Unit 3 Micro: Furniture Retailers Feel Wrath of the OFT

The Office of Fair Trading is investigating potentially illegal pricing activities by six furniture retailers. It all relates to the use of price discounts.

Regulators have cracked down on illegal pricing tactics in recent years and the OFT investigation is into a retail sector where pricing is particularly complex!

The accusation against furniture retailers is that the heavy discounts you usually see offered against the price of a sofa or three-piece suite are artificial. That tempting 50% off might look like a bargain, but 50% off what? Was the product ever really sold at the higher amount?

The Office of Fair Trading (OFT) said the retailers under investigation had all advertised price cuts which were not genuine. In particular, they advertised reductions from previously higher prices, which tricked customers into thinking they were getting a bargain.

This is a great example of how government regulation can affect key decisions in the marketing mix. Watch out for the result of the OFT investigation!