Who: Argos Limited trading as Argos (“Argos”) and the Advertising Standards Authority (the “ASA”)
Where: UK
When: 27 April 2016
Law as stated at: 10 May 2016
What happened:
Argos showed a TV on 23 November 2016 as part of Argos’s Black Friday promotion. The ad stated, “save £100 on this Toshiba 15.6 laptop, just £179.99”. A viewer subsequently complained as they had been unable to find it in stock when the ad was aired.
Argos gave a lengthy response that they had made a reasonable estimate of the likely response to the ad, including an analysis of the units sold prior to the promotion and a comparison of previous Black Friday promotions.
Clearcast added that they had been confident that Argos could meet the demand based on a statement from Argos that they: had adequate stock to meet demand; would actively monitor stock during the promotion; and would ensure that stock was adequately distributed to meet demand.
However, the ASA held that the ad breached BCAP Code rules 3.1 (misleading advertising) and 3.28 (availability). This was based on the following factors:
- The ad did not state or indicate that availability of the laptops was limited. Therefore consumers would understand that they were generally available.
- Argos did not produce evidence that they had estimated the likely demand for the laptops. Although they had produced evidence of the unit sales prior to the promotion, they did not show how this was used to calculate the likely demand during the promotion. Argos used an uplift of 42.5% for demand during the promotion but there was no explanation of how this uplift was chosen. The ASA stated that an estimate of reasonable demand should be based on a robust methodology and there was no such evidence of this in this case. Instead Argos had simply relied upon a reasonably high level of stock availability of the laptops.
- The ASA acknowledged that the stock had, in actual fact, been sufficient. However, although there was stock on a national level, the ASA found that some customers had been unable to purchase the laptop because there was no stock left in their region. Argos had been unable to meet actual demand, despite the fact that there was left-over stock at the end of the promotion.
The ASA therefore held that Argos had not made a reasonable estimate of the likely demand nor had they shown that stock was available across all regions and sale channels. Consequently the ad was misleading as it implied that there was widespread availability of the laptops.
Why this matters:
This ASA adjudication demonstrates the importance that it places on advertisers making a reasonable estimate of demand before launching a promotion. The ASA held that there was a breach of the BCAP Code even though there were sufficient numbers of laptops available during the promotion. The fact that there were not enough laptops in one region, despite the fact that there was sufficient stock on a national level, meant that demand had not been met. This will have most relevance to advertisers who operate nationally as they will have to ensure that stock is reasonably spread amongst the different regions. In addition advertisers who sell through both physical premises and online should make efforts to ensure that stock is available through all sale channels.
Interestingly CAP guidance states that reasonable estimates of demand for promotions should usually be based on responses to previous promotions. However, in this case Argos did not adequately show how it had used evidence from previous promotions to calculate the estimate of demand for the new promotion.
Advertisers could mitigate this risk by alerting customers to the fact that stock may be limited in the ad itself.
