government shouldn't decide where consumers shop - Capitol Concerns - Annapolis, Maryland; retailers want new statewide zoning rules - Brief Article

DSN Retailing Today, April 22, 2002 by Ken Rankin

In retailing, the most innovative and successful companies tend to draw the heaviest fire. In most cases, that's not because they're doing something wrong, but because they are doing a lot of things right. Their success is upsetting apple carts in the marketplace.

In a free market system, apple carts are supposed to get upset all the time. The less efficient operators are supposed to lose business to competitors who are able to offer lower prices or greater selection or better service or all three.

When the market works the way it is supposed to, however, the losers tend to abandon free market principles and pressure government to change the rules.

A century ago, inefficient retailers lobbied for flagrantly anti-consumer restrictions against chain retail stores. During the Depression, they hammered Congress to endorse so-called "fair trade" laws and the Robinson-Patman Act--legislative efforts designed to prevent vigorous price competition among retailers.

In the '70s and '80s these same anti-competitive forces pushed to weaken government enforcement efforts against resale price maintenance conspiracies, and to short-circuit parallel-importing activities used by discounters to bring lower-cost goods to American consumers.

The latest battle to protect inefficient retailers from competition is playing out 30 miles east of Washington, in Annapolis, Md. Seems that consumers in Maryland appreciate the convenience of one-stop shopping and have been flocking to the large, free-standing discount chains and other major retailers who offer this format.

The retailers who are losing business to these "big-box" operators have turned to the legislature for help. They want new statewide zoning rules that would prohibit the construction of any retail store larger than 120,000 square feet in Maryland.

The effect of this, of course, will be to limit retail competition throughout Maryland, deprive consumers of their right to choose where to shop and almost certainly drive up the cost of goods and services in hundreds of communities.

Of course, the supporters of this bill don't put it quite that way. They contend that "big-box" stores "present unique challenges for local government" by creating "more traffic congestion and pollution that then strain local streets and highways." That's not a very convincing argument. One-stop shopping tends to produce just the opposite effect--a point retail industry representatives drove home in testimony opposing the bill during recent state Senate hearings.

IMRA state government affairs manager Jason Todd called the proposed "big-box" restrictions "a prime example of government meddling in the free market system ... by determining the winners and losers in Maryland retailing." If legislation is enacted preventing the entry of large-format retail establishments, "Maryland will clearly place itself at a competitive disadvantage to other states"--a situation likely to result in "fewer jobs, reduced tax revenue and a weakened economy," he warned.

Worse yet, by placing restrictions on the entry of more efficient retail formats, the legislature would be denying Maryland consumers their right to choose where to shop. And it will be depriving them of the fruits of vigorous competition in a free and open marketplace.

Consumers should choose which retail businesses succeed, and governments should let the chips, and the apple carts, fall where they may.