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Comment: retailers need to beware pricing practice pitfalls

Thursday March 3rd 2016

Consumers were outraged when it was revealed that retailers have been charging higher prices for some products marketed at women compared to equivalent products for men. Gavin Matthews of Bond Dickinson puts the argument in context.

A January report by The Times revealed some of Britain’s biggest retailers, including Boots, Tesco, and Amazon, were charging women up to twice as much as men for similar products. In one case, it was revealed Tesco charged double the price for 10 pink disposable razors as it did for men's razors. The Times article suggested that the practice of "sexist" pricing is more widespread than consumers might have reason to believe.

Naturally, the findings sparked a widespread criticism of the brands. Maria Miller MP, Chairwoman of the Women and Equalities Committee, was outraged, demanding that retailers explain how they can be charging such different prices for items which look identical and that retailers are made to account for what appears to be price discrimination based on sex.

In the face of public criticism Tesco remained defiant, insisting that any price difference between almost identical products sold to men and women were justified by different features. The Times reported that the retailer refused to elaborate on the extra features that might justify its pink twin-blade disposable razors being twice the price of its blue ones.

The response of Boots was different, reassuring its customers that the price discrepancy was unintended and that the two products identified were the only two exceptions to otherwise balanced pricing principles that are applied equally across the remainder of its own brand products portfolio.

The revelations came after a particularly torrid 12 months for retail pricing generally which has seen the Competition and Markets Authority (CMA) forced to investigate whether supermarket sales promotions were in line with best practice guidelines after it received a super complaint from the consumer group Which? As a result the CMA announced a series of measures it expects will help improve compliance and bring greater clarity to shoppers and published guidance for consumers to promote a better understanding of unit pricing.

Later this year the Trading Standards Institute (TSI) is also set to publish a wholesale re-write of the long standing industry guidance on best pricing practices. The revised Pricing Practices Guide was published for consultation last year and TSI is currently reviewing responses. The new guidance sees a shift from prescriptive guidance to a principles-based approach which will cause further disruption to businesses as they are forced to reassess their compliance procedures and re-educate staff.

With these latest news reports raising further awareness of potential pricing pitfalls, retailers will be increasingly aware that they are seen to be dealing fairly with consumers. Nowadays more than ever this requires input from legal and compliance experts in conjunction with marketing teams to ensure that the way products are priced offers protection not only in legal terms but in reputational ones too.