A berry-licious fiasco: Tesco cops $519,000 fine over strawberry pricing, could it happen to your business?
Wednesday, August 21, 2013/
The pricing of strawberries at a Tesco supermarket in the United Kingdom has led to the supermarket being fined £300,000 ($A519,000) for misleading consumers, with businesses warned to take care when pricing goods.
UK trade and consumer protection group Trading Standards said the offer, where strawberries were sold for “half price” at £1.99 was in breach of guidelines because the strawberries were sold for the lower price for a much longer time than the original price, leading to a £2.32 million profit for the supermarket.
Hall and Wilcox partner Sally Scott told SmartCompany while there is no set time under Australian Consumer Law stipulating how long an original price needs to be offered for, it should be for at least as long as the promotion period, preferably two to three times as long.
Scott says businesses should “ensure that the goods were genuinely offered for sale by their business at the higher price for a reasonable amount of time immediately before the promotion period” and items should be returned to this price immediately afterwards.
“A mere ‘list price’ will not be sufficient,” she says.
“Businesses can get caught even if the misleading conduct was mistaken. This means that businesses need to ensure that they have sufficient procedures and training in place to try and avoid mistakes.”
In this case, an elderly woman asked Tesco when the strawberries, which were labelled as half price at £1.99, had ever been the original price of £3.99.
The supermarket failed to respond to her complaints, according to The Telegraph, and so she took her complaints to local Trading Standards officials, and now the Birmingham Crown Court has criticised the grocery giant for the “false and misleading” promotion.
The court found Tesco had only sold the strawberries at £3.99 and then £2.99 for two weeks, while the promotion of the “half-price” strawberries ran for 14 weeks in the summer of 2011.
The offer was run across all of Tesco’s 2300 stores during the height of the strawberry season.
Tesco’s strawberry sales quadrupled over the course of the 14-week “promotion”, and Judge Michael Chambers QC found it was not a genuine bargain.
“The effect of the turnover was dramatic. The figures speak for themselves… It was false and misleading,” Chambers said as quoted by The Telegraph.
“It said people would have bought strawberries anyway. I am not persuaded they would have bought strawberries on this scale had it not been for this promotion.”
Despite finding the promotions were “excessive” and in breach of consumers trust, it was found it was not the retailer’s intention to deliberately mislead. The supermarket was fined a total of $519,000.
In response to the case, Tesco said in a statement it sincerely apologises for the mistake.
“We sell over 40,000 products in our stores, with thousands on promotion at any one time, but even one mistake is too many,” the supermarket says.
Scott says a similar case occurred in Australia involving the jewellery company Prouds in 2008.
“Prouds was found to have engaged in misleading and deceptive conduct in relation to discounted pricing. It used ‘was/now’ pricing, for example, was $100, now $50.
“The court determined that a consumer who looks at a discounted pricing sign or advertisement would have the impression that the saving or reduction was genuine,” she says.
The case involved pricing shown in a Prouds Mother’s Day catalogue and it ruled a price that was always shown as discounted was misleading.