Navigating Brand Risk This Boxing Day

Melbourne, Australia - December 26, 2017: A long line of shoppers queue up outside David Jones in the early hours of Boxing Day. The upmarket department store has traditionally opened its doors early on the day an offered discounts on many items.

In recent years, the chaos that is the Boxing Day sales has made its way online. And while it might be without the crowds and queues, in many ways, the online sales are just as crazy.

But with so many brands looking to outdo each other with attractive promotions, the Australian Competition and Consumer Commission (ACCC) is on the lookout for any misleading claims.

Speaking with B&T, Plexus senior solicitor Sharmila Pamamull (image below) warned against starting any promotions that could be deemed misleading this Boxing Day.

“We see brands run potentially risky campaigns and creative every single day. However, Boxing Day is a particularly problematic period for false or misleading advertising, even more so than Christmas. Retail brands are under pressure to meet sales targets, discount more stock and to conduct sales promotions across multiple channels,” she said.

“As a result, issues can arise relating to savings and promotions such as retailers falsely stating that a product will only be available at a particular price for a limited time or stock availability, or where the retailer fails to make a reasonable estimate of the likely response to their promotions.

“To avoid being on the ACCC’s naughty list and disappointing customers, brands need to clearly stipulate any limits to a promotion such as sales stock and sell discounted products for a long enough pre-discount period beforehand. Brands should not make claims to consumers about sales and promotions unless they are offering genuine savings. In an ever-evolving regulatory landscape, we can expect to see more brands leaning on technology providers to ensure marketing compliance and to protect its reputation and relationship with customers.”

A recent example of a campaign catching the ire of the ACCC was Kogan’s ‘TAXTIME’ promotion, where the retailer jacked up the price of products immediately before putting them on ‘sale’.

Pamamull pointed out that the ACCC’s recent decision to take Kogan to court over the misleading sales sets a precedent for other merchants.

“ACCC made it clear to all companies that they cannot simply advertise a discount without the product being sold for the pre-discount price for a long enough period beforehand,” she said.

The cost of Reputational damage

While a fine from the ACCC is one thing, the reputational damage that can come with a misleading promotion can be far more damaging to the longevity of a brand.

Online reviews for Eva Mattress – which recently promoted a (limited stock of) $1 mattresses as part of its Click Frenzy sale – are now filled with negative consumer comments about the entire brand.

The mattress company took a similar hit on social media.

“Consumers are more empowered and savvier than ever before, and are well aware of their legal rights,” said Pamamull.

“With consumers hitting back at brands harder than ever before, the most successful marketing teams are ensuring greater alignment with their in-house legal teams or outsourcing their marketing compliance to a technology provider, to avoid significant financial penalties and reputational damage.

“For most brands, the consumer backlash and reputational damage from running misleading promotions can be far worse than the threat of regulatory action. Regulators don’t have the resources to take on all cases, but in our experience they will often take action where the advertising could cause widespread consumer detriment, where a well-known brand is involved, or if there is a widely occurring issue they want to promote in the media.”

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ACCC boxing day Sales