Retailers are well aware how much shoppers like to bag a bargain. We’re more likely to buy discounted items on a whim. However, our research has found some retailers take advantage of this instinct with frequent “special” prices.
Jewellery retailers Michael Hill and Stewart Dawsons regularly advertise sales. We put their bargains under the magnifier.
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During our price survey, Stewart Dawsons had special offers for Valentine’s Day in February and Mother’s Day. In between, the company advertised an annual sale and a watch sale.
Every item we surveyed at Stewart Dawsons went on sale at some point during our 12-week survey period.
Ten of the 28 items we tracked at Stewart Dawsons were on sale for six of the 12 weeks, blurring the line between regular and sale prices. Long sale periods may be reasonable for clearance items, but all 10 products were still available (at full price) 13 weeks after our survey ended.
At the start of our survey, we found one rose gold necklace advertised as “now $399, was $749”. For the following three weeks, the price was $749 but it spent the next five weeks on special at $374.50 during the annual sale.
Twenty-one of our 28 tracked items were on special during the annual sale. After the sale ended in mid-April, all seven of the full-priced products took their turn on sale.
Michael Hill also promoted several sales during our price survey, including a gold jewellery clearance sale, an Easter sale, a “Diamond Event” and a pearl jewellery sample sale.
We found one diamond tennis bracelet on special for nine of the 12 weeks. Its regular price was advertised as $3999, though it spent five weeks marked down to $3099, then another four weeks at $2999.
Overall, the Michael Hill products we tracked went on sale less frequently than the Stewart Dawsons items.
We chose 30 items from the Michael Hill and Stewart Dawsons jewellery collections, from $49 to $4999. We recorded the price of each item every week from mid-February 2018, for 12 weeks.
Four items from Michael Hill and two items from Stewart Dawsons were discontinued during our survey period, and were removed.
White gold tennis bracelet with one carat of diamonds
On special 9 of 12 weeks
Rose gold triangle necklace
On special 6 of 12 weeks
Blue London topaz and diamond ring
On special 6 of 12 weeks
Along with the white gold tennis bracelet, other items most frequently on sale at the two stores were:
If a product spends more time on special than at its so-called “regular price”, is it really on sale?
The Fair Trading Act states stores advertising a sale must offer genuine bargains. If pricing misleads consumers into thinking they’re getting a better deal than they are, businesses risk breaching the act and being hit with a fine of up to $600,000.
Stewart Dawsons marketing manager Kathryn Frankland said throughout the year the retailer offers various promotions and the period of our survey included “a number of discounting offers, mainly due to [the store’s] annual sale”.
“We run a sophisticated system to manage our promotional pricing, and are constantly referring to the Fair Trading Act to ensure that we are compliant.” In general, items advertised in one sale will not be included in the following promotion, she said.
Michael Hill responded through its lawyer. The retailer said all items in our survey were on sale at the regular price for “a reasonable period” prior to being promoted on special.
“Michael Hill is confident it has not, and does not, mislead its consumers with respect to its pricing practices,” the company said.
How long is too long for an item to be on sale?
There’s no hard rule but the Commerce Commission said if a retailer displayed a price using two comparison prices, then you’d expect its “usual price would have been charged for a longer period of time than its ‘now’ sale price”.
In 2017, the regulator put retailers on notice about using misleading pricing practices. In an open letter, commissioner Anna Rawlings warned “when price claims are not accurate and discounts are exaggerated, consumers do not get the ‘bargain’ they believed they were getting. It is also unfair to other retailers who are offering genuine special prices and pricing their goods accurately”.
We’ve sent the results of our price survey to the commission and asked it to investigate.
Across the Tasman, a jewellery retailer was fined $250,000 in 2013 for its sale pricing tactics. As the company only sold jewellery items at non-sale prices in limited numbers, the federal court found it misleading to represent these as the items’ regular prices. The company also held regular sales and staff offered discounts routinely.
Michael Hill’s adjustable pearl and cubic zirconia bracelet was advertised as $20 off on the retailer’s website during an April sale, though the item was out of stock during the first week of the sale (and had been for five weeks prior).
The Commerce Commission said advertising discounted items that cannot be supplied to customers is “bait advertising” and is illegal.
Michael Hill said the bracelet was available in store during the time it was out of stock on the website.
But we say the retailer should not have advertised the special on its website as online customers were unable to purchase the item.
Purchasing “pre-loved” jewellery can appeal as a way to save coin. However, if you’re buying second-hand, be careful about a common gimmick to make you think you’re bagging a bargain: the insurance valuation report.
One diamond ring advertised on Trade Me was “valued at $2350” based on an insurance valuation report. It sold for $499 – an apparent steal for the lucky buyer.
But Jewellery Valuers Society committee member Paul Nilsson advises consumers not to confuse insurance valuation with the item’s actual worth. “The ‘value’ reported is usually at the high end of what a similar new item might retail for, sometimes significantly higher.”
Replacement valuation reports are prepared for insurers – so in case the item is lost, there’s plenty of money available to replace it. When you’re looking to buy, dismiss this figure. You’ll only need it when you add the new gemstone to your contents or travel insurance policy.
If you want a fair assessment of the item’s worth, you’ll need an independent report on market value.
By Olivia Wannan