Tesco are front page news again but today it’s for the wrong reasons! They have just been fined £300,000 plus £65,000 costs for misleading customers in 2011. Their crime? To advertise strawberries at half price!
Tesco sold strawberries at £3.99 for one week and then £2.99 for a further week before reducing the price to £1.99 for three months. In the UK we are not allowed to sell something as a ‘bargain’ for longer than it was sold at the higher price. There is also legislation that goods offered at ‘sale’ price should have been offered at a higher price quoted for at least 28 days before the sale. You would think that Tesco would have enough legal advice available to them not to make such a fundamental mistake.
The PR blunder
The judge in this case praised the tenacity of a customer, Daphne Smallman, who raised the issue with Trading Standards who then took Tesco to court. Some news reports suggested that Ms.Smallman (who sadly didn’t live long enough to see her victory) raised the matter with the store manager and then Tesco head office before going to Trading Standards. If this is the case then Tesco made a massive PR blunder by not acting on Ms. Smallman’s complaint when it was made. That failure has now cost them dear not just in financial terms but also in reputational damage.
To my mind Tesco compounded their mistake by opposing the Birmingham City Council’s right to take on the case with a national remit. They lost this fight and ended up with a large fine and coverage across the national and regional news media. Tesco admitted their guilt today and apologised for the error but wouldn’t that apology have seemed more genuine if it had been offered without the fight?
To many Tesco is the big, bad ogre of large business caring more for profit than their customers. Already they have been hit by the horse meat scandal and have apparently lost some market share to their rivals. This case will not have helped their efforts to rebuild trust with their customers.
So what are the lessons for small businesses?
- Take customer complaints seriously and check your position within the law.
- Apologise for mistakes promptly and genuinely and rectify the situation.
- Know the law as it applies to your business and stay on the right side of it.
- If in doubt seek advice from an appropriately qualified lawyer or from an expert source. Here in the UK Trading Standards would much rather give advice to small businesses than prosecute them. But be warned, if you don’t heed the advice they will prosecute if customers are being misled.
- Weigh up the risks of damage to your reputation as well as legal costs when opting to fight.
I’m sure that this case will have sent other retailers scurrying to examine their practices in relation to pricing and special offers, I hope that the customer will be the beneficiary.
- Tesco fine is ‘a victory for Birmingham customers’ (itv.com)
- Tesco fined over ‘half-price’ claim (bbc.co.uk)
- Tesco fined for misleading customers over strawberries price (independent.ie)
- Tesco fined over strawberries offer (yorkshirepost.co.uk)
- Tesco fined for ‘misleading public’ over half-price strawberries (standard.co.uk)
- Court fines Tesco £300,000 for misleading price promotion (telegraph.co.uk)