February 21, 2008
Watchdog Questions Truthfulness of Retailers’ Advertising
By Bernice Hurst, Managing Director, Fine Food Network
Tesco and Lidl have both had complaints about advertising and promotional activities upheld against them recently by the UK’s Advertising Standards Authority. Catalog retailer Argos alleged that Tesco was out-of-stock on most of the items advertised on the first day of its promotion. B&Q, a do-it-yourself superstore chain, argued that discount retailer Lidl compared prices on “similar items” using generic descriptions that could be construed by consumers as misleading rather than like-for-like brand comparisons.
Tesco submitted a lengthy and extremely detailed defense, which was only partly accepted by the ASA. Explained the ASA, “We welcomed the fact that Tesco had made clear in the ad that stock was limited, but considered that that did not relieve them of responsibility for taking all reasonable steps to avoid disappointing participants. We told Tesco to ensure that they had sufficient stock to meet demand for future offers.”
Amongst other things, Lidl was criticized for circulating a leaflet advertising a range of garden products. Many featured price comparisons with other retailers with a flash on eight of the products stating “[x]% CHEAPER compared to B&Q.” Small text stated, “Similar item – [description of item], £[price], purchased at B&Q in New Malden 6th February 2007.”
B&Q contended that the price comparisons were misleading because the “similar items” were not identified and therefore did not give customers a fair basis on which to compare products. After comparing the items concerned for themselves, and considering B&Q’s explanations, ASA told Lidl to make the basis of a comparison clear in future ads and to ensure that they held data for all products compared. ASA also told B&Q to ensure that future comparisons were fair and accurate.
Discussion questions: Do ads that promote items that quickly go out-of-stock cause more problems than they’re worth for retailers? Do most customers shrug it off and shop in the store anyway or do they more often just leave unhappy?
[Author’s commentary] Barely a slap on the wrist, then, for either retailer. But we all know that at least part of the intention with a promotion is to get people through the door so they can see what else you have on offer. The ASA may have told them to do better next time but chances are they did pretty well this time.
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I can’t answer for everyone but I really form attitudes about retailers based on their actions. Quick run outs on advertised items is a big No No. All of us know that any supplier can provide a retailer with sales projections that are very accurate.
Additionally, most retailers buy warehouse stock when a manufacturer offers discounts in exchange for performance. The retailer who places a big order and holds inventory in the warehouse until after the promotion ends (denying the consumer the ability to buy the product) should be shut down.
I personally insist on “rainchecks” when these situations occur. I usually insist on at least a dozen rainchecks just to make a point with the retailer. The worst thing that can happen when this situation occurs is to do nothing. Ask to speak with the store manager, call the regional office, email the corporate office. Let them know they have been caught. Some of us remember when it was illegal to advertise an item and then run out of stock. Might be time to revisit this law!
I visit some of the “Post you bargain findings here” sites. This is a common gripe on the forums.
One particular retailer has caused me frustration several times. I go, they are out of stock on the first day. But this particular retailer is always in the news for having financial difficulties. Hmmm, maybe it is because they are not taking care of the customer….
The situation reminds me of when Venture Stores used to run major ads over the weekend, but would be out of stock by Monday morning. They would hand out “rain checks” to the disappointed customers. A former executive at Venture once told me that the rain checks were Venture’s strategy to bring customers back to the store repeatedly. Venture lost ground and eventually disappeared when certain competitors turned to a consistent and credible EDLP format, and others ran feature ads over the weekends and backed up the ads with ample supplies, including displays and end-caps full of merchandise.
Advertising an item and then being out-of-stock is the fastest way I know of to kill a retailer.
When a consumer makes a trip to a retailer to specifically purchase an advertised item and finds it out-of-stock, they simply stop making the effort. The retailer has lost the trust of the consumer. The best example I have seen of this was Bradlees.
When advertising stops bringing consumers into the store, sales decline and the end is near.
Target used to stock only 92% of what it projected to sell on hit video/DVD titles. They eventually lost share of market to Wal-Mart and other retailers.
Is it good that Tesco and Lidl received slaps on the wrist from regulators? Yes. Will it stop the practice? Unfortunately not. Only when consumers vote with their wallets and same store sale slip, will this kind of practice recede.
The Venture story is just one more example: I have never understood why anyone thinks it’s good business to annoy the customer.
Isn’t it just as easy to advertise–and sell–the products you have? Granted, with bait-and-switch you get a little more margin, if:
The customer stays in the store…
and actually buys something on that visit…
that’s worth more than the item that brought him/her in originally….
But chances are, that customer isn’t coming back, so you’ve lost out on the lifetime value of a happy customer.
In the words of the late Harry Caray, I just can’t figure it out.
I find certain categories go out of stock more frequently than others. Food ads are by far the worst. I’d say about at least 1/4 of the specials on food ads are not in stock when I go shopping for them, with packaged food being worst. Any produce, meat or dairy specials are usually in stock regardless. And that’s been consistent for years.
Might make sense though as people just load up on food that can last, while fresh food goes bad quicker, or perhaps poor planning or tried and true bait and switch.
Other sectors like electronics, DVDs and clothing are actually pretty good for me. Not too often do I get out of stocks. Even during Boxing Week madness, I usually score what I’m looking for. Maybe just luck…but this has been consistent for years.
Customers expect retailers to be honest in their ads and to deliver on their promises. Claims and price comparisons are not believed by consumers because they are often misleading, exaggerated or presented in a biased way.
Out of stocks clearly send customers away-even if the ad states “limited quantities.” In my experience, nothing aggravates a customer more than if a retailer is out of stock on an item on the first day of the sale, unless it’s being out of stock on multiple items on the first day of the sale.
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I can’t answer for everyone but I really form attitudes about retailers based on their actions. Quick run outs on advertised items is a big No No. All of us know that any supplier can provide a retailer with sales projections that are very accurate.
Additionally, most retailers buy warehouse stock when a manufacturer offers discounts in exchange for performance. The retailer who places a big order and holds inventory in the warehouse until after the promotion ends (denying the consumer the ability to buy the product) should be shut down.
I personally insist on “rainchecks” when these situations occur. I usually insist on at least a dozen rainchecks just to make a point with the retailer. The worst thing that can happen when this situation occurs is to do nothing. Ask to speak with the store manager, call the regional office, email the corporate office. Let them know they have been caught. Some of us remember when it was illegal to advertise an item and then run out of stock. Might be time to revisit this law!
I visit some of the “Post you bargain findings here” sites. This is a common gripe on the forums.
One particular retailer has caused me frustration several times. I go, they are out of stock on the first day. But this particular retailer is always in the news for having financial difficulties. Hmmm, maybe it is because they are not taking care of the customer….
The situation reminds me of when Venture Stores used to run major ads over the weekend, but would be out of stock by Monday morning. They would hand out “rain checks” to the disappointed customers. A former executive at Venture once told me that the rain checks were Venture’s strategy to bring customers back to the store repeatedly. Venture lost ground and eventually disappeared when certain competitors turned to a consistent and credible EDLP format, and others ran feature ads over the weekends and backed up the ads with ample supplies, including displays and end-caps full of merchandise.
Advertising an item and then being out-of-stock is the fastest way I know of to kill a retailer.
When a consumer makes a trip to a retailer to specifically purchase an advertised item and finds it out-of-stock, they simply stop making the effort. The retailer has lost the trust of the consumer. The best example I have seen of this was Bradlees.
When advertising stops bringing consumers into the store, sales decline and the end is near.
Target used to stock only 92% of what it projected to sell on hit video/DVD titles. They eventually lost share of market to Wal-Mart and other retailers.
Is it good that Tesco and Lidl received slaps on the wrist from regulators? Yes. Will it stop the practice? Unfortunately not. Only when consumers vote with their wallets and same store sale slip, will this kind of practice recede.
The Venture story is just one more example: I have never understood why anyone thinks it’s good business to annoy the customer.
Isn’t it just as easy to advertise–and sell–the products you have? Granted, with bait-and-switch you get a little more margin, if:
The customer stays in the store…
and actually buys something on that visit…
that’s worth more than the item that brought him/her in originally….
But chances are, that customer isn’t coming back, so you’ve lost out on the lifetime value of a happy customer.
In the words of the late Harry Caray, I just can’t figure it out.
I find certain categories go out of stock more frequently than others. Food ads are by far the worst. I’d say about at least 1/4 of the specials on food ads are not in stock when I go shopping for them, with packaged food being worst. Any produce, meat or dairy specials are usually in stock regardless. And that’s been consistent for years.
Might make sense though as people just load up on food that can last, while fresh food goes bad quicker, or perhaps poor planning or tried and true bait and switch.
Other sectors like electronics, DVDs and clothing are actually pretty good for me. Not too often do I get out of stocks. Even during Boxing Week madness, I usually score what I’m looking for. Maybe just luck…but this has been consistent for years.
Customers expect retailers to be honest in their ads and to deliver on their promises. Claims and price comparisons are not believed by consumers because they are often misleading, exaggerated or presented in a biased way.
Out of stocks clearly send customers away-even if the ad states “limited quantities.” In my experience, nothing aggravates a customer more than if a retailer is out of stock on an item on the first day of the sale, unless it’s being out of stock on multiple items on the first day of the sale.