It's that golden time of year for retailers, which begins with Black Friday, the day after the November Thanksgiving holiday in the US, and lasts all the way to the end of the January sales. It is the busiest time of the retail calendar and companies and their investors hope the till-ringing translates into serious profits.
Consumer groups often complain that the deep discounting at this time of year is, for the most part, a falsehood, and often customers are hoodwinked by sales hype.
Discount pricing is controlled from country to country by various rules, regulations and guidance, but in the eyes of consumer champion groups these are not robust enough in practice, not least because of the millions of products and prices that move throughout the year. Customers can conclude they are not getting the bargains they might think and have been swept up by the hype of the Black Friday, Christmas and January sales marketing machines.
Loyalty pricing schemes
The UK's Competition and Markets Authority set out to determine this summer if "people can have confidence in pricing information when shopping online, and that buying decisions are not influenced by misleading, illegal practices".
Supermarket loyalty-pricing schemes in the UK have been judged to offer "genuine savings", according to the country's competition watchdog, but it said consumers should still shop around, as such pricing is universally the cheapest option.
The CMA looked at the prices of 50,000 products in the UK's five leading supermarkets – Tesco, Sainsbury’s, Waitrose, Co-op and Morrisons. It found very little evidence of supermarkets inflating their "usual" prices to make loyalty promotions seem like a better deal. The CMA found 92 per cent offered savings on the usual price, and customers made savings of up to 25 per cent by buying loyalty-priced products.
"While these discounts are legitimate, our review has shown that loyalty prices aren’t always the cheapest option, so shopping around is still key," said George Lusty, interim executive director of consumer protection at the CMA. "By checking a few shops, you can continue to stretch your hard-earned cash."
Much of the CMA's research revealed shoppers' perceptions of supermarket pricing. Seventy-six per cent of shoppers said loyalty pricing has not changed where they shop, but 24 per cent now compare prices more due to the introduction of loyalty pricing, while 55 per cent of those surveyed believed prices for non-members of loyalty schemes was inflated during price promotions.
Dan Coatsworth, an investment analyst at AJ Bell, said the CMA's report will allow the supermarkets to "breathe a sigh of relief that the competition watchdog isn’t kicking up a fuss about loyalty schemes".
“Companies like Tesco and Sainsbury’s have been going hard on loyalty schemes in a bid to attract more shoppers and as part of their fight against discounters Aldi and Lidl," Mr Coatsworth said. "Had the CMA found improper behaviour around loyalty promotions, it could have thrown a spanner in the works and derailed one of the main cogs in their operating strategy."
Price analysis
Airline ticket prices came under the spotlight on Wednesday as well, with the release of easyJet's latest numbers, as the low-cost carrier landed operating profits of £597 million ($750.5 million) for the year to the end of September.
Consumer groups often complain that many airlines, mostly budget carriers, have ancillary pricing strategies, through which extras such as baggage charges, meals, seat selection and even boarding pass printing are added to the original basic fare, making the final ticket price more expensive than the customer might have originally thought.
Last week, Spain's Consumer Rights Ministry fined budget airlines Ryanair, easyJet, Vueling, Norwegian and Volotea a combined €179 million ($187.61 million) for practices including charging for cabin luggage. The ministry said the airlines breached customer rights when charging for larger carry-on luggage, selecting seats or printing boarding passes at airports, plus refusing to accept cash at check-in desks or buying items on board.
EasyJet's chief executive Johan Lundgren told the BBC that the airline offers people choices to "get what they pay for" and that "one third of all EasyJet customers do not choose ancillaries whatsoever". Mr Lundgren said that without ancillary pricing the "underlying fare would increase and it's going to make it more expensive to fly and travel for people who don't want these types of products".
"When you see the increase in ancillaries and the spend, it's actually more driven by demand than anything else. There's no price increase really to speak about. If you look at the overall fare, the increase this summer was £1," he added.
Black Friday pricing
Across the board doubts remain. But of course, pricing strategies often come under scrutiny at this time of year, as festive season spending increases and Black Friday approaches. The UK's consumer watchdog Which? released research this week showing the vast majority of Black Friday "deals" are actually cheaper or the same price at other times of the year.
Which? said Black Friday has become a "hype-driven sales extravaganza" that in the case of some retailers goes on for longer than two weeks. Last year, it is estimated that UK consumers splurged £13.3 billion on Black Friday deals.
Which? looked at deals on 227 products in last year’s Black Friday fortnight between November 20 and December 1, and found that in 92 per cent of cases, all of which were promoted by the UK's big home and tech retailers, the products were the same price or cheaper at other times of the year.
In terms of British law, the Consumer Protection from Unfair Trading Regulations state that if products are on sale or special offer, retailers have to show the original price and they have to have been selling the products at that price for "a meaningful period of time". And a code of practice drawn up by the Chartered Trading Standards Institute advises retailers to be "clear and not to make unfair price comparisons".
“Our investigation is a reminder to shoppers that they should not feel pressured to splash out on Black Friday purchases as those deals are usually repeated, if not beaten, at other times of the year," said Harry Rose, editor of Which? magazine. "We want retailers to drop the sneaky pricing tactics so consumers are not misled about the deals on offer."
One example, Which? researched was the price of a Remington Shea Soft Hair Dryer at the high street chain, Boots, which was on sale at £18.99 on Black Friday, claiming to be reduced from £49.99, a discount of 62 per cent. But in reality, Which? found, it had never been £49.99 at Boots in the preceding 12 months.
In response, a representative for Boots said that "being part of [the Black Friday] promotional programme does not exclude those lines from being on offer at other times throughout the year. Which? reviewed a very small number of our Black Friday deals from last year and in all cases, the items were at a lower price whilst on promotion or when price matched against competitors".
