The ACCC takes Coles to the Federal Court over alleged “illusory” Down Down discounts, putting its discount strategy in retail under scrutiny. The regulator claims prices on 245 everyday items were lifted for a short period and then promoted as discounted. In simple terms, customers saw a savings tag. The ACCC says many paid more than the long-standing regular price.
This is not just a supermarket story. It is a pricing governance story. Any business that uses “was/now” pricing, strikethrough pricing, promotional cycles or reference pricing is exposed to the same scrutiny.
Importantly, this case lands at a time when cost-of-living pressure is high and public sensitivity to pricing is intense. Consumers are watching. Regulators are watching. The media is watching. That combination changes the risk profile of promotional pricing.
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The Current Issue in Discount Strategy in Retail
At the heart of the case is a simple legal question: what does a “was” price represent within a broader discount strategy in retail?
To customers, a “was” price signals a genuine prior selling price. It implies that the product was sold at that price for a meaningful period. It anchors perceived value. It frames the saving.
However, under Australian Consumer Law, the issue is not what the business internally intended. The issue is what a reasonable consumer would understand. If a price is lifted briefly and then discounted, the regulator will examine whether the higher price was truly established or simply used to create a saving narrative.
This is where representation and intent intersect. A technically correct number can still be misleading if the context creates a false impression.
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Inflation Is Not a Legal Shield
Coles argues inflation, supplier increases, freight and utilities justified higher shelf prices within its discount strategy in retail. That context is real. Between 2022 and 2023, many businesses face rapid cost escalation. Pricing teams respond under pressure.
However, cost pressure does not automatically justify promotional framing. Regulators will examine timing. They will examine how long a price remains in the market. They will examine whether the increase reflects genuine cost movement or promotional sequencing.
If a price rises because a supplier increases wholesale cost, that is commercially rational. But if the price then drops under a prominent saving tag shortly after, scrutiny intensifies.
Cost movement explains why a price changes. It does not explain how you frame that change to customers. Inflation may justify higher prices. It does not justify misleading reference points.
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If the ACCC Wins: The Domino Effect Across Industries
If the regulator succeeds, the ripple effect will extend well beyond grocery and reshape the broader discount strategy in retail.
Retailers will need stronger documentation of historical pricing. E-commerce platforms will need tighter control over strikethrough pricing algorithms. FMCG suppliers will face greater scrutiny over promotional funding structures. Even SaaS businesses using tiered “was/now” upgrades may need to reassess messaging.
We can also expect increased class action activity. Once legal precedent strengthens, plaintiff firms follow. That changes the cost equation. More importantly, consumer trust dynamics shift. When public awareness of discount manipulation rises, scepticism increases across categories.
This creates a new operating reality. Promotional pricing must be defensible in court, not just persuasive in marketing.
If Coles Wins: Why Risk Does Not Disappear
Even if Coles successfully defends the case, the environment around the discount strategy in retail does not reset.
Public trust remains fragile. Political attention on pricing behaviour continues. Regulatory appetite for enforcement is unlikely to soften. In fact, heightened publicity often leads to broader industry reviews.
From a governance perspective, relying on a courtroom outcome as comfort is short-sighted. Legal victory does not erase reputational exposure. Nor does it reduce the strategic risk of appearing opportunistic in a high-inflation environment.
Businesses that treat this case as isolated miss the broader shift. Consumers are more informed. Social media accelerates scrutiny. Transparency expectations are rising.
What Pricing Teams Must Do About Discount Strategy in Retail
Pricing teams need to act proactively, especially if their discount strategy in retail relies on reference pricing.
First, audit historical reference prices. Identify how long products sit at their “regular” price before promotion. Flag patterns where uplift periods are short.
Second, document cost movements clearly. Capture supplier letters, invoices, freight changes, and timing. Create a simple evidence trail.
Third, align promotional calendars with genuine pricing history. Avoid mechanical discount cycles that disconnect from cost or demand logic.
Fourth, tighten approval processes. Require a clear internal sign-off for any reference price claim. Ask one simple question: would this withstand regulatory review?
These steps do not slow growth. They strengthen defensibility. They also sharpen internal pricing capability.
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What Executives Must Understand About Discount Strategy in Retail
This case elevates pricing from marketing execution to a governance priority, especially for any discount strategy in retail.
Boards must recognise that pricing risk now includes regulatory penalties, class actions and reputational damage. Financial exposure can be substantial. Brand damage can be longer-lasting.
Executives should review pricing policy frameworks. Is there a documented reference pricing policy? Are promotional strategies aligned with compliance standards? Is there oversight at the senior level?
More importantly, leaders must shift their mindset. Reactive cost pass-through combined with aggressive discount framing is not a sustainable strategy. Value-based pricing is more stable. It reduces reliance on artificial savings narratives.
When pricing is grounded in customer value, not short-term optics, risk decreases, and margin stability improves.
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Australia Is Entering a Pricing Accountability Era
The broader context matters. Cost-of-living pressure increases scrutiny of every discount strategy in retail. Regulators step up enforcement. Media attention spreads perceived unfairness fast. This is an accountability era. Pricing behaviour will be examined publicly. Casual discount framing is ending. Structured governance must replace informal habits in any discount strategy in retail.
Sustainable pricing power does not come from engineered savings. It comes from credibility. The Coles court battle highlights a simple truth: pricing is communication. If that communication lacks integrity, trust erodes. And trust is harder to rebuild than margin.
Many businesses feel tension between margin, compliance and customer expectations. You do not have to manage it alone. We help leaders and pricing teams review reference pricing, strengthen governance and build value-based strategies that withstand scrutiny. Reach out to us, and let’s turn pricing into a true competitive advantage.
For a comprehensive view of building a great pricing team to prevent loss in revenue, download a complimentary whitepaper on How to Avoid Pricing Chaos.
Are you a business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?
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