With 50 days until Christmas, the race for sales is hotting up, but retailers need to stick within the law when it comes to promotions.

As we approach the final straight in the annual Christmas trading war, retailers under pressure to beat last year’s sales will be looking for something to give them an edge over their competitors.

One tried-and-tested way of doing this is to entice customers with eye-catching special offers and price reductions. But in this high-pressure environment retailers need to be careful that they don’t overstep the mark and inadvertently fall foul of consumer protection law, which prohibits misleading offers.

According to pricing principles established by the Department of Business, Innovation and Skills (BIS), a product should be sold at the full price for at least 28 days before it can be marked down. In addition, the period of time a product is on offer with a price discount should not be longer than the period during which the product was sold at full price.

Seasonal products

The risks in this area are particularly high with seasonal products, which have short shelf lives and are often ranged in exclusively for the festive period. Examples might include novelty knitwear, Christmas tree decorations or any other kind of festive-themed merchandise.

Retailers tempted to put this kind of product on special offer quickly to gain a price advantage over their rivals should think carefully. Has the product been on the shelves at the full price long enough to comply with the BIS guidance?

Sales

Sales

Retailers need to be careful that they don’t overstep the mark and inadvertently fall foul of consumer protection law

For example, if a retailer wants to put some Christmas jewellery on offer at ‘25% off’ between November 24 and December 24 (30 days), the jewellery should retail at the full price for at least 30 days – in other words, from October 24 – to ensure that the offer is genuine.

Some retailers may be tempted to deliberately hold seasonal stock early to ‘establish’ a high non-promotional reference price to keep the product on sale for longer. This is a risky tactic.

BIS guidance states that comparisons with out-of-season prices have a significant potential to mislead, since there will inevitably be lower sales levels at these times. So a price markdown on turkeys established in July is unlikely to be acceptable.

January sales

Of course retailers also need to plan ahead and think about the January sales. If certain products have been earmarked for the January sales now, make sure that they have been on sale at the full price for long enough to support the offers you intend to run.

It is important to remember that you have to combine all price markdowns when calculating how long the product must have been on sale at the full price. So if a product is sold at 25% off for two weeks, 50% off for four weeks and 75% off for two weeks, the product should have been sold at the genuine full retail price for a minimum of eight weeks in total.

It is important to bear this in mind if you anticipate that a particular product or line is likely to be on sale for a long time, with multiple price markdowns.

  • Duncan Reed is a commercial associate at TLT Solicitors