I spotted an interesting article in this week’s copy of The Grocer, which addressed the issue of how consumers are being misled by promotions (Bogofs threatened as the OFT eyes ‘misleading’ promotions), where it was suggested that pricing practices such as the bogof (buy one get one free) could be facing a regulatory slapdown.
The article highlighted the importance of making sure consumers aren’t hoodwinked by less than transparent promotions. The OFT (Office of Fair Trading) is right to endeavour to give consumers better protection than ‘caveat emptor’. Mr Average is indeed very easily misled. The article listed the top five worst pricing practices, supplied by London Economics, which cited Drip pricing, Time-limited offers, Baiting, Sales and Complex pricing as the worst offenders.
In another example not noted in the article, even alert consumers may find they have been subtly duped but the prominence of savings in relation to actual price:, eg :’£1.50’ in bold lettering – with a not so bold qualification ‘saving’ compared with a relatively indistinct actual price of £2.99 – a real and common example from a reputable retailer. However, a slapdown seems fairly unlikely. Trading Standards, the Local Authority Trading Standards Services, that administers the law, are much more inclined to encourage self-regulation and in the UK are typically lenient. All retailers know that in the long run ‘compliance’ is in everyone’s interest: and ‘sharp practice’ in the long term builds cynicism and weakens loyalty, which leads to a situation where consumers administer compliance.
In my personal experience, the Trading Standards guiding principle for retailers is ‘do (pretty much) whatever you want, provided you don’t mislead’. This was made very clear to me when I consulted OFT for their opinion on implementing daytime promotions using ESL (electronic shelf-edge labels). I was surprised to find the department wrote to me at some length and confirmed they would be comfortable with this practice provided the consumer was properly informed at all times.
Whatever the subtleties of marketing though, as retail price and promotions become more dynamic, the risk of error and the need for automated compliance becomes greater, and it’s clear that ESL technology enforces compliance – and therefore the retailer’s long-term interests, by:
o Guaranteeing there are no inconsistencies between retailers’ various sub-systems because of manual activities and delays
o Providing consumer information that is clear and consistent, including brand messaging - if that is part of the retailer-brand deal
o Ensuring promotions are activated or deactivated as and when required
o Allowing tuning of promotions and micro-market pricing to match consumer responses
o Providing timely and accurate comparative price information or product information – reinforcing consumer confidence
This isn’t an issue that’s going to go away. The need for compliance and accuracy become more of a challenge the more innovative and dynamic retailers become.
Jnn Naef
Director Product Marketing
Jann.naef@zbdsolutions.com
