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
    0

    Comment number 366.

    Advertising is always misleading to attract customers into the store which in one way is understanble for business, however the prices need to be sorted out so that people are not confused for what they paying for.

  • rate this
    +2

    Comment number 365.

    These dinosaurs need to roll over and die.

  • rate this
    +15

    Comment number 364.

    We need simple price information on the labels.
    It happens so often when comparing the price of some items that they use different units. per pack, per gram, per unit, per ml, per litre.
    We need to have a signle method to be able to compare easily.
    Every label should have per gram (regardless of whether its liquid or solid) and per unit.

  • rate this
    0

    Comment number 363.

    @327 'stracepipe'
    ~~
    Good post. If I see a promotion of large 870ml bottles of Fairy Liquid Original @ £1 each - I buy as many as the budget allows. Better value than 'anti-bacterial', exotically scented or pretty colours at twice the price for half the amount. All soaps are anti-bacterial.

    The other point you make is true - we buy too much food on promotion that can't be frozen or stored.

  • rate this
    +1

    Comment number 362.

    Would this also mean the end of 2 for £2 on a product that normally costs £2.39 for 1? That one always confused me.

    But never as good as the ones where it was 2 for £2 on a product that costs £1 for 1. That one always made me laugh :)

  • rate this
    +1

    Comment number 361.

    I used to think two small bags of rice costing less than one big bag daft -- until I realised who benefits from big/multi-pack discounts: those who can afford them. Students, poor and elderly living alone are hurt by the new law.

    Mark everything CLEARLY by unit price (weight/volume) and forget this silly law. Usually offers/vouchers only lower ridiculously over-priced items to still over-priced.

  • rate this
    +3

    Comment number 360.

    What I would like to know is are we really benefitting from loyalty cards?

    On the face of it, it looks like a good deal but I have noticed that points awarded often get reduced and you no longer get the same points for your purchases as you once did.

    I cannot decide if loyalty cards are actually rewarding us or just another gimmick?

  • rate this
    0

    Comment number 359.

    To cover the cost of this extra regulation the goernement has decided to start charging VAT on all food puchases, so it'll be buy one get one for the same price plus 20%

  • rate this
    +4

    Comment number 358.

    I'm sick of the supermarkets and their grabbing ways.

    The meat quality particularly is now at an all time low, top prices for low grade cuts of meat that are inedible unless braised for hours (who can afford to cook for hours now?)

    My local butcher is doing well because of their thieving ways

    Shop local, the quality is far higher!

  • rate this
    +6

    Comment number 357.

    So supermarkets are all of a sudden going to become "honest" are they?

    Be nice if there were clamp downs on the terminally low wages they pay, as well as what pricing structures they use.

    That's the big issue - the amount of people working for Tesco, Sainsburys et al for peanuts and being subsidised by Working Tax Credits paid by the tax payer.

  • rate this
    +6

    Comment number 356.

    Thats why we switched to using discount shops like Aldi. Fewer promos to battle, fewer club card schemes to work out. Means we buy what we need when we need it, anything we cant get at Aldi the Butcher is not far away as is a Frozen Food specialist. People really need to give the big 4 a lesson.

  • rate this
    +4

    Comment number 355.

    Nothing new. Shops do anything they can to con customers who don't have time to spend 5 hours doing a weekly shop working out all the prices as they go.
    It's be nice to know when will they stop the reduction in size/weight of items whilst maintaining the same price without telling anyone? Are we expected to remember last weeks size and compare to this weeks every week?

  • rate this
    +3

    Comment number 354.

    Remember Scarborough - I remember that being trialled, together with special trollies that took boxes, so you didn't have to repack everything. I could tell how much I'd spent as I went (great on a budget), could see if the special offer discount was applied, I didn't have plastic bags at all (far more environmentally friendly) and my veg didn't get crushed. I don't know why it stopped.

  • rate this
    +2

    Comment number 353.

    Car out of action a while ago, did all my shopping at our local village shop saved ££'s because they did not have a vast array of stock but just what I needed and the rest I could do without. Even got vegs from a local guy all grown by him, tasted superb even started to do my own baking and breadmaking.

  • rate this
    +2

    Comment number 352.

    Most of the shops I shop in give you the price per 100g When comparing similar goods/ different sizes of the same item this is what I use. And yes, it isn't very amusing to see that big "value" items sometimes cost less than multiple smaller purchases of the same item. The info is there to read though.

  • rate this
    +4

    Comment number 351.

    @334. musictechguy

    Are you kidding? You want to spend tax payers money sending in the police and dragging company's through expensive court systems because people are to lazy/stupid to pay attention to how much money they spend?? Should we take B&Q to court if the change the price of paint or restaurants if their steaks increase. The shops can charge what they want....if people are stupid enough!

  • rate this
    +1

    Comment number 350.

    @297 wibble575
    Eventually they'll be able to sell, and charge you what they like, because there won't be anywhere else left for you to buy what you need.

  • rate this
    -4

    Comment number 349.

    Who wants too be checking the prices constantly.All that means is your shopping for twice as long

  • rate this
    +2

    Comment number 348.

    Buyer beware is not an answer when supermarkets deliberately mislead.I photographed an identical pack of blueberries for £1.30 amongst other labelled at 2 for £3 or £2 each a 50% increase in a day so inflation should be double figures.The supermarkets are deliberately misleading on prices-when you see an offer you should have some certainty that they were not cheaper unit prices the day before

  • rate this
    +1

    Comment number 347.

    We can file this one in the "big business ripping off the consumer" category. And the directors moan about over-regulation

 

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