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Marketing

01 Apr 2008

I own a business that sells clothing. What do I need to consider when advertising and setting my prices for a sale?

The word "sale" is designed to appeal to the bargain-hunter in all of us. As a retailer, you must exercise care when advertising a sale. You must not make any statement in your advertising that is likely to mislead or deceive the public. The Commerce Commission (Commission) and Advertising Standards Complaint Board (ASCB) are bodies which investigate complaints about advertising.

You must not make any false statements as to the price of the good or service. One furniture company claimed that a lounge suite on sale for $3,000 was sold by other retailers for $6,000, when this was not true. This statement was misleading and the furniture company was fined $36,000 under the Fair Trading Act.

You should not advertise goods as "on sale" when the sale price is no cheaper than the every day price. For example, a bed retailer ran an extensive nationwide campaign claiming that you could make "massive savings" and offered specific percentages off the "normal" price. It was revealed that the beds "on sale" were consistently sold at the same price during both the sale and non-sale period. Consumers were misled into thinking they had purchased a bed at the sale price, but in fact any saving was illusory. A complaint about a clothing retailer was also upheld where clothing was advertised at a discount of up to 50-60% off normal retail price, when in fact some items had been available at the reduced price before the sale. You need to make certain that your sale price is actually lower than your normal everyday price.

During a sale, you must also ensure the way you display your products in store does not mislead the consumer. You should clearly differentiate between those items on sale and those not discounted. This can be achieved by clearly posting signs around the shop. In one case, a customer complained about an advertisement, which stated "25% off selected school shoes", but it did not include what styles. The ASCB declined to uphold this complaint, as store staff were still in the process of putting up all the relevant signs and the part time sales assistant had only just commenced work.

These cases show the importance of providing clear and accurate information about sale prices to consumers so they can make an informed decisions. If you mislead the consumer during your sale, whether it be in print or television advertisements or how you display your stock, then you may receive a fine.