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OFT price promotions plan ‘doesn’t go far enough’

By Mike Stones , 30-Nov-2012
Last updated the 30-Nov-2012 at 11:59 GMT

Shopping with confidence. Prices and promotions should be fair and meaningful, said the OFT
Shopping with confidence. Prices and promotions should be fair and meaningful, said the OFT

Consumer watchdog Which? says the Office of Fair Trading’s (OFT’s) clarification to retailers on how to correctly advertise and promote discounted prices for food and drink doesn’t go far enough.

Which? welcomed the clarification but wanted further action. Its executive director, Richard Lloyd, said: “It should be good for hard-pressed consumers that the OFT has now made clear to supermarkets what is off limits when they promote products with special offers or discounts.

“We now want the retailers to go further and make a stronger commitment to fair treatment of their customers. So that, as well as scrapping misleading promotions, they ensure busy shoppers see clear, consistent unit pricing with real bargains that are easy to spot at a glance.”

Morrisons, Sainsbury, Tesco

So far, eight supermarkets have agreed to a set of OFT principles to address concerns over special offers and promotions for food and drink. Aldi, Co-Op, Lidl, Marks & Spencer, Morrisons, Sainsbury, Tesco and Waitrose have agreed to adopt the principles into their own policies.

According to an OFT statement:“The principles clarify the OFT’s view on how promotional claims should be used so that consumers can rely on them being fair and meaningful regarding the value of the product or the existence of a discount.”

The clarification follows an investigation into the supermarket sector to consider concerns that shoppers could be confused by the way prices are displayed, advertised and promoted.

‘Misleading promotional practices’

While the OFT did not conclude supermarkets had breached the law or were engaging in misleading promotional practices, it did find “what appeared to be inconsistency in the way the law was being interpreted and applied”.

Clive Maxwell, OFT chief executive, said: “‘Household budgets across the country are under pressure and shoppers should be able to trust that special offers and promotions really are bargains. 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, which accounts for 44% of household spending.

Maxwell said the principles taken together with previous guidance provide 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.

The principles aim to prevent short-term, artificially higher prices disguising underlying prices. So, offers specifying ‘half price’ or ‘was £3, now £2’ must be sold at the new discounted price for the same, or less, time than the previously higher price.

Lloyd said it was unacceptable that shoppers could be confused into thinking that they were getting a good deal when that might not be the case, at a time when household budgets were squeezed and food prices were a top financial worry.

“Regulators should be prepared to take enforcement action against traders found breaking the rules,” he added.

A spokesman for the British Retail Consortium said its members were engaging with the OFT on the topic.

“Retailers take their obligations not to mislead customers very seriously. They already follow the BIS [Department for Business Innovation and Skills] guidance on consumer protection regulation, which lays out the general principles on pricing matters of this sort. They always make the basis of any price claims or comparisons clear.

“So far as we know, none of our members has been prosecuted for failing to comply, evidence that they are behaving responsibly.”