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
    +2

    Comment number 566.

    What business does government have telling supermarkets how to run their businesses.
    Maybe we will finish up with one "official" store in every town with "controlled State prices"? Of course there would be no bread and no meat or other necessities to buy, and the shelves will be empty due to govt policy.
    The Name of these Stores of the State?
    GUM!
    It was how the Soviets "improved" their economy!!

  • rate this
    0

    Comment number 565.

    I recall from a consumer programme recently that the stuff on sale at eye level makes them the most profit, so I reckon from now on we should all look up and look down as we shop for the bargains that makes the supermarkets less profit.

  • rate this
    +2

    Comment number 564.

    This has been going on for years. First you get 25% extra, free. Then the price goes up, but its ok bceause you're getting extra for free - Next the extra for free label comes off and the container size is reduced again. Net result is a price hike...

  • rate this
    0

    Comment number 563.

    Buyer beware.....simples. But when pricing in a supermarket, or any other store, breaks the criminal law it should be prosecuted.

  • rate this
    +3

    Comment number 562.

    557. darren
    Sadly that some should read most. I have given up with the utopia you hanker after. It is not there.
    I now live in the real world where I distrust most people until I have got to know them and realise that everyone wants some of me from the tax man to the supermarkets to the beggar on the street. I now shop local so the local trades people get my money as I now trust them.

  • rate this
    -1

    Comment number 561.

    'Tesco said it welcomed the OFT's "clarity"'

    I would welcome Tesco being clear and would very much welcome them ceasing to price "value" items higher than others - e.g. pre packed Value bananas. I have raised this with them on a number of occasions and have met with a staunch silence. I believe they know full well what they are doing.
    It's about time they stopped. A voluntary code is not enough.

  • rate this
    +2

    Comment number 560.

    528. anotherfakename "Try using the local butcher, the veg stalls on the local market, buy your eggs from the market and bread from a baker."

    Where I live, there is no local butcher, there is no local market, and there is no baker - I have not seen such shops for many years.

  • rate this
    0

    Comment number 559.

    In the past we had criminals ram-raiding electrical goods outlets for the latest TV sets and gadgetry, to sell for profit.

    In the future we will have ordinary people ram-raiding supermarkets for food due to the high prices.

  • rate this
    0

    Comment number 558.

    A real can of worms this is (on special offer of course!). Buy one get one free, buy two get one free, two for the price of one, one for the price of two..... and I have actually SEEN the latter in supermarkets as a "special promotion" but worded slightly differently.... amazing, but true. When will the law protect against these shenanigans? Law? What law? How stupid of me!

  • rate this
    0

    Comment number 557.

    553. Ppuj
    JUST NOW
    550. darren
    "What a load of socialist tosh. How come the Co Op are fleecing people then?"

    I'd rather inhabit my world of common humanity and a sense of decency as opposed to one which sees us as money grubbing back stabbers only on the look out for what "I" can get out of "you".

    It doesn't have to be that way, we can organise ourselves differently, some just don't get it.

  • rate this
    0

    Comment number 556.

    Also, have you noticed how a lot of products may be the same price but have become smaller. Manufacturers should be made to put 'New smaller size' labels on their goods when they do this.

  • rate this
    +1

    Comment number 555.

    We are a commodity, either we do something about it or accept it.
    Which will it be?

  • rate this
    0

    Comment number 554.

    I apply the same principle as I do in the January sales. If you wouldn't pay full price for something, don't get it.

    So if cheese is on BOGOF at £4.99 for, say, a 500g pack, ask yourself - would I really be happy to buy all this cheese and spend £10 ordinarily? Will I really eat all this cheese? If no, get yourself a decent, cheaper 500g block of cheese from the deli counter.

  • rate this
    +1

    Comment number 553.

    550. darren
    What a load of socialist tosh. How come the Co Op are fleecing people then?
    People work to get the most they can with a sprinkling of morality thrown in. Look after yourself in a fair minded way but realise there are a lot of people out there that want a bit of you. You just need to be smart.

  • rate this
    -4

    Comment number 552.

    And what are the OFT/Supermarkets doing to compensate consumers for the abuses that they have suffered before the code was put in place? The OFT has the power to levy fines for market abuse - why is this not happening.

    Perhaps as a goodwill gesture the supermarkets could forego the aanual rise of price rises that they implement in the run up to Christmas?

  • rate this
    -1

    Comment number 551.

    Yeah, of course the supermarkets will do the nice PR act, but it won't make any difference to us punters unless it is to increase their profits.

    I always look at the small print and TV programmes like Rip Off Britain/The Men That Made Us Fat have made me look harder still.

    I don't buy fruit juice in cartons any more.

  • rate this
    +1

    Comment number 550.

    545. Doozie
    "INSTEAD OF MEGA PROFITS FOR A FEW
    WE ARE DOOMED FOR EVER "

    Entirely agree with the sentiment. Furthermore, there is nothing inherently stopping us as a society from going down that path. The argument that private profit is the only thing that drives advancements and organises business is a wholly offensive one. Humans can operate for higher and nobler causes than pure greed alone.

  • rate this
    0

    Comment number 549.

    546.
    cheryl

    There's lots of things where pack sizes have been reduced and prices remained the same (for a while). Don't expect anything to be done about that though, it helps to hide inflation...

  • rate this
    0

    Comment number 548.

    @546
    Highland spring interestingly use the same factory as tesco own brand of water in Scotland yet charge 2 completely different prices. I visited the local area where they get the water and was amazed to find I could drink it for free

  • rate this
    -1

    Comment number 547.

    Surely there's a way around this? Can't we get some clever bod to create an iPhone (or similar) app. Shopper takes photo of products universal bar-code (UPC) or similar and get the app to provide the customer with price trends over last few days or months. Better still, where you can find it cheaper!
    Or has it already been done?

 

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