Supermarkets are facing a potential investigation into ‘misleading’ pricing tactics after Which? issued a ‘super-complaint’.

Which? believes consumers could be hit by pricing practices

The consumer group has used its legal powers under the Enterprise Act 2002, which enables it to file the so-called super-complaint with the Competition and Markets Authority (CMA).

Which? is one of the few consumer bodies that is able to use the mechanism to alert the watchdog to market practices it believes can harm consumer interests. The CMA is now obliged to respond to the complaint within 90 days.

But having taken seven years to compile a detailed dossier of evidence on the issue, has Which? missed the boat in bringing what it claims are “confusing,” “dodgy” and “misleading” supermarket pricing tactics to the CMA’s attention?

The consumer group argues it hasn’t, pointing to four specific examples of “confusing” special offers, all of which were spotted being used by grocers within the last 18 months.

“The market has moved on, shoppers proving to be way ahead of Which? and any official body for that matter in looking after their own interests and combating the supermarkets’ tactics.”

Clive Black, Shore Capital

First to come under scrutiny were seasonal offers, where the higher price of specific goods only applied out of season. Which? said it found Ocado advertising a Nestle Kit Kat Chunky giant Easter egg at £7.49 for just 10 days in January this year, before being sold “on offer” at £5 for 51 days.

The use of was/now pricing also came under fire in the Which? complaint, in instances where the product had been available for longer at the lower price.

It cited the example of Heston from Waitrose acacia honey and ginger hot cross buns, which were advertised at £1.50 for 12 days earlier this year. They were later sold under the tag of “£1.12 was £1.50” for 26 days.

Waitrose responded to the Which? complaint, saying it “was an honest and isolated mistake for which we apologise”. The grocer also pledged to investigate how it occurred and take steps to ensure it doesn’t happen again.

Non-existent savings

Looking back into 2014, Which? found examples of prices increasing for multi-buy promotions, meaning that the customer saving was either less than claimed by the supermarket or, in some cases, completely non-existent.

The consumer group said Asda increased the price of a two-pack of Chicago Town four cheese pizzas from £1.50 to £2 as it was placed into a two for £3 multi-buy offer. The price of an individual pack reverted back to £1.50 when the offer ended.

The fourth offer highlighted by Which? was the ‘larger pack, better value’ promotion offered by Tesco, whereby individual items contained in the bigger pack were actually more expensive.

Last year, the chain sold four cans of Green Giant sweetcorn for £2, an average of 50p each, Which? said. A six-can pack was sold proportionately more expensive at £3.56, despite the fact the larger pack said “special value.”

Which? used mySupermarket.co.uk to find examples of the special offers and the price comparison website’s boss, Gilad Simhony, welcomed today’s super-complaint.

Simhony said: “mySupermarket has long noted the confusing deals and constantly fluctuating prices carried out by supermarkets, which misleads shoppers into thinking they are receiving a good deal when in reality they can be spending more.

“We call on the supermarkets to increase transparency in pricing and to display clearly the price per unit (PPU) on each product as this is the only fair way to compare products.

“Similarly, we encourage shoppers to compare prices before or during their shop as the difference between similar products or between the supermarkets can result in huge savings.”

Market shift

But, despite the recent examples highlighted by Which?, some observers have suggested the complaint has come at a time when supermarkets are winding down their promotional pricing strategies.

British Retail Consortium director of business and regulation, Tom Ironside, said retailers are “committed to treating their customers fairly and to avoid misleading them in any way”.

Ironside added that the BRC did not accept the implications of the super-complaint, adding the examples drawn on by Which? were “very specific” and “not in any way indicative” of the supermarket industry.  

“Over the last seven years while Which? have been running their research they’ve missed what’s been happening to the market”

Catherine Shuttleworth, Savvy

Catherine Shuttleworth, boss of retail and shopper marketing agency Savvy, likened the Which? complaint to “closing the gate several years after the promotional horse has bolted” and supported Waitrose’s argument that some of these deals could have been “delivered through human error”.

She said: “If Which? statistics are correct – if promotional participation hits 40% in an average supermarket – that’s a possible 15,000 products on promotion in any given week so four errors, while frustrating, is hardly the tip of an iceberg – more perhaps a reflection of the complexity of the businesses in an increasingly competitive market.

“And it turns out over the last seven years while Which? have been running their research they’ve missed what’s been happening to the market.

“We shoppers have switched in enormous number to discounters like Aldi and Lidl and pound stores where there has never been unit pricing displayed just straight forward prices that shoppers believe are keener than those offered by the big four.

“This has (albeit in some cases belatedly) shaken up the market and ensured that for the shopper there’s never been a better time to find great deals on the goods they want to buy. That, alongside the accessibility to price checking in real time on your own phone, means we are all savvy shoppers and are keeping the retailers on their toes.”

‘Surprise’ move

Shore Capital analyst Clive Black claimed the issue of a super-complaint was a “comedy” and suggested another investigation should be launched into whether shoppers, suppliers, shareholders and taxpayers would benefit from a “time-consuming and costly” inquiry.

Black added: “Our surprise and mild incredulity with Which? is not that it is investigating promotions and supermarket offers but that it has ‎taken so long to recognise that there may be a problem and do something about it. Indeed, a Which? spokesperson on this subject spoke of promotions being an issue for about seven years. 

“Meanwhile, in the real world, the market has moved on, shoppers proving to be way ahead of Which? and any official body for that matter in looking after their own interests and combating the supermarkets’ tactics. In needing to save money shoppers found new, lower-priced retailers and started to frequent their premises in droves.

“‘Horse bolted, stable door closed’ does not come anywhere near to the lateness of Which?’s activities here on behalf of shoppers to our minds. And the comedy continues with the recommendation of a super-complaint to the CMA, an organisation not exactly known for being snappy.”

It will have to be snappy on this occasion, with just 90 days to sift through the Which? dossier and make a decision on whether or not to launch a detailed investigation. Whether or not it launches an inquiry, the CMA has certainly been given plenty of food for thought.