Grocery Promos Come Under Attack in the U.K.
Eight grocers in the U.K. have agreed to follow new guidelines over promotions after complaints about the veracity of special offers.
The agreement followed an investigation by the Office of Fair Trading (OFT) that analyzed how prices are advertised and promoted in grocers. The guidelines particularly address how prices may be artificially inflated to make later discounts look more attractive. It is a voluntary code and not legally binding.
The new guidelines cover:
- Artificially inflated promotions: Prices should not be "artificially manipulated" to make future planned discounts more attractive. This covers ‘yo-yo pricing,’ or the practice of selling a product in a limited number of stores at a high price with low prominence and low sales expectations and then rolling the product out across stores at a lower price and with an advertised discount. A product also can’t be priced high in its offseason only to be promoted throughout its primary selling season.
- Lengthy promotions: Covers when a price has been marketed as a discount price for longer than the period of time for which the selling price was initially charged.
- Reference prices: When referring to a past price in a promotion (‘Was $3, Now $2′ or ’50 Percent Off’), previous prices must be fewer than two months old. Also covers when a promotion refers to a lower price when a package size has been reduced.
- Pre-printed value claims on packs: When a store markets "best/better value" claims, there should exist no cheaper way of buying the same volume in the same store. This includes when smaller packs are being promoted.
The regulatory agency did not discover any illegality during its investigation, but did find some "inconsistency" in the way the law was interpreted and applied.
"Household budgets across the country are under pressure and shoppers should be able to trust that special offers and promotions really are bargains," said Clive Maxwell, the chief executive of the OFT, in a statement.
A investigation by watchdog group, Which?, in May found in some cases discount prices ran for much longer than the original prices, drawing extensive media attention in the U.K. press and admissions by some supermarkets to isolated errors.
The retailers agreeing to the new guidelines were Tesco, Sainsbury’s, Morrisons, Waitrose, Marks and Spencer, Aldi, the Co-op and Lidl. Nearly all issued statements offering support for more transparency in pricing.
Walmart’s Asda was the lone major grocery chain not agreeing to the guidelines. A company spokesperson told The Telegraph that Asda was "taking some time to consider the recommendations in detail."
- Eight supermarkets sign up to OFT principles on special offers and promotions – Office of Fair Trading
- Principles of food pricing display and promotional practices – Office of Fair Trading
- Supermarkets to ditch misleading multi-buy deals – The Telegraph
- Supermarkets sign Office of Fair Trading pledge over dodgy discount price practices – The Grocer
- Analysis: What do the Office of Fair Trading promotion principles mean for retailers? – Retail Week
How widespread are misleading promotional practices in the U.S. grocery channel? How would you rate the level of price transparency in grocers’ promotions in the U.S.?