Coles’ shameless ‘Down Down’ promotions have been exposed. So why aren’t they even trying to rebuild trust? | John Quiggin
Like millions of Australians, I shop at Coles,I’m not as careful as I should be, but I try to buy things advertised as being discounted, or on special,But after following a recent case before the federal court, I’ll be checking my old receipts before accepting such claims,In particular, I’ll be avoiding “Down Down” promotions,On the evidence before the court, such promotions are routinely used as a way of implementing price increases.
The facts of the case are simple and apparently uncontested.One example is particularly striking.Over a period of nearly a year, Coles offered a 1.2kg loaf of Nature’s Gift wet dog food for $4.Then, for seven days, the price rose by 50% to $6.
On the eighth day the price was set at $4.50, more than customers had been paying for all but seven of the previous 303 days, with Coles labelling the product “Down Down”.Sign up: AU Breaking News emailThe only unusual feature of this path to higher prices was the short duration of the large increase.According to Coles’ lawyers, the more common pattern was to raise the price for six to 12 weeks, then partially reverse the increase and advertise “Down Down”.As the evidence regarding deals with Arnott’s makes clear, this strategy is planned in advance as a way of raising prices without upsetting consumers.
In their defence, Coles claimed that Woolworths’ “Prices Dropped” program (the subject of a separate ACCC case) was even worse.More broadly the defence was that consumers were incapable of understanding the many complexities of pricing decisions.But most of us are capable of understanding the idea that taking prices two steps up then moving them one step down still leaves them higher.Whatever the outcome of the court case, it’s hard to believe that Coles will be able to get away with “Down, Down” promotions in future, even if they are genuinely reducing prices.In the long run, then, it seems as if this kind of sharp practice should be self-defeating.
The banks, for example, have spent years trying to shake off the bad reputation they built up for hidden fees and charges in the years leading up to the financial services royal commission.Woolworths and Coles are big companies that plan to stay around for a long time.Could not one or both of them commit to a policy of truthful advertising and stand by it long enough to establish a reputation that customers could trust?This hasn’t happened – with supermarkets, or telecoms, or banks or anywhere else, at least in the absence of comprehensive public shaming driven by government action.But why not?One explanation, apparent from the evidence in the Coles case, is that no one wants to be the first to move.Given the short-term pressure that decision-makers are under, it’s easy to imagine that any proposal of this kind will be put in the too-hard basket and left there.
Another possibility is that distrust is so widespread that no single company can break the pattern.The era of neoliberalism has certainly strengthened this distrust.There was a time when used car dealers were famously untrustworthy but financial institutions were pillars of probity.Today, when buying a second-hand car, the biggest risk is not that the speedo will be wound back but that you will be sold a loan with deceptively high interest.In this context, you just assume everyone is lying.
The final, gloomy, hypothesis is that Coles’ lawyers are right, and that we are proving the wisdom of HL Mencken’s observation that “No one in this world, so far as I know … has ever lost money by underestimating the intelligence of the great masses of the plain people” (put more succinctly by PT Barnum as “there’s a sucker born every minute”).Perhaps we are simply incapable of resisting an apparent bargain, even when we know there’s bound to be a catch.For years, we all fell for the illusion of items priced at $9.99 or similar, rather than the honest price of $10.Partly because of the digital economy, this particular trick seems to have faded away.
But the same digital economy has far nastier tricks in mind for us.The trickery of “Down Down” seems childish compared to the wonders of personalised pricing, where sellers set a price specifically aimed at being the maximum you are willing to pay, and precisely when you are primed to buy.The only solution, it appears, is to build your own AI agents, to trick the company algorithm into seeing you as a desirable customer.John Quiggin is a professor at the University of Queensland’s school of economics
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