Price war puts rivals in sights

Retailers are talking tough in the fight for the consumer dollar. Photo / Herald on Sunday

Customers are the winners as cut-throat silly season competition sees retailers publicly naming their rivals and vowing to beat them on price.

A downtown Auckland Bond and Bond store's window advertising says it will better any price for the same product at Dick Smith Electronics or JB Hi Fi.

Bond and Bond's sister company, Noel Leeming is employing the same tactic at its St Lukes store, offering to better deals by its rival Hill and Stewart.

John Journee, chief executive of Bond and Bond and Noel Leeming, says store managers can name local competitor stores - typically within walking distance - in their advertising as long as they honour their price promises.

Adam Baldwin, general manager of JB Hi Fi and Hill and Stewart, says he's "quite happy" about Bond and Bond's aggressive advertising because it points out to potential customers that there is a JB Hi Fi store in the vicinity.

"It's showing people there is competition in the street and we are certainly doing well, so people must be considering us. Let them go for it - obviously they must be feeling it if they are going to put that sign up."

It is actually sending more customers to JB Hi Fi's stores, Baldwin says.

Warehouse Stationary marketing manager Julie Garlick - formerly marketing manager for Bond and Bond and Noel Leeming - says her former employer's advertising may be a strategy to clearly distinguish their combined competition, so they are not battling each other. But "I don't know if it will work for them," Garlick says.

Journee says those stores naming and pledging to beat opposing retailers need to have "an anecdotal, if not formal" way of tracking the sales response.

Christmas season sales are tracking "substantially above last year and forecasts," which he says is "pleasing at this critical time of year".

Journee admits it is a "relatively uncommon" advertising ploy: "There would be less than 3-4 per cent of our stores doing it at any particular time."

Lawyer Andrew Fawcett says there are risks around naming competitors outright because of restrictions on trademark use. And what the advertiser says cannot be misleading or deceptive under the Fair Trading Act. "If they are saying they are going to beat those prices, they have to."

The customer benefits from proper competition, he says. "If you can go to a bunch of stores and properly negotiate on price, the customer can get the best price available - and there are deals to be had. That's what competition should be about."

Russell Sinclair, of the Retailers Association, says he is not aware of opposition stores being named in advertising previously. "It is something new to the market in New Zealand," he says, reflecting its competitiveness at present.

"Everybody is fighting for the consumer dollar. They are prepared to look beyond what has been traditional in advertising to new opportunities to attract attention and sales."

It used to be "an unwritten rule" not to talk about competitors because it unwittingly advertises their brand.

- HERALD ON SUNDAY