How Retail Supermarkets Can Avoid Fake Discounts Claims 🐒

We are often drawn to those little signs saying “50% off!” or “Prices Dropped!” like moths to a flame. But have you ever stopped and thought, “Is this discount real?” Unfortunately, the answer is often not too simple. Just look at the recent cases against Coles and Woolworths in Australia. These retail giants, who control a significant portion of the grocery market, were accused of marking up prices only to “discount” them later. The result? Shoppers felt deceived by fake discounts, and trust in these stores took a serious hit.

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The Risks of Fake Discounts and False Advertising

Fake discounts—also known as “illusory” discounts—aren’t just misleading; they can also break the law. The Australian Competition and Consumer Commission (ACCC) has gone after Coles and Woolworths, alleging that they hiked prices before quickly offering “discounts” that weren’t really discounts at all. Products like lemonade, pest control spray, and everyday household items were allegedly marked up as much as 39% before being presented as “reduced.”

For businesses, the risks of using fake discounts are huge. First and foremost, they can lose customer trust. Consumers are savvier than ever, and nothing frustrates them more than feeling tricked. When customers realise that the so-called “discount” they received was just a ploy, they might not come back. And in a world where customer loyalty is key to sustained business growth, that’s a dangerous game.

Second, misleading discounting practices can lead to legal trouble, as we’re seeing with Coles and Woolworths. Fines, legal fees, and damage to brand reputation all add up. Beyond that, these companies face potential class-action lawsuits.

Why Fake Discounts Backfire

One of the biggest mistakes businesses make with discounting is assuming that any “discount” will drive sales. It’s a quick, seemingly easy way to attract customers, but when done dishonestly, it can backfire in a big way. Customers today have endless ways to compare prices and verify deals. When they catch wind of misleading pricing strategies, they’re not just annoyed; they’re likely to share their frustration with others, whether through online reviews, social media, or word-of-mouth.

Another common error? Assuming that discounts alone will create loyalty. While discounts might draw customers initially, loyalty is built on trust, consistency, and value. Once that trust is broken, even loyal customers are likely to turn to competitors they can rely on.

Real Discounting vs. Misleading Fake Discounts

So, what does a real discount look like? It’s all about transparency. A genuine discount reflects an actual reduction in the usual selling price, not an inflated number conjured up to look generous. Transparent pricing builds customer trust and shows respect for the buyer’s intelligence. This approach may not create an instant surge in sales, but it will cultivate a loyal customer base over time.

To illustrate, consider a small clothing boutique that runs a straightforward “end of season” sale. They lower prices on summer items to make way for the fall collection, offering real discounts on items that previously sold at regular prices. They even explain why they’re running the sale, creating a sense of transparency. The result? Customers trust the boutique’s pricing because they see the genuine value in the sale.

Building Customer Loyalty without Gimmicks

For those in retail or service industries, the question is: if misleading discounts don’t work, what does? Here are some alternatives that work better than fake sales and help build real customer loyalty.

Value-Based Discounts: Offer discounts that have a meaningful value attached. For instance, consider loyalty discounts or discounts tied to specific customer milestones. This approach feels personal and rewards customers for their loyalty in a genuine way.

Bundle Offers: Instead of slashing prices on a single item, create bundle offers that provide value. For example, if you run a grocery store, offering a deal on “dinner bundles” that include all the ingredients for a recipe can create a sense of added value. Customers appreciate these kinds of discounts because they feel well-thought-out and relevant.

Transparent Promotions: If you’re running a promotion, explain it. Let customers know why the discount is happening—whether it’s due to overstock, seasonal clearance, or an anniversary sale. Transparency fosters trust, showing that you’re offering something special without trying to pull the wool over their eyes.

Loyalty Programmes: Instead of one-off discounts, build a loyalty programme that rewards repeat customers. When customers know they can accumulate points or perks for consistent spending, they feel valued and are more likely to return.

Flexible Pricing Strategies: Not every customer is drawn to discounts, especially if they suspect they aren’t real. Consider flexible pricing models, like subscription services with added benefits or tiered memberships that let customers choose their level of commitment. This approach can often replace the need for aggressive discounting by providing consistent value.

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Rethinking Your Discount Strategy

The allure of discounts is undeniable, but when used dishonestly, they lead to mistrust and potentially irreversible damage to a brand. Remember that discounts should be just one part of a broader customer engagement strategy. Building loyalty takes more than a price cut; it requires respect, value, and trust. 

So next time you think about a discount, ask yourself: Is this providing real value? If not, it might be worth reconsidering. In the end, customers don’t just remember the discounts; they remember how you made them feel. And that’s something worth getting right.

If you’re unsure, or if you want fresh ideas for building stronger customer relationships, reach out—we’re here to help. Together, we can create a strategy that attracts customers and keeps them coming back. Start today.

For a comprehensive pricing strategy to prevent revenue loss in your company, Download a complimentary whitepaper on How to Avoid Pricing Chaos.

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