Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research's weekly analysis on emerging issues facing retailers, presented here for discussion.
In mid-June, a segment on the Today Show probed two class action lawsuits against two retailers — J.C. Penney and Kohl's — for allegedly setting "misleading" prices. The report warned consumers to be on the lookout for "sale" prices that turn out to look an awful lot like the manufacturer's suggested retail price.
Turns out, the story behind the story is more complicated than that. In the case of Kohl's, an appeals court in California overturned a lower court's ruling that now paves the way for Kohl's to be sued in a case that centers on purchases made in May 2010. Legal technicalities aside, the court basically ruled that consumers can sue retailers for advertising prices as "sale" prices when they are actually "regular" prices, even if the consumers keep the items they purchased and even if the "sale" prices are "fair."
The public commentary is much more fun — and jaded — with many commenting, "Haven't retailers been doing this forever?"
What does this tell me? We have entered an age of price promotion that has jumped the shark — it is a trend that has peaked and doesn't know it yet. Today didn't have to approach the story as a consumer alert that poked at consumers' sensibilities. But they did, obviously because they felt it was an angle that would generate consumer interest. So it seems to me that they are at least testing the waters to see if consumers are getting tired of the relentless search for the best deal. Coupled with Americans' apparently less-than-stellar math skills when it comes to understanding sale prices, retailers can be perceived as unfairly taking advantage of this drive.
So I'll throw it out there to get it on the record. To me, this smells like the beginning of the end. It will only take one retailer behaving badly this holiday season and it will all be over. Don't get me wrong, however — I don't think this would be a bad thing. In fact, it may be exactly the thing we need to get back to rationale pricing behavior, especially as it appears the economy is carefully, slowly improving.