Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Claims on a website for a supermarket, www.tesco.com, seen on 23 October 2013, stated "Hobgoblin 4x440ml Can ... SAVE 49p Was £4.99 Now £4.50 valid from 23/10/2013 until 12/11/2013".
The complainant, who understood that the product had been available for £4 for three months until 7 October 2013, challenged whether the promotion was misleading because:
1. they understood that the product had not been available at the higher price for a reasonable period of time; and
2. the product was still being sold at the lower price after the promotion had closed.
1. Tesco Stores Ltd said the product had been priced at £4.99 from 2 October 2013 until 22 October 2013, a total of 21 days, in all Tesco UK stores that regularly stocked the product. They considered £4.99 to be a genuine retail price and provided details of how many units of the product they had sold at that price. They said that their pricing for the product was consistent with other retailers in the market and believed that customers accepted £4.99 as a genuine price for the product.
They said the product was placed on promotion at £4.50 from 23 October to 12 November 2013, also a total of 21 days, and was again available at that price in all Tesco UK stores that regularly stocked the product. They explained that, during the promotional period, the shelf labels for the product were yellow and featured the former price £4.99 crossed out. They said the Tesco website also featured claims about the product being on promotion and referenced the former £4.99 price. They considered that, by communicating that the product was on promotion during those three weeks, they helped to alert customers to the recently lowered price point.
They said they had agreed to adhere to the Office of Fair Trading's (OFT) Guidelines on Food Pricing and Promotions at the end of 2012 and had therefore agreed to adhere to a "one-to-one ratio" in relation to their pricing and promotions. They explained that that meant that they would not advertise a product as being on promotion for a period longer than that product had been available at a higher price. They stated that, given the varying nature of supermarket goods and customer purchasing patterns, it had also been acknowledged that product pricing could not necessarily remain static for as long as might usually be expected in other sectors. They said they considered that 21 days was an appropriate period for sale of the product at a higher price before reducing the price and communicating that to customers as a promotion.
They stated that their experience had shown that the product was very responsive to the pricing of equivalent and substitute products sold by Tesco and its competitors, and that their promotions for the product tended to align with the pricing of other market players. They said customers continued to purchase the product at all price points between £4 and £5 and provided details of the total sales of the product, at varying prices, from October to December 2013. They considered that those sales showed that they had maintained reasonably consistent selling volumes of the product irrespective of price variations and supported their view that £4.99 was a genuine retail price at which customers would purchase a significant number of goods. They provided a pricing spreadsheet for August to December 2013, which showed that the product had been available for £4 from 1 August until 1 October 2013.
2. Tesco said they continued to sell the product at £4.50 from 13 November to 3 December 2013, but that the price point was not communicated to customers as a promotion and the price was featured on a regular white shelf label during that time. They said the price remained at £4.50 during that period to reflect other retailers' selling price of the product. They did not consider this sales period to be a promotional period and stated that subsequent changes to the product's price reflected market pricing and were consistent with Tesco's approach to the "one to one ratio".
The ASA noted that the ad stated "Hobgoblin 4x440ml Can ... SAVE 49p Was £4.99 Now £4.50 valid from 23/10/2013 until 12/11/2013" and considered that consumers were likely to understand that to mean that £4.99 was the usual selling price for the product and Tesco had reduced the price for the promotional period, meaning that consumers benefitted from a saving of 49p. We noted that the product had been on sale at £4.99 for 21 days immediately before the promotion, but that it had been available at £4 for at least two months prior to that. Although we acknowledged that the product category was one in which prices fluctuated regularly, we considered that, because the product had been available at £4 for at least two of the three months leading up to the promotion, and for at least twice as long as it had been available at the higher price referenced in the ad, it was reasonable to assume that £4 was the normal selling price for the product at the time the ad was seen. Because of that, and because we considered that the ad implied that £4.99 was the normal selling price for the product, we concluded that the promotion was likely to mislead consumers into believing that a greater saving was available than was the case.
On that point, the promotion breached CAP Code (Edition 12) rule 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising).
We noted that the ad stated "…Was £4.99 Now £4.50 valid from 23/10/2013 until 12/11/2013" and considered that consumers were likely to understand that, in order to take advantage of the 49p price reduction, they would need to take the offer up by the advertised end date of 12 November and the price would therefore revert to £4.99 after that date. However, we understood that the price remained £4.50 until 3 December. Although we acknowledged that this reflected a price reduction and was not a result of the promotional end-date being extended, we considered that the inclusion of a closing date in the ad implied that the price would be increased to £4.99 after that date. Because that was not the case, we concluded that the ad was likely to mislead in that respect.
On that point, the ad breached CAP Code (Edition 12) rule 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising).
The ad must not appear again in its current form. We told Tesco Stores Ltd to ensure that prices used as the basis of savings claims reflected the normal selling price for the product and not to imply that a product would revert to a higher price if that was not the case.