Stores bypass loss-leader ban

SUPERMARKET competition is reaching fierce new levels – and is set to get stronger this summer.

It comes as shops test new ways of discounting products to bypass strict trading laws.

France’s ban on loss-leaders – where items are sold at a loss to entice shoppers to visit – has pushed supermarkets to use store cards, coupons and discounts to win shoppers. In the last ten years the number of items on ‘special offer’ has doubled and reduction coupons have increased ten fold.

Elizabeth Exertier of marketing analysts Le Site Marketing said: “When stores market themselves now it’s all about promotions – they don’t have products and services that are sufficiently different.”

Both Carrefour and Leclerc launched new discount card schemes early this year – a measure normally saved for the summer.

Leclerc’s Garantie Promo, on trial at 127 shops, claims that the store will monitor discounts offered by other supermarkets on some products and automatically refund the difference on to their own loyalty card as credit for future use.

Carrefour retaliated with Promo Libre, reimbursing the cheapest of three items from the same section on its store card. The sections change weekly and, as the cheapest item depends on what you pick, it blocks the Leclerc scheme.

Ms Exertier said Promo Libre is innovative because it is simple and people could see what they save.

“People are fed up of complicated promotions. Stores say ‘you'll have 50% off this and that’ – it’s not necessarily products in demand and people wonder if they then pay 50% too much at other times.

“If you don’t have a calculator and a spreadsheet it’s sometimes impossible to work out what you’ll really pay at the checkout and after loyalty card reimbursements.”

Traditionally coupons were the main method of offering discounts in France after a law banned stores from advertising on television to protect press advertising. The law changed in 2007 and, as coupons can cause huge queues, store card offers are increasingly used.

Ms Exertier said however that supermarkets were not taking advantage of recent legal changes to the loss-leader ban allowing supermarkets to lower prices slightly more than before.

“There were huge price wars before the ban (in the 1990s) and they’re aware there will be a vicious circle of lost value if they drive the basic prices down,” she said.

“Leclerc’s offer is wide-ranging, though it leaves out categories including wine and many fresh goods. It creates the impression that competitors offers are of no interest as Leclerc will beat them.

“You’ll get reductions, but without knowing on what,” she added.

Charles Pernin of consumer watchdog CLCV said: “Shoppers often don’t know any more what the real price of items should be.”

Look at price per kilo, he said, and be aware ones on special offer might not be the best value.