Who: Morrisons, ASA
When: November 26 2014
Law stated as at: January 2015
In December 2014, grocery chain WM Morrison Supermarkets PLC (“Morrisons”) was hit with an adverse ruling from the UK’s advertising regulator the Advertising Standards Authority (the “ASA”) on newspaper and website advertising for one of its promotions following a complaint to the regulator.
The advertising in question related to an “Any 3 for £10″ wine promotion that Morrisons had run around the 2014 May bank holiday weekend, offering customers their choice of 3 bottles of certain wines from a selected range for £10. The offer was limited to 12 bottles per customer, and the adverts relating to the offer included small print stating that the offer was “Subject to availability” and/or “while stocks last”.
The offer was a more aggressive discount on wine than had been available to consumers for a while, as, according to an industry magazine, other supermarkets which had previously offered 3 for £10 had all dropped this type of promotion by January 2014 for damaging profits. It was therefore perhaps unsurprising that the May promotion was highly successful, and Morrisons sold over 1 million promotional bottles.
However, two customers who had seen the advertising visited a number of Morrisons stores but were unable to purchase any of the wine shown in the adverts, as the stores were out of stock. The disgruntled customers complained to the ASA, on the grounds that the retailer had not made a reasonable estimate of the likely response to the promotion, and that the adverts did not contain a defined end date.
Morrisons underestimated popularity of discounted wine
The retailer said that the promotion had been more successful than it had anticipated, and that sale items had sold out quickly. Demand for the promotion had apparently been “unprecedented”. It argued that it had followed general industry practice to calculate the likely demand for the promotion, and had based stock levels on a ten-day offer window and a 25% uplift in sales.
On top of this Morrisons had set by a contingency stock of just under 400,000 bottles. Once it became clear (on day one of the promotion) that stocks would be insufficient, Morrisons took action to withdraw or amend booked advertising, arranged for contingency stock to be delivered and added three more types of wine of similar quality to the promotion.
However the retailer was unable to obtain extra stock of the wines on offer, and continued to suffer problems with stock levels.
Morrisons argued that it always included a precise end date if the offer ran for fewer than 7 days. However, as it claimed that it did not have any records of running a 3 for £10 offer on wine before, it was difficult for it to calculate the amount of stock needed. As such, it considered “subject to availability, while stocks last” to be a better option, and a clearer indication of the parameters of the offer than a set date would have been.
Unfortunately for Morrisons, the ASA found that the adverts were misleading on both counts.
The fact that – by the retailer’s own admission – availability of the offer was a problem from day one, led the ASA to conclude that Morrisons had not adequately estimated demand. The supermarket should have anticipated that this type of offer would be extremely popular, particularly given that customers could purchase up to 12 bottles in a single transaction. Morrisons also did not withdraw the advertising soon enough to satisfy the ASA – the promotion continued to be advertised for up to 3 days after the retailer became aware of the problems with stock levels.
On the other point, the ASA found that Morrisons should have included an end date in its adverts. Consumers would generally expect promotional prices to apply for a reasonable period after national press adverts appeared. Given that in this case the stock levels for the offer had been calculated for a ten day window – a reasonably limited time – it was misleading not to include an end date, as consumers would not know how quickly they needed to act to take advantage of the offer.
Why this matters:
This adjudication is a good reminder that it is better to err on the side of caution with stock levels when planning a promotion. This will be particularly pertinent when, as in this case, the discount offered is significantly greater than anything else available in the marketplace at that time.
As Morrisons found, it only takes one or two disappointed customers complaining to the ASA to lead to a resource-consuming adjudication process. Advertisers are obliged under the CAP code to be able to demonstrate that they have made a reasonable estimate of the likely response to promotions (CAP Code rule 8.10) and that phrases such as “subject to availability” do not relieve promoters of the obligation to “do everything reasonable” to avoid disappointing participants (CAP Code rule 8.11).
While the CAP Code does not expressly require advertisers to include a closing date in all circumstances, advertisers must be able to demonstrate that failure to include such a date does not disadvantage consumers (CAP Code rule 8.17.4.c). Morrisons claimed that its standard threshold for including a closing date was for promotional campaigns lasting under 7 days. However the ASA found that, in this case, a 10 day promotion would still have required a closing date to avoid being misleading.
While the length of a promotion may be an indicator of whether a closing date needs to be included or not, retailers should note that this is unlikely to be a watertight route to compliance. The test is whether or not consumers may be disadvantaged, not for how long the promotion runs. The safest option for advertisers is therefore to make sure that all adverts for promotions make the closing date clear.