Retail surgery: Will the Office of Fair Trading’s crackdown on misleading pricing have much of an impact on the promotions run by retailers?

The Office of Fair Trading (OFT) has said it will act against retailers that engage in practices such as baiting sales - where low-priced goods are advertised but not in stock.

However, AlixPartners director Dan Murphy doesn’t believe that retailers set out to deceive customers by advertising promoted goods that they know are not available. In his experience, the issue is often about lack of communication and co-ordination in the company. One team will plan the promotion and sort out posters, in-store signage, and advertising, but will not tell the team responsible for ordering the stock until it is too late. As in most areas of life, the answer is found in the “cock-up theory” rather than the “conspiracy theory”.

He also points out that the OFT would have to prove that retailers are deliberately setting out to mislead customers, which is extremely difficult. Retailers actively try to persuade customers to buy more expensive, higher margin products and if they succeed in doing this through promotional activity, then it is difficult to criticise them too much.

Murphy points out it does highlight the disjointed and inefficient way that most retailers run promotions. If they adopted a more co-ordinated and communicated promotional model, the benefits would be considerable: better forecasting of stock requirements; learning from previous promotional mechanics; and a much smoother promotional planning process to avoid errors such as running out of stock on key items.