Carpet, bed and sofa retailers promise ‘genuine prices’ after OFT investigation
Wednesday, April 02, 2014
According to the Guardian, Carpetright and four other flooring and furniture retailers have promised to clean up their pricing after reaching a settlement with the Office of Fair Trading (OFT). It looks like a good example of the potential for market failurearising out of asymmetric information.
The article reports that the watchdog's investigation last year found widespread misuse of promotions.
Offers advertised for a limited period, often over bank holidays, were used to pressurise shoppers into making instant purchases. But the OFT found that just 5% of products were ever sold at the higher advertised price and many were never sold at that price. The OFT said a pre-discount price was highly unlikely to be genuine and fair if it was only available in a few stores, or if the discounted price was in effect the normal price.
The head of the OFT's goods and consumer group, said: "Retailers advertise bargains and discounts by referring to a previous or future higher price. It's a powerful marketing tool which, when used properly, provides a helpful and easy way to demonstrate to shoppers the value of discounts and savings. We are therefore pleased that these retailers have confirmed their commitment to using genuine prices."
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