Noel Leeming is facing criminal charges after the Commerce Commission filed against the business over alleged misleading of consumers. Photo / Supplied
Consumer NZ says it has received 50 complaints about Noel Leeming in the last seven months, a figure the group said was “significant” from its member base within that timeframe.
The disclosure comes as the retailer, which is owned by The Warehouse Group, faces criminal charges from the Commerce Commission, over alleged multiple breaches of the Fair Trading Act relating to its ‘price promise‘.
Noel Leeming maintains it has committed no offences and will vigorously defend the action.
Consumer NZ chief executive Jon Duffy said it had received a high volume of complaints about Noel Leeming, consistent with the issues the Commerce Commission’s investigation has covered.
Duffy said he was pleased charges had been brought, noting the business had previously been convicted on eight charges under the Fair Trading Act for making false or misleading representations to consumers about their Consumer Guarantees Act rights in 2018.
“Our advice to shoppers is that a price promise should be as advertised – without fishhooks and unreasonable conditions,” Duffy said.
“One of our investigations in November 2021 highlighted that the most frequent claim we encountered at Noel Leeming was the ‘Price Promise’.
“It was used on every item we tracked, meaning the retailer should match the price of the product if a customer found it cheaper elsewhere. However, some appliances were exclusive to Noel Leeming, so you couldn’t find them at other retailers.”
A price promise or price match is where retailers promise to match the price of a competitor for the same item as long as certain conditions are met.
Duffy said Noel Leeming had received several warnings and compliance advice letters from the commission about potentially misleading consumers over the years.
Duffy said penalties for Fair Trading Act breaches were not acting as a sufficient deterrent and he believed penalties needed to be increased.
Noel Leeming was asked about the complaints received by Consumer NZ but declined to comment.
Noel Leeming chief operating officer Jason Bell also wouldn’t say how many complaints the business deals with, but said: “We handle over three million transactions a year, if we don’t get something right, we work hard to ensure fair resolutions for our customers.”
Asked why the business used the “price promise” promotional model, Bell said its competitors, including Harvey Norman and JB Hi-Fi, had price match offers just like its own.
First Retail Group managing director Chris Wilkinson said the Commerce Commission charges raised more questions than answers.
“ComCom’s obviously been working at it for a while. This sector is probably one of the most challenging in terms of pricing to manage.
“Obviously, there are a number of sectors that do these price promises, but it’s probably a more limited number of sectors that do it these days because it is such a challenge,” Wilkinson said.
“This is really now limited more towards the home improvement category, so between Mitre 10 and Bunnings. Of course, there’s only really two players in that market.”
He said the challenge for Noel Leeming in particular comes with appliances, a product category where there is price pressure from several competitors.
Wilkinson suggested the promotion may have been a remnant of the strategy from previous leadership.
The commission alleges multiple breaches of the Fair Trading Act by Noel Leeming, which is owned by The Warehouse Group, for its “Price Promise” promotion.
“For over a decade Noel Leeming has prominently promoted their ‘Price Promise’, which is their commitment to match any competitor’s price. We believe their price promise claim was misleading and in breach of the Fair Trading Act,” Commerce Commission deputy chair Anne Callinan said.
“Price match advertising gives the impression that customers will be able to show up and get a match for competitors’ prices … we believe Noel Leeming’s price promise had many limitations and conditions which weren’t made obvious to customers and made any price matches difficult to obtain.”
However, Noel Leeming’s Bell said they were baffled by the Commerce Commission’s decision to press charges.
“We firmly maintain that we have committed no offence and will vigorously defend this.
“We’re perplexed by the commission’s claim that price matches were difficult to obtain, when over 250,000 Kiwis saved money with our Price Promise between 2019-2021.
“Our terms and conditions are fair and presented just like other retailers, and when we can’t price match, we often don’t get the sale. Price matching is widely used by the industry, and it helps drive competition, and without it, Kiwis will end up paying more.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.