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The Truth About Supermarket Price Wars

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Supermarket price war, don't you believe it. Perhaps it makes the


shopping experience more exciting. It doesn't necessarily make it


cheaper. Confusing claims. Misleading ads. I believe what they


tell me on the packet, wrongly. think they find ways of making you


spend more. Deals that save you nothing I admire the brazen nerve


to present something as a great deal when in fact it has gone up in


price. Everywhere you look there are special offers. And Panorama


sees how some of the biggest names stand accused of breaking the law.


There's a potential for prosecutions to be brought against


8 0sthou thousand -- 80,000 square feet, 40,000 product lines. Opening


day at Tesco's brand new super store in Sheffield. This launch


comes as household budgets are under increasing pressure and amid


a ferocious PR war in which the Big Four compete for the title of UK's


cheapest. Sainsbury's offers to refund the difference on branded


goods if they can be found cheaper elsewhere. Moirzens promotes its


pris crunch campaign while ASDA offers to sell goods 10% cheaper


than the rivals. Tesco pledges to cut the cost of thousands. It was


quite a few bargains. We have not - - you got your washing powder.


I got was a special offer on ketchup. You can't turn your nose


up on it. Good deals according to some customers. Cut throat


competition according to the headlines. In which price war is


truth the first casualties? there was a price war going on at


the moment we would see profits falling or see severe warnings.


That's not happening. What we're seeing is more about using the


marketing budget as effectively as you can. The name of the game is to


be as clever as possible how you promote and use your discount and


adrabgt your customers. If the latest promotions really are about


marketing and the supermarkets profits are unaffected, what is the


reality behind the savings? Tonight we will find out, we'll study


supermarket promotions in detail and reveal the hidden catches and


ask the hidden giepbs are -- giants are breaking the promises or the


laws to designed to protect us, the consumer. Michael and Beatrice Bond


do their regular big shop at Tesco. Week by week their trolley of items


hardly changes. I would think we spend between �6013 -- and �70 a


week. -- 60... We figured our prices would come down. Most of the


items are basic items. Tesco's price campaign started at the end


of September. At Tesco we're dropping the price of 3,000 items.


As customers like the Bonds have noticed other products have been


going up This Creamfields cream three months ago it was 65 pence,


and now 68 pence. And this was 87 before and 94 now. The unsalted


butter they are saying is �1.10 a pack. We have a receipt back from


April, and the unsalted butter is 98p. This has gone up 12p a pack.


They are creeping the prices up all the time. Tesco says it has spent


�500 million on the latest price cuts. With price rises elsewhere,


is it benefitting us as much as we think? We pick up things like 3,000


products, you would think that sounds like I'll really benefit


from that. 3,000 products in the context of a modern supermarket is


less than 10% of all the products they stock. Tesco says as the big


prise Drop is focused on staples, customers can make significant


savings and customers are happy. It has slash the value of the Clubcard


loyalty scheme to fund the cuts. Customers who used to get 2 points


for every pound spent only get one. Supermarkets give you with one hand


and take away with the other. Any time you get a good deal they


compensate by charging something else more -- more for something


else. Our loyalty for Tesco is being tested. We want straight


pricing that is not complicated could people understand what they


are paying for. We're constantly having to outwit the management of


Tesco. Tesco deny misleading customers and say they are sorry


the Bonds are unhappy. Everywhere you look there are special offers.


You would feel something not being something on offer. Across the UK


lots of other shoppers are unhappy, not just about Tesco. I can't work


this out!. As customers we're confronted with thousands of


promotions every time we set foot in a super store, we're confused by


them and losing faith in them. my head I think it's cheaper.


Thinking again. In a survey for Panorama, 42% of shoppers said they


no longer trust supermarket discounts are genuine Sometimes you


-- they make deals on things that you think I don't need it, but


because it's a great deal, maybe I should get it. I think they're


finding ways of making you spend more. This view is widely shared,


while most people do still believe supermarket claims nearly a third


of those in our survey said they're less likely to do so now than in


the past. And 47%, almost half, said they felt mislead by various


offers. I've come across stuff it's a yellow tag with a price on, and I


thought it's an offer but it's not. You have not always the time to


read through which one is good and not. Everything can't be that cheap.


Although there's nothing wrong with supermarkets enticing us to stop


there, they should be honest. The Advertising Standards Authority


have found three of the Big Four misleading customers repeatedly. It


has banned ten adverts from ASDA, and 16 from Tesco. I'll show you a


couple of ads from newspaper, and national newspapers. The first is


Tesco, and appeared in 2009. Last fry over 1.1 million customers were


cheaper at Tesco and ASDA... ASA's judgment, this was misleading.


Tesco did not analyse 1.8 million, it studied just 218,000. It didn't


compare all the products in them. think it's cheeky, when someone is


proclaiming something like that on television, I presume they have had


a proper test. The ASA later banned the ad as well as this. She grabs a


the price guarantee did not apply to certain items. So what do you


make of that? A -- I'm lost for words. I don't know what to think.


They're pushing their luck. Seeing how far they can get away. It's


surprising how much and to what lengths they go to. Some ads may


look fine at first sight and the flaws in others are more obvious.


These multi-buy deals offer no savings at all but they increase


sales. People will look at that and think that is silly but I think it


would work, yes. In 2thou 9 the Office of Fair Trading asked


psychologist Ahmetoglu to report on how offers such as this influence


customer behaviour. You would think no-one would go for that. Offers


trigger a biological reaction. They are triggering the same reward


system in the brain you have when you eat chocolate. The offer will


attract your attention, and a lot of people won't look at the single


unit price. That's a simple calculation. People don't calculate.


They use a lot of automatic decision-making. In this case they


would not be conscious of the fact they're being influenced. In number


two they would subconsciously prime the consumer to buy a higher


quantity. Supermarkets say they refer to a range of products so


savings can be made. Others are the result of human error. And another


kind of offer, the type that leaves me flummoxed. Look at these? It is


so complex. That you would simply go for the simplest offer which is


three for five. Marketers know the better they promote their products


the more they are likely to sell. That's why they have special offers.


That's their business. Perhaps it make the shopping experience more


exciting. It doesn't necessarily make it cheaper. The supermarkets


say they strife to offer value. One former regulator believes the


techniques leaves consumers baffled. It's confusing. There's the


illusion of value. Is that what they're -- we're about, no, we


should be transparent. I don't believe the consumer is being


intentionally mislead but the consumer is being confused. If we


find cases where supermarkets are outside the law, they must be


prosecuted. When does a merely confusing promotion become


potentially more serious. Let's look at ASDA and the price


rollbacks. An example of how all of us at ASDA are saving you machine.


Not always, earlier this year, ASDA was caught offering 27 items as


rollbacks when the prices have gone up. They apologised claiming a


glitch in the system. Now Panorama has find problems in the deal the


woe woe. There's items in the A good deal? Really? I'll let you


decide. We have since checked the prices of some of the items lifted


as Wow offers on ASDA's website. 11 had been on sale for the same price


for at least six months. No savings there. These four items, actually


more expensive nan they used to be. I admire the audacity of the brazen


nerve of the soibgz to present something as a Wow deal when it has


gone up in price. You have to clap. All promotions, all promotions must


comply with protection. Parry par advised the government on how to


incorporate a directive. A average consumer seeing something market as


Wow ko would get the impression the price has been redepuesed. If it's


a case the price has not been reduced it could be a breach of


regulation five of unfair trading regulations. Your average consumer


when they learned the truth that the price was not reduced and in


fact had been increased almost certainly would not purchase the


item. We have since contacted ASDA about the examples it found, it


told us the products should not have been advertised at Wow offers


and has removed them. In the so- called price war huge amounts of


money are at stake. Of the 96 million we spent on groceries, �65


million went through the tills of the Big Four supermarkets. At --


Tesco is the biggest. Using data spried by mySupermarket we have


been tracking a range of prices over the last months, and we have


found instances of price establishing. A retailer sells a


product for a certain price for a long period of time and suddenly


raises it, and shortly afterwards it drops it back down then it can


say it has slash the cost. It seems Tesco has been doing that as part


of the big price drop campaign. Supermarkets are allowed to do it,


as well as the price has been established for 28 days or along


with consumer expectation. We found xlgs of Tesco breaching the rule.


Take the supermarket's fresh chicken which freefps in the ads.


In January customers could buy them for �4 each. That remain the case


in February, March, April, May and June. In midJuly Tesco raised the


price to �5 each and in September it went back to what it had been


most of the year, Tesco labelled it a price drop. Are you concerned or


surprised by what we found. An average consumer would not expect a


price that had been consistent for many months suddenly to prize by �1


to revert back to the -- price by �1 to revert back to be described


as a price drop. If it could be established that the average


consumer was being mislead it could lead to a criminal prosecution.


Tesco told us it had acted in accordance with government pricing


guidance. Misleading websites, questionable ads. What promotions


are the companies peddling in store? Time for a undercover


shopping trip. For soibgz in six hours. There are -- supermarkets in


six hours. The first thing I noticed was how they priced the


fruit and veg. It's confusing. are priced differently. On weight


here and units there. In all supermarkets the loose items were


priced per kilo but some packaged only gave a price per pack with no


weight lifted. The only way to compare was to way -- weigh the


pack and compare. Haven't time to do the maths really. Afterwards we


had time to do the maths and examine the actual price


differences. In Sainsbury's five bananas in a pact were �1, and


buying five loose were 45p. It was the same with red onions in ASDA.


86p per kilo for loose ones but 2.85 per kilo in a net. At Tesco


gala apples �1.66 per kilo loose. � 2.14 per kilo in a bag. At Morrisey


the other way around. Their Empire apples cost �1.82 a kilo in a bag.


A good deal more if you bought them loose. Pity I couldn't work it out


at the time! Despite the confusion all the supermarkets told us


customers like being presented with different offers like this


Supermarkets have been more disciplined in letting people know


the price per unit as well as per pack. We have to be better at


giving people the information they need to buy carefully and properly.


The way supermarkets price fruit and veg may be confusing but it is


allowed. What government guidance does not allow is advertising a


price cut without displaying the previous price. At Morriseys my


eyes were drawn to this -- Morrison -- my eyes were drawn to this price


conditioner. I wonder why the old price wasn't on the label? Perhaps


because it was lower than the previous. The condition may be �2


now, but if I bought it two weeks before, it would have cost �1.65.


Morrison said it was more earlier in the year. So �2 was still good


value. The average consumer would be looking for a reduction. If the


price was cheaper than the current offer in particular in the


immediate past that would influence the consumer in making the decision,


and if they knew the truth of it, and -- they might not make the


purchase. I showed Parry par some of the other purchases I made.


Including this one. Offering me a worse deal. 75 or three or �4.


Offers like this can be the result of mistakes. Supermarkets say where


individual products work out cheaper shoppers will be charged


the lower price. These went through the till correctly. According to


the survey others don't. 35% of shoppers said they found mistakes


on bills with regard to promotions and discounts. If the multi-buy


offer doesn't go through properly at the till there's a clear


evidence of breach of regulations. One one expect supermarkets to


programme the till correctly before they put the offer on display.


my shopping trip I came across another promotion that breaches the


regulations, one all four were guilty of. This is a bigger pack


better value. If they got two of the smaller ones it's cheaper. The


better value is put the big one back. At ASDA I found the tub of


Clover... I could buy two tubs for a total of �3. Same amount, 2p


cheaper. The same misleading claim with the same product was made as


Morrisons, here the bigger pack was �is -- �1.70 more expensive. At


Tesco it was Vanish, but three small ones for �9, and a big one


for ��12. At Sainsbury's a further five examples. I can get


Sainsbury's own cream of tomb co- soup, �1.99 for four cans. If


you're eagle-eyed and work your way down the row, you can get the


single cans, �46. Much cheaper than buying four cans packed up. It


isn't. The supermarkets say they offer thousands of deals. When


smaller packs are on promotion they may be cheaper for a short period.


I found 17 examples of bigger packs presented as better value when they


weren't. Five in Tesco, five in Sainsbury's. Four in ASDA. And


three in Morrisons. All these stores are within eight miles of my


home. How many more examples are out there. I'm normally walking


around here with three kids. I last thing I can do is work out what is


cheaper. I believe what is on the packet. The supermarkets told us


value labels are often put on by the manufacturers and ASDA says


they're working with them carefully to resolve this issue. They all


said they display big and small packs, so shoppers are compare them.


Some were genuine mistakes. The law on this area is very clear. It is


unlawful to make claims that are misleading or actually false and


that are persuading consumers to make the wrong choice. What worries


you the most. It is not just the occasional mishap here. There are


repeated examples with many, many products in different locations


with different supermarkets and all of them seem to be doing the same


thing. So there's a potential for prosecutions to be brought against


all of them. And it is not as much they haven't been warned that could


happen. A year ago this year the Office of Fair Trading told


retailers to clean up their products with relation to


misleading prices. And the OFT promised to take eneno --


enforcement action. 12 months on the OFT has told Panorama they will


be concerned about misleading offers. Tesco defended the price


rises before the price drop saying it was launched in a period of


significant higher food costs and the claims intended to help combat


inflation not eliminate it. All four said they worked hard to give


great scrawl and pointed to research saying promotional


campaigns had contributed to a fall in inflation. The march of the Big


Four supermarkets continues. They control 68% of the grocery market.


Consumer laws are there to make sure they play fair with customers.


Are the laws used. Supermarkets in Britain have benefitted from a


light regulatory touch. It is time that the regulatory government got


tough with the supermarkets. And said we won't have you misleading


people with price. People are really anxious about the mounting


costs of the grocery bills. In the last months the Big Four have


opened more than 200 stores. Is misleading information the price we


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