After an investigation by the Office of Fair Trading (OFT) into how supermarkets display prices and offer promotions in-store, eight of the major supermarkets have now signed up to adopt a new set of principles that will ensure any special offers and advertising are fair. The supermarkets that have agreed to this new fair pricing policy are: Tesco, Sainsbury’s, Morrisons, Waitrose, Marks and Spencer, Aldi, the Co-op and Lidl. Asda, has not yet signed up, and said it was considering the revised code but objected to one of the principles, which states that any discount period must not be longer than the normal-price period. A spokesperson for Asda argued that this could actually increase incidents of “yo-yo” pricing. They told the BBC: “We don’t think this is in the best interests of our customers.”
Yo-yo pricing is when an item is sold at a greater and inflated price for a short while in only a few stores, then offered in all stores at a much lower price. This lower or ‘discount’ price then tends to last for a much longer time, which in reality makes it the normal selling price of the item in the first place. But this is only one of several incidences of price ‘fixing’ the OFT investigated. Other tricks of the trade include reducing the size of a product but keeping it at the same price and not making it clear to the customer that the product has shrunk; the Buy One Get One Free deals where it is actually cheaper to buy the two products separately; and charging one price in store A, a lower price in store B, then saying “was £x, now £y” when the higher price was never actually charged in store B.
Office of Fair Trading, Clive Maxwell, OFT chief executive, told the BBC: “It is particularly welcome that we’ve reached this agreement at this stage with household budgets under pressure.” But not everyone was convinced that this would make any difference. James Ford from price comparison service mysupermarket.co.uk said: “I’m highly sceptical that this will make any difference while these principles remain voluntary. A lot of our customers remain sceptical, too.”
The OFT says that the new principles will include stopping such promotions as “half price” or “was £3, now £2” offers, which must now be sold at the new discounted price for the same, or less, time than the previously higher price. They say that this would prevent short-term, artificially inflated prices masking the offer. They also state that items that are advertised to suggest they are better value because they are in a bigger pack, must have a comparable product elsewhere in the same store. Maxwell said: “Shoppers should be able to trust that special offers and promotions really are bargains. Prices and promotions need to be fair and meaningful so shoppers can make the right decisions. Nowhere is this more important than during regular shopping for groceries. [This] provides supermarkets with a clear benchmark for how they should be operating so that their food and drink promotions reflect the spirit as well as the letter of the law.”
And Richard Lloyd, executive director of consumer group Which?, agreed, but went even further, saying that traders should be fined if they do not adhere to the new principles: “When household budgets are squeezed and food prices are one of people’s top financial worries, it’s unacceptable that shoppers are confused into thinking that they’re getting a good deal when that might not be the case. Regulators should be prepared to take enforcement action against traders found breaking the rules.”
So what are the supermarkets saying? A spokesperson for Sainsbury’s said: “We will continue to ensure that our pricing and promotions are as clear as possible for our customers,” whilst the Co-op said: “We understand how important it is for shoppers to be able to easily understand what the promotional offer is, so they can spot the best deal, and we are committed to providing clear and accurate labelling for our customers so they can make informed purchasing decisions.” Aldi said that although they were happy to sign up to any agreement, it would not make any difference to their pricing strategies, and a Marks and Spencer spokesman said: “It is right that we sign up to these new guidelines.” A Morrisons spokesman said: “We are happy to sign up to the OFT’s principles because they reflect good promotional practice,” whilst Tesco said it welcomed the OFT’s “clarity” and that it supported the regulator’s wish to see a consistent approach to promotions across the supermarket sector. Waitrose said it was also supportive and always ensured pricing was clear and transparent.
Source & picture credit: BBC News