A Sticky Time for Stamps

Minutes after opening, the E.F. MacDonald Plaidland redemption centers in Manhattan are thronged with customers anxious to exchange their thumb-worn books of trading stamps for flashy new merchandise. All day long, people queue up outside, the lines snaking back a block or more. Occasionally tempers flare and Pinkerton guards try to keep order. John Walker, a MacDonald executive brought in from Chicago to help with the crush, sighs: "I go up and down this line three times a day to tell people that we are not going to close." The run on redemption centers in New York City--and earlier in Chicago, St. Louis and other places--has occurred because the giant A. & P. chain has stopped giving out Plaid stamps. People who have lovingly saved stamps over months or even years for that new lamp, lawn mower or bicycle are worried that their booklets could become so much wastepaper.

MacDonald's difficulties are symptomatic of a marked decline in the popularity of all trading stamps. As supermarket prices continue to rise, followed closely by consumer ire, many grocery chains have switched to cut-rate pricing and reined back on stamp and game promotions. A. & P., Safeway and Bohack have scrapped stamps completely, .while Acme, Jewel and Food Fair have dropped them in some areas. The Super Market Institute reports that more than half its membership was using stamps in 1966; today the figure is about 20%. Revenues of stamp companies have taken a pasting, dropping from close to $1 billion four years ago to an estimated $725 million this year.

At the biggest and oldest company, Sperry and Hutchinson (S&H Green Stamps), revenues in the stamp division have fallen from $368 million in 1969 to an estimated $355 million for this year. The company's stock plunged from $52 last January to $26 last week. The loss of A. & P.'s business will cost MacDonald nearly $20 million in revenues, or about half its trading-stamp volume. As its business shrinks, Mac-Donald is folding redemption centers round the country, including all but two of the 15 that it operated in Chicago. At Blue Chip, the biggest stamp marketer in California, revenues have dipped from a peak of $126 million in 1970 to $102 million last year. Many small regional stamp firms have been forced out of business.

Trading stamps, which were first brought out by S&H in 1896, have been through a number of up-and-down cycles. The stamp business flourishes during periods of stability, when prices and wages are in relative balance and shoppers are not overly cost conscious. Trading stamps were clobbered during the Depression, and all but disappeared during World War II rationing. They came back strongly in the 1950s with the rapid growth of supermarkets. From the mid-1960s on, the business has edged downhill, pushed by consumer complaints that stamps have added to food costs.

Irving Axelrod, chairman of the Trading Stamp Institute of America, a trade association, bravely predicts that stamps are on the verge of a "renaissance," noting that some smaller supermarket chains and even department stores are turning to them. Industry officials argue that the thinned-out number of stores using stamps will gain a potent merchandising advantage, compelling competitors to follow them. Then the whole game of giveaway promotions would move into another upward cycle--until the next decline.

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