Key Takeaways
- Regulators actively target temporary price spikes deliberately designed to generate fake future sales.
- Retailers must ensure promotional discounts compare against genuine historical baseline prices held for a sustained period.
- Independent stores risk devastating reputational damage if local customers feel misled by manipulated ticketed pricing.
- Supplier cost increases require immediate, permanent adjustments to your standard shelf price rather than deceptive promotional tags.
- A robust point-of-sale system automatically logs the exact duration an item remains at a specific price to prove compliance.
I have been following the ACCC vs Coles case, which is a major legal proceeding examining whether the supermarket's "Down Down" promotional pricing deliberately misled everyday consumers. Closing statements for the ACCC and Coles are here.
Specifically, the ACCC alleges that Coles temporarily spiked prices on hundreds of products purely to establish an artificially high baseline for an upcoming discount campaign. For example, say a gift shop suddenly raises the price of a book from $10 to $14 for three weeks, and then heavily promotes a "massive discount" back down to $11.
I find some of Coles' arguments about the challenges posed by fluctuating prices and inflation fair and relatable. However, I have my doubts about their logic here in an ACCC's example: an item was sold at a set price for 649 days, raised to a higher price for 28 days, and then "discounted" to a price still higher than the original price. Would an ordinary, reasonable consumer genuinely think that the product was on sale? It strains credulity. Furthermore, the internal planning documents submitted by the ACCC, showing Coles actively planned to take products off "Down Down," spike the price, and return them to "Down Down" four weeks later, seem to me difficult to explain away.
Why This Case Matters
Retail pricing compliance matters because it may legally protect your business from regulatory fines while preserving the essential trust of your local shoppers. Deceptive pricing directly risks destroying your community's goodwill.
Besides, fighting a deceptive pricing allegation is financially impossible for most businesses.
Handling Wholesale Cost Increases
Admittedly, managing genuine wholesale cost increases is a frustrating daily reality for any Australian retail business fighting inflation today. If your wholesale costs for stationery, magazines, or gift lines increase, as they often do due to freight charges, the legally compliant approach is to update the standard undiscounted shelf price immediately. If a supplier raises the wholesale cost of premium dog food by 10%, a pet store owner must immediately raise their standard retail price to protect their profit margin.
Next, you must strictly avoid artificially inflating a price with the predetermined intention of dropping it later to claim a "discount". Trying to soften the blow of inflation by staging a fake sale is legally considered deceptive pricing. A boutique clothing shop cannot raise the price of a dress from $50 to $80 purely to advertise a "30% off" clearance sale two weeks later.
Finally, the law strictly requires that advertised discounts be compared only with the price the item is genuinely sold at for a reasonable, sustained period. Because the exact legal definition of a "reasonable period" remains frustratingly murky, testing your luck with brief price spikes is highly inadvisable. Retailers maintain legal safety by completely avoiding "was/now" tags on items that recently fluctuated in price.
Documenting Pricing Compliance
A point-of-sale (POS) system is comprehensive software that tracks inventory costs, processes transactions, and logs historical pricing data. Instead of manual spreadsheets, it provides a digital record of product prices over time. For example, a retail manager can quickly generate a report showing a wine remained at $20 for six months before a sale. Using a trusted Australian POS system also allows effortless documentation of reasons behind price changes, enabling instant proof to regulators of when, why, and how long a price changed.
Furthermore, keeping your software up to date reduces the risk of human error on the sales floor. When supplier costs fluctuate, updating the central database ensures the correct baseline price instantly syncs to the front-of-house register. A busy cashier will never accidentally sell a garden hose at an outdated, unprofitable price if the system automatically locks in the new baseline.
Next Steps for Retailers
Undeniably, the most crucial next step is to fully audit your current promotional tickets to ensure they reflect a genuine, sustained prior selling price. If you recently spiked a price specifically to accommodate a supplier's recommended retail price. If you have been using "was/now" tags, I suggest you be careful. I am not going to.
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.
