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:

This is a community discussion forum. Comment is free but please respect our rules:

  1. Don’t be abusive or use sweary type words
  2. Don’t break the law: libel, slander and defamatory comments are forbidden
  3. Don’t resort to name-calling, mean-spiritedness, or slagging off
  4. Don’t pretend to be someone else.

If we find you doing these things, your comments will be edited without recourse and you may be asked to go away and reconsider your actions.
We respect the right to free speech and anonymous comments. Don’t abuse the privilege.

 

Upcoming retail changes: What to expect in 2017

  • News
  • May 26, 2017
  • The Register team
Upcoming retail changes: What to expect in 2017

With the influence of digital marketing, international up-and-comings and constant changes in consumer culture, 2017 has seen changes already in the retail industry, so what are some important up and coming changes?

Read more
 
 
 
 

How did that happen? Crocs

  • News
  • May 25, 2017
  • Courtney Devereux
How did that happen? Crocs

A key footwear player from the mid-2000s is slithering out of the swamp of unfashionability and onto the runway. That’s right: Crocs are back.

Read more
 
topics
Spotlight on signage
At first glance, the humble in-store sign might ...
Red Awards 2016
The Red Awards for retail interior design celebrate ...
Auckland Unitary Plan
Auckland is changing. The Unitary Plan will decide ...
Sisterhood
Women in retail help one another. We spoke ...
All things to all people
Kiwi retailers share their omnichannel strategies.
Rising stars
Retail's top young achievers.
How to open a store
Sarah Dunn considers what it would take to ...
Delivering on your promises
The sale isn't over until your item is ...
Retail in heartland New Zealand
Retailers keep the regions pumping, but how strong ...
The changing face of retail
Shifting demographics are creating big changes in New ...
The retail yearbook
With the help of experts in the retail ...
Retail rogues
We put the spotlight on staff training. Jai ...
Here come the giants
Topshop has arrived in Auckland’s CBD, David Jones ...
From retail to e-tail
Ecommerce has become part of the way mainstream ...
Loyalty in the digital age
How are retailers maintaining loyalty? Sarah Dunn, Elly ...
Window shopping: A spotlight on social media
Sarah Dunn and Elly Strang look at how ...
The Innovators | In partnership with Spark Business
Technology is rapidly changing the retail industry as ...
 
 
 

Two minutes with: Roy Campbell

  • News
  • May 25, 2017
  • The Register team
Two minutes with: Roy Campbell

We had a brief chat with Roy Campbell, chief executive of Smiths City. The listed national chain sells electronics, furniture and beds, among other lines, and moved into Auckland with the purchase of the three-store Furniture City business early in 2016.

Read more
 
 
Next page
Results for
Topics
Jobs
About us.

The Register provides essential industry news and intelligence, updated daily. And the digital newsletter delivers the latest news to your inbox twice a week — for free!

©2009–2015 Tangible Media. All rights reserved.
Use of this site constitutes acceptance of our Privacy policy.

Advertise
The Register

editor@theregister.co.nz

Content marketing/advertising? Email marlene.coote@tangiblemedia.co.nz or call 09 358 7297 / 027 544 2298

View Media Kit

}