Carpetright Plc (CPR) and five other U.K. carpet and furniture retailers are misleading consumers by inflating prices before offering discounts, the Office of Fair Trading said as it asked the stores to stop the practice.
Using so-called reference pricing, companies tout a “higher artificial price when advertising the current price of a product,” the OFT said in a statement today. “There were a significant number of products amongst certain high street retailers where no sales at all took place at the artificially inflated reference price.”
The regulator has asked the retailers to sign legally enforceable agreements to stop the practice, which it said infringes consumer protection regulations. The allegations come as Britons prepared for a three-day holiday weekend that is traditionally a busy time for sales promotions.
“There is no suggestion in the letter of Carpetright having behaved in a manner which breaches competition law,” the retailer said in a statement today after receiving the request from the OFT. The regulator declined to name other retailers who received the letter.
The OFT recommended that customers ask store workers how long reference prices have been in place and how many sales were achieved at that price, to ensure they are getting a good deal.
Inflated reference prices “can make consumers buy goods when they otherwise would not” and discourages people from searching for a better deal from competitors, the regulator said.
Carpetright fell 0.8 percent to 665 pence as of 10:27 a.m. in London, as trading volume was 7.3 percent of the three-month daily average. The retailer’s shares are down 2.2 percent this year.
The retailers have “until autumn 2013” to respond to the OFT’s request, the regulator said.
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