Supermarkets 'use discounts to disguise price rises'

Published on Sunday 15 February 2009 23:58

BRITAIN'S biggest supermarket chains have been accused of using money-off deals to hide price increases.

A report into the industry found some goods were returned to a higher price than before, after being put on limited-period special offers.

Sainsbury's was shown to have reduced 200g jars of Nescafe from 4.13 to 3 for four weeks in January. But when the offer came to an end, the price of a jar increased to 4.45.

Similarly, Tesco reduced a 2.85kg pack of Ariel washing powder from 5.54 to 5 for four weeks, and when the offer ended the pack went up to 5.78.

The tactics used by the UK's big four supermarket chains were highlighted by trade magazine The Grocer.

It said that more than a third of branded products were on promotion. But analysis of data from the magazine's weekly "shopping basket" survey showed that up to 25 per cent of money-off promotions on branded lines returned at a higher price once the promotion drew to a close.

In another instance, an 80-pack of PG Tips pyramid teabags in Tesco cost 1.73 at the start of January. For the following three weeks, the pack cost just a pound – but once the offer ended it went up to 1.95, which represents a 12.7per cent rise.

The investigations showed that this pattern was repeated for promotions across Tesco, Sainsbury's, Asda and Morrisons during December and January when supermarket prices rose 1.7 per cent, according to the magazine's price index.

The practice was most prevalent in the household goods, hot beverages and fizzy drinks, although other items from HP Sauce to chocolate biscuits were also found to have risen in price after promotion.

The news came as the British Retail Consortium announced that food sales were up 6.8 per cent last month.

Kay Staniland, managing director of promotional consultancy Assosia, said that several branded manufacturers used promotions and discounts to ease in and mask inflationary price rises.

"This tactic minimises the attention drawn to price rises," she said. "Manufacturers and retailers need to manage costs and try to preserve some kind of margin – a fine balancing act with consumers so price sensitive right now. I suspect promotional activity followed by price rises is something we will see more of in the year ahead."

Retailers yesterday denied they were using such promotions as a price rise tactic.

A spokesman for Morrisons said: "There is no policy of price rises following promotions at Morrisons. Any price rises are solely a result of recommended selling prices going up from manufacturers."

A Tesco spokesman said: "Many prices have been brought into line with the recommended selling prices once promotions have ended. Prices do change but for those that have gone up there are many more than have come down."

A spokesman for Sainsbury's said: "The promotions we offer are genuine and aimed at giving customers the best possible value on everyday products."