“December is the busiest month of the year for retail sales and with online sales growing significantly, there is even greater competition in the market,” says commissioner Anna Rawlings. “Big sales and discounts are good for consumers and are an increasingly common feature of the retail industry in New Zealand. However, retailers need to ensure they are aware of their responsibilities under the Fair Trading Act.”
The Commerce Commission specifically censured promotions which compare a discounted price with a misleading non-discounted price. A breach of the Fair Trading Act could occur here if the retailer includes non-discounted prices which differ from the prices they usually charge in the promotion. This could occur via:
- Inflating the non-discount price advertised to exaggerate the discount.
- Advertising an RRP which does not correspond to the price the retailer usually charges.
- Selling products repeatedly and/or for extended periods while advertising this as a discounted price.
The Commission has previously warned and prosecuted retailers for misleading consumers in this way. In 2012, Progressive Enterprises was issued with a warning for advertising “at least 20%” or “at least 25%” off all beer at its Countdown, Foodtown and Woolworths supermarkets in a special promotion. The Commission found that in a number of cases, Progressive had not offered the discounted products at a non-discounted price for up to eight months.
“The Commission considers it misleading to use a standard shelf price as the basis for a saving claim when that price has not been displayed or charged for lengthy periods of time,” said Commerce Commission general manager of competition, Kate Morrison.
According to Nielsen, New Zealand groceries have one of the highest percentage of sales on promotion in the world. For every $100 spent on groceries, $59 is derived from producs on promotion. To find out what this looks like in the marketplace, Consumer magazine tracked prices online for a basket of 10 items at Countdown and New World Thorndon over a three month period and found that while the details of the specials varied, the majority of items tracked were discounted for about six or seven out of every 13 weeks. The highest percentage of promotion fell upon 250g blocks of Whittaker’s chocolate, which was on special at New World for 11 out of the 13 weeks.
Based on its research, Consumer called for closer price monitoring by regulators. The watchdog also scrutinised non-grocery discounting in October, when it found some items were “routinely on special” at Briscoes and Farmers: “Some items appeared to be on special all the time.”
The Commission has compliance resources available on its website.