Furniture retailers price advertising strategies to come under the spotlight in OFT study

16th October 2009 | marketing | The price promotion tactics used by furniture and flooring retailers are to be investigated as part of a study that could have far reaching consequences for the industry.

The Office of Fair Trading (OFT) will look into six price advertising strategies, and if the retail trade fails to get a clean bill of health, it may take action against companies suspected of breaching consumer law.

The six areas are:

- Drip Pricing, where prices are incrementally added during the sale process;

- Baiting sales, where consumers are attracted into stores by headline offers but ultimately purchase a full priced item;

- Reference prices, where a relatively high reference price is quote relative to the advertised sale price;

- Time limited offers, such as prices limited to one day only or sales finishing at the end of the month;

- Complex pricing, where it is difficult for consumers to assess an individual price such as three for two offers;

- Price comparison websites, which may utilise some of the above tactics.

Of these pricing strategies, time limited offers, baiting prices, complex pricing and reference pricing are all commonplace in the furniture sector.

The OFT study is expected to be completed by the middle of next year.