Debenhams’ latest Sale has raised eyebrows, and not just for its early timing. What are the rules when it comes to sales promotions?
Why are Sales in the news at this time of year?
Debenhams surprised the industry last week when it launched a four-day ‘Sale Spectacular’ on autumn stock. During the Sale, which began on September 7, Debenhams offered discounts of up to 25% on “tens of thousands” of new season’s lines in a bid to lure reluctant shoppers, who are still worried about a double-dip recession.
Does it constitute a Sale if the products have not yet gone on sale at full price?
The law does not distinguish between different types of Sales; as far as regulations are concerned, an end-of-season Sale is the same as a ‘buy one, get one free’ promotion. Perran Jervis, head of retail at law firm TLT, says any sales promotion action covers a raft of methods retailers might employ to boost sales.
The laws governing sales promotions are shaped by the Unfair Commercial Practices Directive, which is enforceable through the Enterprise Act 2002, and rules on misleading advertising, which are laid out by the Committee of Advertising Practice and enforced by the Advertising Standards Authority.
Jervis points to a case brought against high street retailer Officers Club by the Office of Fair Trading (OFT) in 2005 over its permanent 70%-off advertising strategy. The High Court ruled in favour of the OFT and used the judgement to clarify that, for a retailer’s higher price to be genuine, the goods must be offered for sale at that price in “significant quantities and for a sufficient length of time”.
Because of the range of retailers the rule applies to - from independents with just one store to chains such as Debenhams - the High Court did not specify the number of shops or length of time the products have to be on sale.
So how can Debenhams offer discounts on new stock?
Debenhams can offer the discounts as an introductory offer, provided it is clear what discounts are offered on which lines and that the discounts are for a limited period.
The OFT took Sportsdirect.com, Hargreaves and Gilesports to task in 2008 after receiving complaints from consumers that the retailers were displaying closing-down adverts for several months, whereas the shops in question either did not close or only temporarily. The OFT found this was misleading, because retailers cannot hold open-ended Sales, nor create the impression that a shop is closing, when it isn’t.
The law states that, if a retailer advertises something at 10%-off, that has to be off a genuine price and any campaign promoting it must be “clear and fair”.
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