Six of the UK’s largest furniture and flooring retailers are to be investigated by the Office of Fair Trading over their Sales practices. Retail Week takes a closer look at the details of the investigation.
- The OFT investigation is examining price promotions used by six leading high street carpet and furniture retailers which include Carpetright. The OFT has not disclosed the names of the retailers but, as revealed by Retail-Week.com on Thursday, it is thought that DFS, ScS, Dreams, Bensons for Beds/Harveys and Furniture Village are also being investigated.
- The OFT said it has launched the investigation after finding that “many are misleading consumers into thinking that they are getting a bargain by artificially inflating prices in order to promote sales and price cuts that are not genuine”.
- The retailers are being investigated for the potential use of a practice known as ‘reference pricing’, which “usually sees a retailer include a reference to a higher artificial price when advertising the current price of a product to demonstrate it as being of good value for money”.
- The OFT said it found “systematic examples of reference pricing” within the industry. It said there were a “significant number of products amongst certain high street retailers where no sales at all took place at the artificially inflated reference price”. In all cases no explanation of how and when these reference prices were established were provided, the OFT said.
- The OFT said in some instances current prices were compared to ‘was’ prices that the retailer had formerly charged for the product; after sales prices (ASPs) that the trader intended to charge in the future; or recommended retail prices (RRPs) recommended by a manufacturer.
- According to the OFT’s research, displaying high reference prices can make consumers buy goods when they otherwise would not, “often to their detriment” and that it “infringes consumer protection law regulation”.
- The OFT has written to the retailers “asking them to cease using pricing practises that mislead consumers by signing legally enforceable undertakings”.
- The retailers have until Autumn 2013 to respond. “If they fail to agree to these undertakings then the OFT will consider what further action it will take”, the OFT said.