Using 'was/now' specials to drive foot traffic in some form is one of the most common sales promotions today. Now, the federal court has ruled against Coles, which ran such a promotion, and the resulting penalty will likely be expensive. The decision has fundamentally changed the rules for every retailer in Australia. Here I will tell you where we stand now.
Key Takeaways
- The Federal Court ruled that Coles' "Down Down" pricing misled consumers by using short-term price spikes as the "was" reference price in discount claims.
- Retailers can legally raise prices and then discount them, but the higher "was" price must have been charged for a genuine, reasonable period before advertising a saving.
- The court indicated that approximately 12 weeks is a practical benchmark for a stable "regular price" and four weeks was ruled insufficient.
- Any "was/now", "save $X", or "X% off" claim must be backed by a documented price history showing when that higher price was actually charged.
- Small retailers face the same Australian Consumer Law obligations as major supermarkets, and a single customer complaint can trigger ACCC scrutiny.
Was/Now promotion
These promotions are when you state the price was $X, but it is now $Y.
Say, for example, an item was $10, and you advertise it "Was $10 Now $6."
ACCC v Coles court case
The ACCC sued Coles, claiming its "Down Down" campaign was deceptive. Coles raised prices for about four weeks, then lowered them and put a large red "Down Down" sticker on the shelf, creating the illusion of a big bargain.
For example, Coles raised the price of a popular breakfast cereal from $5 to $7 for just one month, then dropped it to $6 with a "Down Down!" sign reading "Was $7, Now $6".
Coles argued that all these prices were legitimate. The court accepted that Coles was correct on this point. The courts accepted that supplier pressure had caused the price rise and that the lower price was a discount.
So what was considered wrong?
The court felt that a price for only four weeks was far too short to count as a normal price and that "ordinary shoppers would wrongly believe they were getting a genuine discount off the usual regular price, rather than just a slight drop from a temporary spike." The case came down to not on why Coles raised prices, but rather whether the later promotions created a misleading impression about the savings.
The court suggested that 12 weeks should be the measure. Now that 12 weeks are yet to be tested, and even the court stated it may depend on the product. Right now, no one knows. What we do know is that four weeks is not enough for these products.
But this landmark ruling means all Aussie businesses must completely rethink how they advertise their sales.
I would state now in your shop that if you increase the price of an item in May, you need to wait until September before you can safely run a "Save 20%" sale based on that May price.*
Can the ACCC now fine retailers for 'Was/Now' Pricing?
Now, yes, the ACCC can fine retail businesses for such discounting tactics as the same rules that apply to Coles apply to all shops. You do not have to accept the fine and take your chances in court. I would not suggest it.
It's not hard for a single confused shopper to give you such a massive regulatory headache. Imagine a customer spots your "Special: $10 off!" sign on a premium stationery set, checks their receipt from last month, and reports your shop to the ACCC because this "was" price never actually existed.
Stop Risky Short-Term Spike Discounts
Start by reviewing every price ticket or sign that uses phrases like "Was $X, now $Y", "Save $X", or "Down from $X." Ask yourself if that higher price was charged for a substantial, genuine period. Your POS Software can help you there, as it shows prices from 12 weeks ago.
Use Safer Ways to Describe Promotions
You can still run highly effective specials without relying on fragile "was" price comparisons. Instead, read up on how to set up multi-buy promotions in your POS system to run deals such as "2 for $X" or "Buy one, get one half price". You can also advertise an item as $X without reference to an older price.
Keep Basic Records of Prices and Promotions
In any ACCC investigation, the retailer must prove its price history. Here, your computer will be a lifesaver. It maintains a price log for each product, showing the date each price took effect and when it changed.
Also keep dated copies of all your promotional materials, and record the exact start and end dates of every promotion you run.
Conclusion
The Aussie retail landscape has fundamentally shifted, and we need to be more careful with our advertising.
Written by:
Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.
