Confusopoly - the art of baffling your customers on price

Man choosing milk Image copyright Thinkstock

Today, the consumer watchdog, Which? is launching a "super-complaint" against supermarkets.

It claims they have confused customers for too long with money off offers which don't offer money off and "buy one get one free" deals where "free" is a pretty elastic term.

The complaint by Which? goes to the heart of what is called "confusopoly" in mature, western markets.

The word was first catapulted to fame by Scott Adams, the man behind the gloriously funny cynicism of Dilbert, the cartoon strip which punctures all that is bad about the management speak of "customer focus" and "cascading management" techniques.

He wrote in 1998: "In the future all barriers to entry [in major markets] will go away and companies will be forced to form what I call confusopolies.

"Confusopoly: a group of companies with similar products who intentionally confuse customers instead of competing on price."

In the past, the energy and mobile phone sectors have been attacked for bamboozling consumers with impenetrable tariffs and deliberately opaque special offers.

A study by the CentreForum last month said that there was little switching between energy suppliers because of the "deliberately confusing way" pricing information was presented.

Art of razzamatazz

Customers gave up trying to understand which tariff would be best for them. Or thought they were getting a better deal than they actually were.

The claim by Which? is that supermarkets are guilty of operating a confusopoly.

Because the offer - food and toiletries - is basically the same, say the critics, selling has become the art of razzamatazz, telling customers they are getting a good deal through noisy promotions rather than straight forward low prices.

Those same critics point out that the hard discounters Aldi and Lidl have proved that fewer promotions and simpler lower prices work for consumers.

Go to either of those chains and what is striking is how few promotions there are.

But, has Which? made its super-complaint - a power granted it under the Enterprise Act well over a decade ago - just as the tide is going out on the promotions frenzy?

The evidence is that the mainstream supermarkets are becoming wise to the negative effect on "trust" caused by constantly shouting at their customers through the price promotions megaphone.

Customers are wise to the fact that there is no such thing as a free lunch - even if it does come with a bottle of wine on the side.

Tesco, for example, has cut back drastically on the number of promotions it does.

The new chief executive, Dave Lewis, is well aware that time-pressed customers tend not to walk around stores with a calculator to work out what the best "unit price" is when presented with four different pack-sizes of, say, Coca-Cola - some of which will be "on promotion" and supposedly offering "value".

Good for customers

Admittedly, there is a long way to go.

Which? says that around 40% of all groceries sold in the UK are on some form of promotion. Given that the overall groceries and toiletries market is worth around £115bn, that is a significant amount.

The problem for Which? is proving that the examples it gives where promotions do not appear to be all that they seem are more than singular instances of poor behaviour.

For the Competition and Markets Authority to act using powers under consumer protection legislation, the behaviour will need to be provably systemic and of clear detriment to consumers.

Retailers will argue hotly that it is neither.

Tom Ironside, the director of business and regulation for the British Retail Consortium, puts it succinctly.

"The examples set out [by Which?] are very specific in nature and are not in any way indicative of broader systemic problems across the retail industry," he said.

The argument from retailers is that, yes, errors do occur but price promotions generally are good for customers.

Certainly, the groceries sector in the UK is brutally competitive with the BRC saying that generally prices are 7% lower than the average across the eurozone.

As discounters bite, profit margins in the supermarket sector are already squeezed. Prices are falling, not rising.

A bout of simplification on prices I am sure would be welcomed by consumers, as long as good value remains.

If the complaint by Which? speeds progress to that end, then many will say it has merit.

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