B&Q, Homebase kitchens, Yo-Yo Pricing and BBC Watchdog

bandq-homebase-kitchens-bbc-watchdog

At Kitchens-Kitchens we speak to, write about, and take note in the goings on in the KBB sector (kitchen,bed,bath) and from time to time, some stories surface that surprise you, some surface that you kind of suspected all along, and the Yo-Yo pricing incident at B&Q and Homebase was one of those stories many were not surprised about.

The allegations were that consumers had started noticing that kitchens they had bought from Homebase and B&Q, were days later being advertised as being “20% Off” for example, but that the actual price was not too different from the price that consumers had paid mere days before. Some looked at this with confusion, others smelled a rat.

So, here is what BBC Watchdog reported on the matter:
(source: www.bbc.co.uk/programmes/b006mg74/features/b-and-q-homebase-pricing)

B&Q and Homebase are two of the biggest D.I.Y. chains in the country. They’re in fierce competition for our business, so they have to make sure the deals they advertise are really enticing.
DIY: B&Q and Homebase pricing

But are those ads really as good as they look?

In March this year Aaron Leatherland spent £568 on kitchen items in B&Q. Just a few days later they introduced a ‘20% off sale’, and he decided to work out how much he would’ve saved if he’d waited for the sale to start.

Aaron told Watchdog that, ‘When I looked into it further, I realised the 20% discount they were offering was actually only 8%. And it was quite clear that the price had gone up.’

It turns out that B&Q had increased the price of some kitchen items at exactly the same time they started the sale. The 20% discount had applied to these new amounts and not to the non-discounted prices that Aaron paid, just 10 days earlier: the so-called ‘list prices’.

Aaron told us that, ‘The way that they do it, by increasing the list price just before the sale, I don’t think is fair at all.’

BBC Watchdog decided to investigate whether this was an isolated example, so decided to take a detailed look at a few other B&Q deals.

Raw data was obtained and compiled from the independent price comparison company kitchencompare.com. The team then combed through seven months’ worth of prices and worked out how much a standard eight-unit galley kitchen would cost from B&Q at different times.

The findings were an eye opener. According to guidance set out by the Department of Business Innovation and Skills, discounts should only be offered on the most recent price a product was on sale for, and it should have been available at that price for at least 28 days.

Yet, it was found that B&Q introduced discounts based on older, more expensive prices. If you consider the eight-unit galley kitchen from the IT range. throughout January it would have cost £938. But then, at the start of February B&Q introduced a ‘20%-off’ promotion.

But rather than offer 20% off £938, as you would expect, they offered 20% off £1,080. A previous higher price. Potentially misleading according to consumer lawyer Deborah Parry.

She told us that, ‘Under the consumer protection regulations and government guidance, if you are not using the previous selling price as your base price, then you have to give very clear indications on what price you are using. This is not going on here and it could lead to a misleading action offence rising.’

But are B&Q alone in their confusing pricing practices?
Watchdog researchers also worked out the cost of a standard eight-unit galley kitchen from Homebase’s Milano range. However it was difficult because although the list price was £4,465, Homebase changed the sale price an astonishing 25 times between December and June of this year.

It’s an extreme case of what’s known as yo-yo pricing – a baffling practice, which can leave little chance of deciding when, is the best moment to buy. Yo-yo pricing is allowed but provided the list price has been in place for 28 consecutive days before an offer starts. However that wasn’t the case in this instance.

The Milano range had only been on sale at its list price for 19 consecutive days. So, all those 25 offers that Homebase made on this range were potentially in breach of government guidance. And looking at the detail, some more surprising facts appear. One of the sales offered the £4,465 kitchen for just £2,219. More than two thousand pounds off.

It may sound like a bargain until you go through the pricing data and realise that, just a week before advertising that offer, Homebase were actually selling the same kitchen for only £1,949. This is £271 cheaper than it was in the following sale.

Deborah Parry told us that, ‘By using a list price which is very rarely the actual selling price of the goods, this enables the firm to claim large price reductions. In fact, if you look at the previous selling price the price reductions are minimal and in some instances the price actually goes up during a sale promotion.’

With inflated prices, misleading sales and yo-yo pricing, how can customers really decide the best time to buy.

Company Responses:

A SPOKESPERSON FOR HOMEBASE SAYS:
Homebase strongly refutes any suggestion that our promotional pricing on kitchens is not genuine or breaches legal guidelines. We have genuine offers and we fully adhere to the law surrounding pricing and promotion, taking into account pricing guidance. In doing this we work closely with Trading Standards.

Homebase also disputes the way Watchdog calculated its prices. We update our pricing frequently to ensure that we offer customers the best deals in what is a highly complex and competitive trading environment. Further, Homebase will price match on any like for like product when provided with a written kitchen quote, plus 10% of the difference.

We sell over 40,000 kitchens each year from over 130 ranges through our City & Guilds trained consultants in store. The most recent independent research from Ipsos MORI (which is undertaken monthly) shows 94% of customers who opt to choose Homebase installation are satisfied with our award winning service.

We support Watchdog’s goal of providing customers with clear, fair and accessible information to assist them in the important decision of buying a new kitchen. So, we will consider the information Watchdog has provided to see how we can make pricing even easier to understand for our customers.

A SPOKESPERSON FOR B&Q SAYS:
B&Q is the market leader and we take our customer price promise very seriously. We sell around 100,000 kitchens a year and were the first kitchen retailer to come down on the side of the customer when we championed clarity in kitchen pricing by moving to everyday low prices in December 2011.

Our everyday low price approach means that we do change our prices to absolutely ensure that we are consistently offering our customers the best value and the lowest prices in the market. www.kitchen-compare.com shows that our prices are consistently lower. Unlike many of our competitors, we publish our price lists, we fully support independent price comparison sites and actively encourage customers to use these sites.

We are totally committed to offering our customers kitchens at prices that are clear and unambiguous so that they know what they’re paying but we’ve obviously not been as clear as we could have been on this occasion so would like to apologise to Mr Leatherland for any confusion. It is always our intention for our prices to be clear and easily understood. It’s not acceptable to us that we have any customer who is not satisfied with their shopping experience at B&Q.

(above source: www.bbc.co.uk/programmes/b006mg74/features/b-and-q-homebase-pricing)

Defusing the PR Speak

Depending on the scale of the potential reputational threat, the PR handbook yields various responses from deny deny deny, deny deny deny and call the evidence into question, deny but not too strongly, deny you were aware the problem existed, own up but blame another party and a politicians favourite, give an answer that looks like you are saying something didn’t happen, but leaving the door open in case the problem gets bigger, and the Homebase response just smacks of that last one.

In the statement, “Homebase strongly refutes any suggestion that our promotional pricing on kitchens is not genuine or breaches legal guidelines.” the key statement here is just the same as the likes of Google, Amazon and Starbucks in terms of allegations of tax avoidance. They didn’t break the law (in the strictest sense) but the suggestion isn’t that Homebase broke the law or didn’t actually offer a discount (i.e. note the word ‘genuine’), but that they perhaps employed tactics that were misleading to the average consumer in that whilst they may not have broken the law, the discounts were not based on the perceived price or the previous price in accordance with guidelines, as was the case with the Milano range which had only been on sale at its non sale list price for 19 consecutive days, despite the 28 day guidance. More so when Homebase changed the sale price 25 times between December and June alone.

Homebase using the word “genuine” is a classic PR trick to call the allegation false by changing the implied meaning of the allegation and in doing so, PR statements like that are designed to put doubt in the readers mind. Rather than say the discounts are not ‘worthwhile’, ‘substantial’, and the like, you shift the emphasis so that it looks like you are denying an allegation that the discounts ever happened in the first place. They did happen, but in non PR speak they were a tad ‘crap’ and so out of a denial comes a half truth and a bit of spin to limit the reputational damage.

Unlike Homebase, (and taking who is more right or more wrong out the equation here) B&Q’s response was a bit more polished and less likely to result in loss of consumer trust in that it didn’t try and say it dosn’t change prices but that it regularly changes its prices (up and down), and that it publishes its price lists and works with “independent price comparison sites”. The same could probably be said of Homebase to be fair, but the Homebase spokesperson was a bit too defensive.

Read into the BBC Watchdog report and the respective Homebase and B&Q responses what you will and whilst we at Kitchens-Kitchens would recommend big sheds to those doing DIY kitchens and the independents to home owners looking for more than just the kitchen furniture, it has to be said that there are some equally misleading “sales” and “discounts” outside of the big sheds so don’t just look at the headline offer, but weigh up the value of the kitchen on all the other factors you would in your decision process, if all the prices were the same.

Buying a kitchen is more than just the price and whilst big sheds and independents can be equally misleading look at the quality of the product, the knowledge of the staff, the reputation of the business and the previous work of the kitchen company to see if it matches your expectations of what you wish to have both in terms of the kitchen itself, and the process of getting it fitted.