NAD Compares Wegmans, Costco Price Comparison Claims

Wegmans Food Markets should modify certain in-store comparison pricing displays with additional disclosures, the National Advertising Division recommended in a new decision.

Competitor Costco challenged claims such as “Who has time to comparison shop? We do. We check hundreds of prices each week so you don’t have to” and “Don’t shop around town … shop at Wegmans and save.” In addition to these claims, on more than one occasion Wegmans’ in-store comparison pricing displays showed an incorrect price for Costco products, the company said.

Wegmans told the self-regulatory body that it conducted weekly visits on Mondays to competing stores for its price comparisons and that the frequency of its price checks was in accord with both accepted industry practices and NAD precedent. Costco conducts its own competitor price comparisons on Wednesdays and Thursdays, the advertiser argued, and then lowers its prices to ensure they are as low or lower than Wegmans—meaning Wegmans’ claims are accurate when they are posted.

The NAD cited the Federal Trade Commission Guides Against Deceptive Pricing and its own precedent, relying heavily on a 1996 National Advertising Review Board decision in Winn-Dixie Stores, Inc. In that case, the NARB took notice of the typical weekly advertising cycle in the retail grocery business and allowed some “modest leeway” within the seven-day period for advertisers to perform the requisite price checks, record the data, plan advertising copy, and publish the advertising.

“[G]iven the absence of any convincing evidence in the present record demonstrating that price comparison data is now collected by means other than weekly in-store visits, NAD found no reason to reach a different finding in the instant matter,” according to the decision. “Although Costco asserted that using today’s digital technology market retailers can compare prices on a daily basis, it provided no evidence to support this assertion. NAD concluded that the advertiser’s current competitor price-checking and posting was in keeping with FTC and NAD precedent and that one week is a reasonable period of time to check on prices to keep them current.”

The NAD was not persuaded that modern technology necessitated a shorter time period for the lifespan of price comparison claims. “While it may be true that advertisers, through the use of digital technology, can and do update prices with much greater rapidity than they did 20 years ago, there is nothing in the record to demonstrate that, at the present time, they can feasibly do so in less than one week (i.e., daily) without unreasonable burden,” the self-regulatory body wrote.

However, Wegmans’ price comparison boards—which already disclose that the comparisons are of a specified date within the seven-day period—should “be modified to provide clear, conspicuous and prominent disclosure to the effect that prices are subject to change,” the NAD recommended.

While the NAD determined that Wegmans’ claim “Who has the time to comparison shop?” was adequately qualified, it recommended that the claim “Don’t shop around town … shop at Wegmans and save” should be partially discontinued. The first phrase instructed consumers not to comparison shop, the NAD said, and “directly contradicts the recommended qualifier that prices are subject to change.” Nothing precluded the advertiser from claiming that consumers can “Shop at Wegmans and save,” the NAD added.

To read the NAD’s press release about the decision, click here.

Why it matters: The takeaway for advertisers? “If an advertiser wishes to make comparative pricing claims in an industry or market in which it is known that prices change frequently, it is incumbent upon that advertiser to take steps to insure that the comparison is current and accurate,” the NAD wrote.



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