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
    +6

    Comment number 226.

    208. DG737
    They also trick the less savvy customers.
    Tesco for example had Lynx Bodyspray on special offer 3 tins for £5 (Usually £2.69/Ea) saving £3.07
    Less than a week later the sign had been changed slightly to read 2 tins for £5 so if you didnt recheck the wording and bought 3 cans it would of cost you £7.69.
    --
    Anyone 'tricked' by an offer changing like that shouldn't be allowed out.

  • rate this
    +4

    Comment number 225.

    A bargain is not always a bargain. If you do not usually buy the product leave it alone - unless it is a "treat" of some sort.

    I know these things, I am a Yorkshireman, it's in my genes.... and in my wallet's genes.

  • rate this
    +2

    Comment number 224.

    214.EazilyGrizly

    I'm not sure anybody can complain that things on offer sell out so 'have' to buy the more expensive stuff. If you want it cheaper, go elsewhere. If you want wine badly enough, pay the extra.

    People do love a moan at everything don't they?

  • rate this
    +1

    Comment number 223.

    Pre-washed and bagged Brussels Sprouts, 75p a kilo cheaper than loose, unprepared ones. What's that all about? 6 cans of cat food 5.60 or a Special Offer of 12 for £12. Same Brand; 2 for 89p at the local convenience shop.

  • rate this
    0

    Comment number 222.

    Shops must work on getting their shelf tickets clearer. Use a consistent measure (g or ml), and having the price go through the tills as the price the shelf ticket says. I think the only way this will happen is when individuals scan each item as they go round the store with a zapper machine. But there should be teams of peple checking this every day.

  • rate this
    +1

    Comment number 221.

    The prevailing attitude in both business and government is just to grab as much money as possible with the minimal input. In other words the customer can take a running jump.

    This code means nothing as other methods of obscure pricing will be invented and the public will then have to learn those as well.

    In the end retail will have to relearn that customers matter.

  • rate this
    +2

    Comment number 220.

    @109

    Couldn't agree more - discounters are the way to go.

    Although for some reason - and in spite of underhand pricing tactics - people seem to trust the big supermarkets.

    The simple fact is that Aldi and Lidl products are usually just as good (often better!) than Tesco etc and pricing is done without trying to con you.

  • rate this
    +1

    Comment number 219.

    So is this the same ASDA who here say they don't need a code for offers as they have low prices all the time, but Which caught them doubling the price then claiming it was "reduced" and putting the price back after the offer? Caught out lying twice....
    http://www.bbc.co.uk/news/business-18191773

  • rate this
    +2

    Comment number 218.

    For those that can already perform basic maths, this will have absolutely no effect. Unfortunately, there are a huge number of people who lack the ability to add up and this move will help them in their weekly shop. Shame on you by the way - it's no wonder this country is going down the pan.....

  • rate this
    0

    Comment number 217.

    @121 Alex
    Better still, buy your steak from a butcher.

  • rate this
    0

    Comment number 216.

    It might be a useful idea that besides having an "unintelligible to humans" bar code on ALL items in ANY shop, we have the price printed in £p? Then even the mathematically challenged can add up for themselves on their calculators. All very well to say II| I|II and find that it is really 50p more than you expected!

  • rate this
    +1

    Comment number 215.

    When you've worked in retail for a bit, you realise that there are no deals to be had, it's all an illusion to make you feel like you're beating the system.

  • rate this
    0

    Comment number 214.

    Re Tesco, if you use a smaller Tesco Express, for wine they will have say 4 or 5 lines on half price, which will generally be sold out by the evening and not restocked. The rest of the wine will be much more expensive. They deliberately don't restock as they want people to buy the more expensive product. Again this is the dark arts of draw the customer in with false promises...

  • rate this
    +4

    Comment number 213.

    We don't have an Asda, Sainsburys, or Tesco.

    We have Waitrose and Aldi. I am not suprised both signed up, the effort required for them is going to be minimal as they generally operate fairly decently.

    We occasionally try stuff from the big supermarkets, then come back to Waitrose as we get twice the quality for 10% more, i.e. waitrose bleach is so strong you hardly need any to be effective.

  • rate this
    0

    Comment number 212.

    I'm adopting a new code too. I'm never going to drink more than 2 units of alcohol per session - or am I confused? . . . . . We'll see.

  • rate this
    0

    Comment number 211.

    Because of the culture practised by just about all retailers these days. The thoughts and actions are based upon. ' How can we get away with hoodwinking the customer ' not ' How can we best serve the customer so that we may grow our business legitimately based on quality, value and service ' The pricing scam should be described as retail mugging.

  • rate this
    +1

    Comment number 210.

    Bring back RETAIL PRICE MAINTENANCE; that will put a stop to it.

    Asking the stores to police themselves is nonsense.
    Supermarkets cannot be trusted.

    The very same people who verbally twist advertising to distort its meaning will be twisting their arguments to whatever body is formed to monitor them.

  • rate this
    +10

    Comment number 209.

    Disagree with comments saying if you don't understand the pricing then you're thick or lazy.
    I'm good at mental arithmetic and I'm also a scotsman so a bargain I shall seek. Unfortunately my partner often finds me staring at cheese for a worryingly long time. "Just get that orange one" she frustratingly says as I try to make sense of the different weight v price v special offers conundrum.

  • rate this
    +1

    Comment number 208.

    They also trick the less savvy customers.

    Tesco for example had Lynx Bodyspray on special offer 3 tins for £5 (Usually £2.69/Ea) saving £3.07

    Less than a week later the sign had been changed slightly to read 2 tins for £5 so if you didnt recheck the wording and bought 3 cans it would of cost you £7.69.

    They need to be better regulated not just for groceries but for fuel costs as well

  • rate this
    +1

    Comment number 207.

    One supermarket at least price matches to Tesco - but against their multi-buy price without offering the multi-buy. i.e Tesco is offering full price £1.50 each and two for £2 - and the supermarket I have in mind increases their price from £1.40 to £1.50 each claiming price match with Tesco - but DOESN'T offer the 2 for £2 deal.

 

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