Supermarkets agree to end 'yo-yo pricing' with new code

 

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Eight supermarkets have agreed to ensure that special offers and price promotions are fair.

The Office of Fair Trading (OFT) has been investigating the way prices are displayed, advertised and promoted in stores.

It raised concerns about prices being artificially inflated to make later discounts look more attractive.

The major UK supermarkets have now agreed to adopt a set of principles drawn up by the OFT.

They are Tesco, Sainsbury's, Morrisons, Waitrose, Marks and Spencer, Aldi, the Co-op and Lidl.

Asda, which has not yet signed up, said it was considering the revised code.

Deal or no deal?

Photo: Amy Shepherd

It objects to one of the principles, which states that any discount period must not be longer than the normal-price period, arguing that this could actually increase incidents of "yo-yo" pricing.

"We don't think this is in the best interests of our customers", a spokesperson told the BBC.

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 James Foord 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."

'Squeezed finances'

Pricing tricks of the retailers

Shop sale sign
  • Product is sold at an inflated price for a limited period at low volume in just a few stores, then rolled out across all stores at the lower price - known as "yo-yo pricing"
  • The "discount" price period lasts much longer than the original higher price period, making the discount price really the normal selling price
  • 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
  • Saying a product price has been reduced without mentioning that this is only because the package size has shrunk
  • Buy One Get One Free deals where the same volume of the same product can be bought more cheaply in a larger pack

Source: Office of Fair Trading

The OFT says that "half price" or "was £3, now £2" offers must be sold at the new discounted price for the same, or less, time than the previously higher price.

This would prevent short-term, artificially inflated prices masking the offer.

Items that suggest they are "better value" because they are in a "bigger pack" must have a comparable product elsewhere in the same store,

"Shoppers should be able to trust that special offers and promotions really are bargains," said Mr Maxwell.

"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."

Richard Lloyd, executive director of consumer group Which?, said: "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."

A Which? investigation in May suggested that some customers had been misled by supermarkets over discounts and multi-buy offers.

It analysed more than 700,000 prices and suggested that in some cases "discounts" ran for much longer than the original price. Following that investigation, some supermarkets admitted isolated errors amid a huge volume of pricing.

'Inconsistency'

Misleading advertising is illegal under the 2008 unfair trading regulations, and the OFT is not making any recommendation that the law should be changed.

The regulator said it did not discover any illegality during its investigation, but did find some "inconsistency" in the way the law was interpreted and applied.

Meanwhile, nearly 40% of fast-moving consumer goods could be on some sort of promotion or discount.

Many of the supermarkets said they were happy to work with the OFT.

"We will continue to ensure that our pricing and promotions are as clear as possible for our customers," said a spokesman for Sainsbury's.

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 it supported any initiative that encouraged "transparent pricing and a fair deal for consumers", although the agreement would have no effect on its own prices.

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."

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.

 

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  • rate this
    +27

    Comment number 206.

    Don't really need a special code. Just more Shopper Awareness! Examples I have seen recently, where a four pack of energy drink was priced at 4.50- the Individual cans were £1 each... 50p for the cardboard?

    And these run throughout the stores, like with cereals, and the 500g box being X the 750g being X and 1KG at a discounted X. Where if you look closer 2x 500 would be cheaper

  • rate this
    0

    Comment number 205.

    you all know this just means they won't bother with the deals and just have the inflated prices right? I dont usually bother with "deals" because I like what I like, and something being cheaper doesnt really make me want to eat it

  • rate this
    +3

    Comment number 204.

    189. Vboulderer
    I did not say the dim don't need protecting I am simply saying this is what it is for. It is a shame people do not realise at a young age that business, people, government, they all want a bit of you.If you are not smart then they will get it. If you don't look carefully and use your brain then you will be fleeced. This does not stop at the supermarkets it is in every walk of life

  • rate this
    0

    Comment number 203.

    lidl I am confused they always seem honest so perhaps they want in on the scam the others operate and this is a way into the party

  • rate this
    +8

    Comment number 202.

    Supermarkets make you pay for Convenience thats all. Walk to the high street you will get a better deal. Bakeries, butchers, fruit and veg shops all offer most of these products at nearly half the price. And a lot less crisps, booze and chocolate.
    Councils don't help because they don't offer anywhere to park your car - only attracting retired or poor people. They hate constituents & retailers.

  • rate this
    +3

    Comment number 201.

    Supermarkets pledge prices action

    Yup - they pledge to raise prices uniformly with both theri cartel and government backing.

    Good news for the consumer. We no longer need to wonder if we are being ripped off, now we will plainly know we are being ripped off.

  • rate this
    +5

    Comment number 200.

    If the supermarkets have agreed to end this marketing strategy , it means they've already come up with a new way to rip us off.

  • rate this
    +1

    Comment number 199.

    As a " rough rule of thumb " any discount of more than 20-25% is usually a bit of a fibb !! - because after VAT the average mark up on most mainstream goods is 30-38 % . Be very suspicious of big discounts on own brand goods - how can you check with other retailers for the best price on an own brand product ?

  • rate this
    +7

    Comment number 198.

    What on earth has happened to this country? Every business and politician is out to con the general public. It seems laws have to be introduced simply because of greedy CEO's and their cronies. And once again they all act as monopolies following each others con of the month.
    Buy a packet of trust and get a free packet of gotcha.

  • rate this
    +4

    Comment number 197.

    Another trick they sometimes play nowdays is with the assumption that buying bulk or larger pack size is cheaper, In Morrisons at least if one looks at the unit price on the shelf price or calculate it if they've decided to use different unit measures for different pack sizes then the unit price for the larger pack is often higher than that for the smaller pack

  • rate this
    +3

    Comment number 196.

    186. Birchy
    wrote
    "I avoid the big T like the plague, you go in for once simple item, it's on offer, say 1x500g for £2.50 or 2 for £4, "

    But watch out. Quite often the big T will only have 450g or even 400g packs on the shelf above the yellow flash quoting 500g. This is fraud.

    Even if it is a mistake, an offence has been committed, but they never get prosecuted.

  • rate this
    +6

    Comment number 195.

    Supermarkets to agree to price promotions 'code of conduct' and principles on discounts, drawn up by OFT.

    Yep, codes of conduct - that always works doesn't it - not even many of our MPs or newspapers can abide by them?

  • Comment number 194.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +4

    Comment number 193.

    Similar self regulation as the newspapers eh?
    Why would anyone intervene when they're all making money from it. Even the tax man gets his extra VAT share from over-priced goods.

  • rate this
    +7

    Comment number 192.

    I know why Asda hasn't signed up because they are terrible at raising prices, simply so they can advertise it as a reduction a few days later. They have lots of things on "roll back" i.e. reductions, and I have never seen thiese items at any other price for months. Very few of their supposed reductions are real reductions. Most have been put up, simply so they can say they are reduced, days later.

  • rate this
    +1

    Comment number 191.

    If I understand this correctly it only relates to special offers.
    2 things irritate me:
    When larger jars/tins/packets etc. are more expensive per gram/liter than smaller ones.
    When I have to go and weigh items using the fruit / veg section scales because one version is priced per gram and one per unit.

  • rate this
    +3

    Comment number 190.

    @ 132 Cheese and Biscuits
    I don't disagree with you but if you divide something up into much smaller quantities the price doesn't seem so high. For example paying tax at around 80p a litre doesn't sound as bad as £3.64 tax does on a gallon. Therefore, I think it helps to disguise the real amount of the tax you are paying on fuel.

  • rate this
    +3

    Comment number 189.

    174.Ppuj
    These regulations are to protect the dim.....That is what being smart is all about...not to feel constantly frustrated that you are a loser.

    So with comments like that, I'm assuming you constantly feel frustrated?
    Again, why is there an issue with protecting the vulnerable? I personally see being smart as a way to better society and make a fairer place to live with equality.

  • rate this
    +19

    Comment number 188.

    Consumers have the power to vote with our feet. Supermarkets are well aware that we are not as good as we were at shopping around and settle for convenience of buying in one place. In that sense we have got what we deserve. Save a fortune by buying the amount you need, not what’s packaged, from fruit & veg shops butchers etc – and it’s the freshest possible! It’s not rocket science.

  • Comment number 187.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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