Seven deadly price promotions

Wed, 1 Sep 2010 | By Rosie Baker

Retailers could be facing a rough ride over pricing structures if a set of proposals over price promotions due to be published next week come into force in December.

The Grocer has revealed that The Office of Fair Trading (OFT) is due to issue a set of standards that will demonise seven promotional tactics commonly used by retailers.

The seven pricing practices under scrutiny include time-limited offers, volume discounts, “free” offers, and a number of pricing structures that potentially confuse and mislead shoppers.

The aim is obviously to protect consumers from misleading and confusing pricing tactics and under the guidelines, retailers could face fines and prosecution if they continue to use these promotional measures.

I’m all for championing consumer’s rights to clear pricing and transparency and although there are opportunities to criticise retailers for offers that don’t pan out to be as good value for the shopper as they first appear, I believe most retailers aim for transparency too.

The new rules would have the most marked impact on the supermarkets and their promotional strategies, but would affect all retailers. While there is logic in a set of guidelines looking out for the consumer in this way, it runs the risk of making it impossible for supermarkets to offer promotions without opening themselves up to prosecution.

This in itself would mean consumers getting a worse deal overall than they would if a minority of deals don’t add up.

Baiting, a tactic of publicising a special offer with limited availability, can often mean that some shoppers are disappointed at not being able to get hold of the product at the special price. On the other side of the fence, there is a raft of consumers that did manage to benefit, whereas if the practice were outlawed, no one would benefit at all.

The whole point of promotions, such as time limited offers, is to add value. It should be looked at as a bonus if you get to take advantage of the deal, not an entitlement.

If a retailer runs out of stock on a particularly good deal before I get to the store, then I have to take responsibility for not getting there in time to take advantage of it, and live with the fact that I missed the boat. If that deal is extended, I should see that as yet more added value from the retailer, not grumble that I’ve been swindled by said retailer.

Where it gets difficult to legislate is whether the retailer is being deliberately unscrupulous in its promotional strategy, but technically playing by the rules. But I think retailers are more transparent than they have been in previous years as money-back guarantees, comparison sites and initiatives such as the Asda Price Guarantee mean that there are fewer places for retailers to hide sneaky price increases anyway.

I know I’d rather have the opportunity to take advantage of a price promotion than have that decision made for me by regulators.