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Commerce Commission cracks down on retail pricing strategies

  • News
  • May 11, 2017
  • The Register team
Commerce Commission cracks down on retail pricing strategies

The $800,000 fine issued to Bike Barn in February for misleading advertisements apparently hasn’t deterred Kiwi retailers from continuing to sail close to the wind when it comes to dodgy discount sales advertising and price promotions. The situation is so concerning that the Commerce Commission has issued an open letter warning retailers to comply with the law.

In the open letter, the Commerce Commission says pricing concerns were the largest source of consumer complaints to the Commission in 2016. It acknowledges the importance of discount sales in attracting consumers, and that these sales can create value for consumers by driving competition, but notes that inaccurate price claims and exaggerated discounts are unfair to consumers and other retailers.

Pricing, discounting and other advertising and promotional practices are a current area of focus for the Commerce Commission’s compliance team.

A range of concerning pricing practices it has noted include:

  • Exaggerated discounts: giving consumers the misleading impression that they are getting significant discounts from usual selling prices when in fact the items have never sold, or do not normally sell, at the price which is being compared with the advertised discounted price.
  • ‘Was/Now’ discounts: giving consumers the misleading impression that items had been offered at a previous price, and are now being offered at a lower price when in reality, the items have never sold, or do not normally sell at the price advertised as the previous price.
  • Continual promotional pricing: continually selling products at an advertised promotional price giving consumers the misleading impression that the promotional price is less than the price they would usually pay. If a business continually sells a product at a promotional price then the promotional price becomes the usual selling price.
  • Fine print: giving consumers the misleading impression that the advertised price is the total price they need to pay for the good or service when additional unavoidable charges must also be paid and they are contained in the fine print.
  • A sale is in its ‘Final days’ or items are at ‘clearance prices’: creating a sense of urgency for consumers to act to get the discount, when in fact the items continue to be offered at the same price after the ‘final days’ or ‘clearance sale’ finishes.
  • Limited stock at discount prices: using ranges which give consumers a misleading impression that a promotion is more attractive than it is. For example, claiming goods are on sale “from $9.99” or have “up to $50 off”, when only a small proportion of goods are on sale at $9.99 or have $50 off.

Companies found in court to have breached the Fair Trading Act 1986 can be fined up to $600,000 for each breach, and an individual up to $200,000. Repeat offenders can have their directors and managers banned from managing any company for a period of up to 10 years.

The Commerce Commission advises retailers to stay within the law by avoiding any misleading marketing claims. Any claims a business makes about price must be clear; accurate, with no exaggerations; and unambigious, with fine print kept to a minimum.

More information is available from the Commission’s fact sheets:

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Black Friday and Cyber Monday: Deals for Kiwis

  • News
  • November 22, 2017
  • Courtney Devereux
Black Friday and Cyber Monday: Deals for Kiwis

On the weekend starting 24 November, many retailers will lower prices in a day-long sale. From independent stores to multichannel retailers, who is jumping on the Black Friday and Cyber Monday bandwagon?

Read more
 
 

Enhancing the experience: A growing demand

  • Design
  • November 22, 2017
  • Courtney Devereux
Enhancing the experience: A growing demand

Some commentators think food and integrated hospitality offerings will save brick and mortar retail from obsolescence in the age of ecommerce. But does catering to the consumer’s every need result in sales, or are shoppers moving on without making a purchase? In the Enhancing the experience series Courtney Devereux looks into why these two different sectors are working together.

Read more
 
 
 
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Kiwi retailers cash in on Singles’ Day

  • News
  • November 21, 2017
  • Sarah Dunn
Kiwi retailers cash in on Singles’ Day

The Chinese holiday Singles’ Day, popularised by Alibaba as the ’11.11 Global Shopping Festival’, is now the biggest sale event in the world. Alibaba reports that US$25.3 billion of gross merchandise volume was settled during the 24 hours of Singles’ Day this year. Not all of that went to Chinese retailers, however – a handful of Kiwis made the most of the opportunity.

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Updated: Noel Leeming launches a dedicated after-purchase services division

  • Technology
  • November 20, 2017
  • Sarah Dunn
Updated: Noel Leeming launches a dedicated after-purchase services division

The Warehouse Group’s electronics retailer Noel Leeming has been looking at expanding its focus on services this year. Now, it’s launched a dedicated after-purchase services division: MyTechSolution. The change also means that customers will be charged for access to Noel Leeming's helpdesk if the request goes beyond a "quick fix".

Read more
 

Cameras aren’t just for security anymore

  • In Association with Axis Communications / Sektor
  • November 20, 2017
Cameras aren’t just for security anymore

In-store video cameras revolutionised loss prevention when they first became available to retailers, but as camera technology continues to evolve, they can now provide a plethora of data that supports better business decisions.

Read more
 
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