Shoppers go gullibly into sales frenzy

Your eyes are focused on the lurid pink fake fur coat. You knock several old ladies to the ground in your rush and bear it off triumphantly to the till clutching the sale label.

But as the annual hysteria of the January sales begins this week, be warned. Your bargain may not be quite what it seems.

And while it is the consumer's responsibility to point out to Trading Standards any infringement of sales laws by shops, most of us display woeful ignorance as to what stores are allowed or not allowed to do, according to research by the Manchester School of Management.

Over half of the people it talked to did not realise that retailers can raise prices just before a "sale" and then reduce them to make them look like bargains, and just under three-quarters of those surveyed did not know that it is perfectly legal for retailers to have a continuous sale all year round.

The findings are part of a study carried out as part of Europe's largest investigation into consumer knowledge, attitudes and behaviour in seasonal sales.

The Manchester researchers looked at four big retailers, tracking their sales discounts over three years, and surveyed 2,500 sale shoppers. The research looked at both the summer sales of 1995 and the winter sales of 1995-96.

Under the UK Code of Practice on Price Indications 1988, price comparisons must always state both the higher price as well as the new lower price - therefore it is not acceptable to display in isolation "Reduced to pounds 39".

If a previous higher price is quoted, it should have applied during at least 28 consecutive days in the preceding six months, and general sales notices such as "Up to 50 per cent off!" should not be used unless the maximum reduction quoted applies to at least 10 per cent of the goods on offer. But most customers were unaware that these restrictions were in place and if they spotted discrepancies usually failed to take action.

"The problem is a) they don't know if it is wrong, b) they are too embarrassed or lazy to do anything about it and c) they do not know what to do about it." said Professor Peter McGoldrick, one of the report's authors.

When asked what they would do if they saw jumpers in a half-price sale at pounds 20 when they knew the original price was pounds 30, more than a third said they would do absolutely nothing, and only 4 per cent would report it to their Trading Standards Authority.

Describing sales as a "well orchestrated farce", Professor McGoldrick said that the marked-down goods tended to be ones bought in error by the shops.

"In the good days before the recession, in the late 1980s, retailers found it easy if they made mistakes, they could get away with it," he said.

"But when times got bad and stockrooms were bulging with unsold stock they had to get rid of stuff - if only to get the next lot in." The result was hysterical "everything must go" mark-downs.

But these days are on the way out, the researchers found. Pricing strategies have changed from the late 1980s with a number of retailers turning against the sharp practice of setting high initial prices in order to give the impression of good bargains - known as "high-low pricing" - in favour of more credible all-year-round good value.

"Consumers . . . became increasingly sceptical of high-low prices, resented the huge margins stores must have been adding and were fed up at always having to shop around and wait until the sales," said the professor.

"The recession highlighted just how inefficient and unfocused some retailers had become," he added. "Deep recession sparked off panic-stricken discounting . . . and mark-downs reached unprecedented levels as stores tried to stimulate demand."

Professor McGoldrick said that most stores had taken corrective action and had become wary of excessive discounting. For example the Burton Group had managed to trade at full price for 73 per cent of the time by 1995 when in the previous year it had been just 24 per cent.

He added that sales could in future diminish in importance but they were unlikely to ever disappear because of the British public's love of a "bargain".

A Harrods shopper was reported as being thrilled with a designer skirt reduced from pounds 184 to pounds 9. "Even if you give it away it is still worth pounds 9," she said. According to the MSM this woman was prey to "transaction utility". "It is a curious psychology," said Professor McGoldrick. "You buy something you don't want, give it away and still feel as if you've saved money. It would appear that some people can get more enjoyment from the price reduction than the product they carry home.

"I suppose retailers would like to have no sales but they would never get rid of them altogether because they are traditional and work up such excitement," he added. "You can't imagine Knightsbridge without the Harrods sale."