Tomorrow sees the return of "Black Friday", with "Cyber Monday" following after the weekend. Retailers are set to slash prices and offer amazing promotions in order to entice consumers to do their Christmas shopping early.
Last year saw more retailers than ever in the UK follow the lead of their US counterparts by running "Black Friday" and "Cyber Monday" sales promotions. However, a number of retailers came under scrutiny for being poorly prepared and not being able to match supply with demand and, this year, some have retreated from a one or two-day flash sale, spreading their offers over a week or a number of weeks.
Although not a "Black Friday" offer, Colgate's 'BIG ELECTRIC BRUSH SWAP' electric toothbrush promotion shows the risks - massive unforeseen demand (to swap an existing electric toothbrush for a new Colgate product) led directly to angry crowds unable to get their new toothbrush, the closure of the Colgate stand on safety grounds and ultimately, an upheld complaint before the Advertising Standards Authority (ASA).
So what should retailers do when planning flash sales and other short-term offers likely to trigger very high demand? We have set out a few practical and legal pointers to help retailers get ready for the race ahead and ensure that their sales promotions avoid both regulatory issues and a backlash from consumers.
Retailers should have in place an effective plan for the main event and make sure they have all the right systems and procedures in place.
- Ensure you have made a reasonable estimate of likely demand - how have similar promotions fared in the past? How widely have your offers been promoted?
- Ensure you have sufficient stock levels to meet that demand.
- Test your IT systems and ensure they are resilient and will not fall over when dealing with the increased level of users.
- Employ adequate numbers of staff and train your sales teams to cope with the high volume of consumers they will have to deal with.
- Have contingency plans in place to avoid disappointing consumers in the event of higher than expected demand - for example consider flexibility for staff to make 'under the counter' offers on similar products.
- Review your terms and conditions and advertising and increase timeframes for deliveries, product returns and refunds if necessary.
- Carry out a health and safety assessment and employ adequate security staff to assist with managing crowd control.
- Plan and organise the store layout and use signage to help consumers navigate their way around your store.
- Plan, plan and plan some more! Remember that an obvious source of customer dissatisfaction, and probably the most common trigger for ASA complaints in retail, is an attractive deal which the consumer cannot obtain when they visit the store or website.
2 The warm up
Retailers now need to communicate their promotions to consumers.
Misleading advertisements - retailers must ensure their advertisements, sales offers and product promotions are compliant with laws and obligations under the CAP Code. To avoid issues under the Consumer Protection from Unfair Trading Regulations (CPRs), enforced by Trading Standards, retailers must not engage in:
- Misleading advertising.
- 'Bait advertising' - this is where retailers offer goods for sale at a price where they have reasonable grounds for believing that they will not be able to supply those goods, at that price and in quantities that are reasonable (having regard to the product, the price and the scale of advertising).
- 'Bait and switch' - this involves offering goods for sale which are not actually available, or not available at the price promoted, in order to attract consumers into a store or to a website, with the intention of selling the consumer a different product.
- Falsely stating that a product will only be available at a particular price for a limited time.
CAP Code - the Committee of Advertising Practice's UK Code of Non-Broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code), enforced by the ASA, sets out rules governing the content of marketing and advertising communications. The CAP Code restricts misleading advertising but also provides additional rules in relation to sales promotions.
Retailers must conduct their sales promotions equitably, promptly and efficiently and be seen to deal fairly and honourably with participants, and they must avoid causing unnecessary disappointment. Phrases such as "subject to availability" and "first come, first served" will not absolve a retailer of their obligation to do everything reasonable to avoid disappointing consumers.
In addition, retailers will be required to show that they have made a reasonable estimate of the likely response to a sales promotion and that (1) they were capable of meeting the estimated demand, or (2) the consumer was presented with sufficient information, in a clear and timely manner, to take an informed decision as to whether to participate in the promotion or not.
Common issues which can arise under the CPRs or the CAP Code in relation to short term, high publicity price promotions include:
- Misleading consumers by exaggerating the savings - "WAS [NEVER REALLY] £1,000, NOW £500!" This includes advertising a discount against a higher price which is not the normal price for the goods e.g. because the higher price is not the immediately preceding price, is not a price which has been charged for a sufficient period or in sufficient stores, or is not a price at which the retailer expected to make significant sales. Retailers should have regard to the Pricing Practices Guide published by BIS (a revised version of which is currently subject to consultation on the Trading Standards Institute's website).
- Falsely instilling a sense of urgency - "ONE DAY ONLY BLACK FRIDAY DEALS! [NOT REALLY, WE'LL BE BACK WITH THE SAME OR SOMETHING BETTER TOMORROW]". In the last 12 months, the ASA has ruled against a number of high profile retailers for advertising time-limited offers which, following the closing date, were immediately (or within a few days) superseded by the same offer or an even larger discount. The ASA has ruled this kind of activity misleads in situations where a call to action is used ("HURRY, MUST END SOON!") but also in situations where there is no such call to action, just a closing date for the original offer.
- Failing to stock to meet likely demand (or to explain to the consumer the limitations on stock so they can make an informed decision on whether to go into store or visit the website) - "FLATSCREEN TVs FOR £100! [WE'VE ONLY GOT TWO OF THEM AND WE'RE PRETTY CONFIDENT THEY'LL BE GONE WELL BEFORE YOU GET HERE"] The non-availability of an advertised offer is always aggravating for consumers who have gone into store or online to seek out that offer and is therefore a very common cause of complaints to the ASA. It is easy to see how allegations of 'bait' advertising could be raised if the relevant retailer has not stocked to meet the likely demand.
So, when marketing a flash sale:
- Ensure that your offers are genuine and unlikely to mislead - don't be tempted to exaggerate an offer e.g. just to catch some "Black Friday" publicity.
- 'Everything' means everything - don't advertise '20% off everything' if there are exclusions from the offer.
- Don't be tempted to shortcut your normal clearance checks because of the urgency or volumes of offers.
- Ensure discounts are against the normal price for the goods.
- Ensure that your advertised deals are going to end when you say they will (and the discount will not be repeated or bettered in the days immediately following the event).
- Check carefully to ensure that you have stocked to meet the likely demand, given the desirability of the offer and the scale of advertising you have planned (although also remember that, even with relatively little above the line promotion, news of great deals can spread like wildfire through Money Savings Expert and other online platforms).
- If there are likely to be limitations on stock, then make that very clear in your advertising (and not just with generic 'Subject to availability' small print) so consumers can make an informed decision whether to seek out the offer (in the full knowledge that stocks may be exhausted).
- Consider the relationship with other offers - can consumers claim a "Black Friday" discount in conjunction with other deals or discounts?
- Include all other significant conditions.
The main event and the aftermath
The race is now on and retailers must honour their promotions and ensure they implement their plans effectively. But even after the main event has finished, it's not all over. Another very common cause of consumer complaints to the ASA relates to late delivery (and consumers therefore claiming that advertised delivery times are misleading).
An ASA decision from earlier this year considered that very issue in relation to "Black Friday" and a 'Next day delivery' claim. Although, the ASA identified a fall in the number of successful next day deliveries by the relevant retailer following "Black Friday" and "Cyber Monday", the vast majority of deliveries were still on time and the ASA therefore found that the 'next day' claim was not misleading. The decision would certainly have gone the other way had the vast majority of consumers not still received their order the following day.
So, following your "Black Friday" or similar offers:
- Process orders quickly and in accordance with your terms and conditions.
- Honour your delivery obligations to the customer and get products delivered in accordance with advertised delivery times.
- Where there is likely to be a drop in performance against advertised delivery times, as an absolute minimum, seek to ensure that 90%+ of your deliveries are still being delivered in accordance with the advertised delivery time and resolve the issue as soon as possible (days not weeks).
- Process product returns and refunds efficiently and in accordance with your terms and conditions.
- Respond to and resolve customer enquiries in as timely and effective a manner as possible.
- Seek advice early on any ASA or regulatory complaints - sometimes issues can be resolved quickly and informally without bad publicity.
- Learn the lessons and wait for the Christmas sales...
If you would like further information about the issues discussed above, please contact Dan Smith or Rebecca Costen.