A former Coles manager has admitted the supermarket giant breached internal guidelines and launched Arnott’s Shapes into the Down Down promotion earlier than allowed, blaming “human error”.
The confession came on the third day of the shocking federal court case.
The Australian Competition and Consumer Commission (ACCC) is suing Coles in what a former ACCC chief described as the “case of the century”.
The consumer watchdog group accused Coles of running a “premeditated” campaign to mislead customers with fake or “phantom” discounts on hundreds of common household items.
The ACCC claims the supermarket giant temporarily increased prices before promoting sales at “phantom” discounts. (ABC News: Billy Cooper)
The supermarket giant claims it temporarily raised prices, then lowered them and included the products in its “Down Down” promotion.
ACCC general counsel Garry Rich pressed former Coles director Rebecca Thompson over the price the supermarket giant charged for the Arnott’s Shapes Multipack 375g variety pack.
The former biscuit and cookies department manager was asked about negotiations between Arnotts and Coles after the two asked for the price of Shapes biscuits to be increased from $5.
The court heard that after the product had been sold as a “down-down” special for more than 340 days, the supplier had negotiated a price increase. (ABC News: Patrick Stone)
This product was on sale at this price in the “Down Down” promotion for over 340 days until May 2022.
They agreed to increase the price to $5.50 as a “down down” promotion.
But under Kohl’s internal guidelines or “guardrails,” that didn’t happen right away.
The guardrails were intended to ensure that “previous” prices were maintained for four weeks before becoming “down-down” discounts, so as not to mislead customers.
Coles claims it has been hit with an unprecedented number of price hikes by suppliers. (ABC News: Billy Cooper)
That’s because the supermarket’s pricing ticket shows shoppers the “old” price of $6.50 and the discounted price of $5.50.
But Coles didn’t do that. They sold Shapes for $6.50 one week, gave them a 30% discount the next week, sold the product for $6.50 for two more weeks, and then sold “Down Down” tickets for $5.50.
Rebecca Thompson said the agreement between Coles and Arnotts did not follow pricing “guardrails”. (linkedin)
Mr. Rich asked Mr. Thompson whether he acknowledged that Coles had moved too quickly and violated its own guidelines.
“You admit it didn’t follow the guardrails, right?” he asked.
“Yes, it was a mistake,” she answered.
The ACCC claimed in the Shapes example that shoppers received no discount at all, despite what the price tag suggested.
The group claims that Kohl’s “down down” pricing was misleading because shoppers who handed over $5.50 paid an extra 50 cents compared to the “down down” price of $5 a month earlier, or a 10 percent increase.
Coles disputes this.
In another tense exchange, Mr. Thompson was asked about an internal email from a member of the pricing and value team.
The man who wrote to her provided a date for when Arnott’s Shapes’ “Down Down” promotion would take place in accordance with internal guidelines.
Ms Thompson appears to dispute whether she was sent the correct date.
But Rich objected to this.
“Do you think what he told you was strictly correct?”
“No, because it wasn’t part of the guardrail.”
“Okay. Are you saying it’s his fault?”
“No, I say it was human error. It was a mistake.”
“But he sent you the guardrail, right? He sent you the relevant part of the guardrail, right?”
“I was nostalgic for those days, so yes.”
Ms Thompson said Coles also had to take into account Arnotts’ twice-yearly discount promotions, which contributed to the problem.
The ACCC seeks to prove that Coles misled shoppers because the products were sold at the same regular price for at least six months before being increased for a short period of time as part of a “Down Down” promotion and then reduced.
Shoppers thought they were getting a good deal, but were paying the same or more than the product’s regular price, the ACCC claims.
Coles is defending the lawsuit by claiming that it has suffered an unprecedented number of price hikes from suppliers and that rampant inflation is driving up its costs.
It also denied that the discounts were fake and said it offered genuine price reductions.
Coles also argued that the consumer watchdog has not been able to establish what the regular price should be or how long the discount should be offered.
The trial continues.