Consumer NZ calls for investigation into retail sales tactics

Shoppers packed Auckland malls this weekend as the final countdown to Christmas begins - but are they getting ripped off? Photo / Jason Oxenham

New Zealand's consumer watchdog is calling for an investigation into retailers sales tactics in the lead up to Christmas, saying consumers are being misled.

Just six shopping days remain until Christmas and consumers are heading for a record-breaking spend up.

A staggering $1.29 billion was spent through the 100,000 terminals in the Paymark network in the first seven days of December - up more than $66 million on the same period last year.

Paul Brislen from Paymark said spending would peak on Christmas Eve with an anticipated 150 transactions per second.

Many are being lured by special deals as they frantically try to bag a bargain to put under the tree.

But Consumer NZ says some of the biggest retailers are duping shoppers by marking up prices before discounting them.

"We've complained about this and we'd like the Commerce Commission to take a tougher line on it," Chetwin said.

"We've looked at sales items from [several retailers]... and it's really hard to see whether those items were ever at a price other than a sale price.

"It's just duping the consumers into believing they're getting a bargain when in fact what they paid is actually the price."

A Consumer NZ study late last year, tracked a number of sales items at major retailers for just over three months.

It found numerous examples of products marked as on sale for the majority of the 13 weeks.

"I think it would be useful if the Commerce Commission took a few more prosecutions and set some examples," Chetwin said. "It is completely misleading."

Commerce Commission competition branch manager Stuart Wallace said the commission received a small number of complaints about retailers marking prices up to then discount them each year.

"It's a recurring problem and it is global, but there are rules around that. "In terms of us doing more about it, we do investigate where we get evidence of that occurring. It is a matter that we take reasonably seriously."

Chris Wilkinson, managing director of consultancy First Retail, said it was a tactic that became more prevalent around Christmas as firms tried to win the battle for shoppers' eyes.

"If a retailer is not seen to be active and competitive and enticing the market, then they potentially could be outside that consideration set for consumers."

Wilkinson said while he was aware of issues around sales tactics it was hard to quantify how much it was happening.

"It's a global thing that happens. We're not proud of it as a market but it happens, and not only in retail but in many other sectors as well."

Retail NZ public affairs general manager Greg Harford said retailers were also under pressure to keep up with the international market.

Online shopping also meant consumers had a much broader range of options.
"It's obviously important to generate a return on your sales so you can pay your staff, invest in your business and keep going," Harford said.

Chetwin said the regulations need proper policing.

"[Retailers] are getting away with selling items, and attracting people into their stores thinking they're getting a bargain, when what they're selling them for is the actual price."

Meanwhile, Credit Simple has reported a 17 per cent increase in credit applications in the past three weeks.

CEO David Scognamiglio said using credit could be a useful way of managing the cost of Christmas, but advised paying back as soon as possible to avoid excess interest and damaging your credit score.

"It's crucial to be smart about what you borrow, hunt for the best deal and make a solid plan to pay it off before you're stung with interest and fees."

Figures from Paymark show from December 1-7th New Zealanders spent $1,289 million through eftpos and contact-less cards.

In Auckland shoppers had tills ringing to the tune of $533.8m - up 5.8 percent from last year's $502.83.