August 2005 - Small Business News

Points to Remember When Conducting a Sale
 

If your business is holding a sale, or offering goods at a discounted price, then you must be sure that you are stating genuine selling prices. A landmark high court judgement has strengthened the Office of Fair Trading (OFT) position on misleading price advertisements.

The retail clothes shop The Officers Club was found to have deliberately promoted misleading sales prices; claiming a 70% discount from actual prices when the ‘discounted’ price was actually their normal selling price.

The Officers Club has given an undertaking not to repeat the offer unless the original selling price is genuine, sparing them a court injunction. They will be held in contempt of court if they break these undertakings.

Small businesses should learn from this case when conducting sales or price reductions; not only are dishonest promotions breaking regulations, they destroy any trust that the customer has in your business. When you next offer a discount, ask yourself the following questions:

• Is the original price/discount genuine? Could you reasonably expect to sell the item at that price? – If not then you are promoting a misleading discount. You cannot legally say “50% off original price of £100!” if you would only reasonably expect to get £75 for the product when first sold.
   

• Has the item been sold at the original price for a reasonable period of time? – If not, or has only been so for a number of days; you may be promoting a misleading retail price. (This can exclude perishable items that are only saleable at full price for a short time.)
   

• Is there stock of the item available? – A number of companies have had action taken against them for offering hugely attractive discounts on products they did not have in stock; falsely encouraging customers to visit their stores.
   

• Are there conditions to the offer? – If you need to spend over a certain amount, take a finance agreement, or meet other conditions to qualify for the offer you need to state this in any promotion/advertising for the offer.
   

• Are You Selling a Bad Deal as a Good One? - Be careful of making consumers think there is a bargain when there are in fact expensive minimum buys or contracts. One local car dealership recently promoted big discounts, but the offer required you to sign up for finance at interest rates well above average; this meant you were actually losing a lot of money on the deal. This kind of deal damages trust and borders on dishonest.