This article looks at whether Sports Direct is in breach of consumer laws. Many Irish consumers now import online from this company, but are you getting real value for your money when you make your purchase. This makes for interesting reading.
The chain is booming, and its price labels offering large discounts are highly tempting – but its tactics for shifting goods leave consumer law experts unimpressed. Harry Wallop investigates
Number 150 Oxford Street is a rather fine art-deco building, a four-storey, glass-fronted former theatre, right in the centre of Europe’s busiest shopping street. Pedestrians might not notice the architecture: it currently serves as the flagship for one of Britain’s most successful retailers, Sports Direct.
The huge shopfront is mostly a vast open door, welcoming you into the Nike section, with posters of Mo Farah running and Maria Sharapova wielding a tennis racket.
It is a sign of how far the brand has come. Only about five years ago, its business model was to operate out of either basement shops or from first floors, where rent is up to 90 per cent lower than in the high street. Shoppers would have to take an escalator up, or down, and Sports Direct would have to pay top-whack rent only for a small entrance on the high street.
Those days are long gone.
Sports Direct, along with Aldi, Lidl, Primark and Poundland, has become one of the great recent success stories of the high street, taking advantage of the consumer downturn to open more and more shops offering cut-price goods to people on a budget.
Offering everything from camping gear and swimming trunks to baseball caps and footballs, it stocks most of the sports kit you could possibly ever want, all at bargain prices.
Last year, sales jumped 24 per cent to £2.7bn, and its pre-tax profits increased 15 per cent to £207m.
This, in turn, has helped its deputy chairman, Mike Ashley, who founded the business 33 years ago, to become one of Britain’s richest men. He is valued at £3.5bn, allowing him to buy Newcastle United and take a significant stake in Rangers Football Club.
Discounting is the most obvious tactic Sports Direct adopts to persuade shoppers through its doors. Even at its Oxford Street flagship, it is hard to find an item of clothing that is not on some sort of promotion. It sells a wide variety of riding jodhpurs, for instance. All are reduced in price. So, too, the women’s boxing gloves, from the “Mega Value” £14.99 ones to the “Mega Value” £62.99 ones – turn over the products and, on the back, there is a higher price struck through with a red line.
The strategy of discounting everything applies to its website also. Of the 244 kids’ hoodies, all but two are discounted. Of the 3,218 men’s trainers available to buy today, just 87 are not discounted.
The implication, to an ordinary shopper, is that they are getting a bargain, that Sports Direct has cut the price.
Now, £74.99 might have referred to the price at which you could have pre-ordered the trainers. But the Department for Business, Innovation and Skills has published guidelines saying any higher price – unless explicitly explained otherwise – should have been available in that store for the previous 28 days.
Deborah Parry, a consumer law expert at Hull University, who trains trading standards officers, says: “It is quite clear that their labelling is not following the terms of the guidance – they are not providing sufficient information.”
Her concern is that the practice of printing a higher price which is then crossed out could mislead shoppers into thinking they are getting a far bigger bargain than they really are.
“[Shops are] supposed to spell out exactly what their offer means, how long it has been on display, whose previous price it is, and if it hasn’t been sold for very long, they should be saying how long it has been sold at that higher price etc. So consumers can look at the label, read them, make a proper decision and then act on it.”
The higher price, she explained, could in theory refer to a manufacturer’s recommended price or a rival’s price, but it has to be made clear on the label. And Sports Direct does not make that clear.
One example, caught on undercover footage, shows a pair of Hello Kitty ankle boots arriving in the warehouse from Asia with a price of £19.99. But in the pricing department, a label of £29.99 had been placed over the top of the first price, before then being given a discount label of £14.99. The boots were then sent to the store.
Which was the original price – £19.99 or £29.99? It’s unclear. But the latter suggests a bigger bargain than the former.
Source: Telegraph 04/15 by Harry Wallop