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Supermarkets need to wean themselves off their discount addiction

Which? has reported the grocery industry to the authorities over 'misleading' offer prices.

by Jack Torrance
Last Updated: 23 Apr 2015

No longer just a way of moving excess stock, discounts have become ubiquitous in the supermarket of 2015 – in fact 40% of all groceries are sold at a supposedly knock-down price. That's a practice that's been criticised for its impact on suppliers but also, perhaps counter-intuitively, for its effect on consumers' wallets. 

Today the vocal consumer group Which? (better known to some as the brand of the Consumers' Association) launched 'one of its most powerful legal weapons', the appropriately-named 'super-complaint' against the supermarkets, accusing them of misleading customers with confusing special offers, 'like dodgy multi-buys, shrinking products and baffling sales offers – that exaggerate discounts,' as well as larger packs which offer less bang for your buck than smaller ones.

Which? Didn't have any stats about how prolific the practices were, but said that they could be costing customers 'hundreds of millions of pounds per year.' Specific examples included a four can pack of Green Giant sweetcorn for £2 in Tesco, when six cans were proportionately more expensive at £3.56, and Asda increasing the price of one pack of Chicago Town Pizza from £1.50 to £2 as it went onto multi-buy at two for £3. 

It's possible that the examples were genuine mistakes and isolated incidents. 'The examples set out are very specific in nature and are not in any way indicative of broader systemic problems across the retail industry,' insisted Tom Ironside, the British Retail Consortium's director of business and regulation. 'With thousands of products and special offers in store every day, errors may from time-to-time occur, however these are rare in nature and are resolved quickly by the retailer concerned.'

And even if the claims do prove to have some basis, the supermarkets probably won't have too much to worry about. For all its posturing, Which?'s super-complaint simply forces the Competition and Markets Authority to have a look at the issues raised, something it would probably done already if it thought a case could be made.

Even if the CMA does find wrongdoing, its powers include 'recommending the quality and accessibility of information for consumers is improved' and 'encouraging businesses in the market to self-regulate,' which isn't likely to have supermarket bosses quaking in their boots – though it can also 'take competition or consumer enforcement action' if things are truly serious.

It's not just for the sake of consumers that the big supermarkets need to sort out their discounting though. Relentlessly cutting prices isn't a sustainable business model and has played right into the hands of Aldi and Lidl. Despite their misleading label, the 'German discounters' actually don't offer as many discounts and instead focus on offering consistently lower prices - and have substantially increased their market share over the last couple of years.

The supermarket establishment needs to either attack Aldi and Lidl on their own terms, offering everyday lower prices (which, to be fair they have started to do), or work harder to justify their higher prices that they do charge.

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