Competition Commission overturns ban on RRPs on electrical goods
The Competition Commission has formally overturned the ban on RRPs (recommended retail prices) on certain electrical goods, including televisions and AV systems.
The Domestic Electrical Goods Order was introduced in 1998 by the then Monopolies and Merger Commission in an attempt to improve competition in the market, amid suspicions that some upmarket brands were refusing to allow their goods to be sold at a discount.
Last year The Office of Fair Trading recommended that the ban on RRPs on electrical goods be overturned.
Now the Competition Commission has agreed to lift the 1998 Order with immediate effect.
In its final ruling, the Commission says it decided that "a number of changes since the order was introduced have significantly increased competition in the market and removed the need for the safeguards provided by the Order".
Chief among those was the rapid growth in online retailers, often selling goods at a discount over high street stores.
"The Commission also considers that the Competition Act 1998 now provides an effective mechanism to address attempts to fix prices or restrict supply unfairly."
The news will be welcomed by struggling TV manufacturers, who have seen margins eroded and losses escalate.
It will also end the current confusion over the pricing of electrical goods, with certain specialist audio products such as CD players, speakers and hi-fi amplifiers being exempt from the 1998 ruling, while others – such as TVs and DVD/Blu-ray players – were not, leading to a two-tier pricing system.
Presumably, electronics manufacturers and retailers will now return to a system of RRPs on all products.
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Comments
Paul, thats most likely because a local independant dealer will place an order for a product one at a time, upto ten at best, because of the cash holding large amounts of stock costs. A large retailer, will place an order for 000's and distribute the stock to their different stores. They are bound to be offered better buying discount for larger orders.
Personally I thinkre- introducing RRP is a good thing, not because I dont like bargins, but all of the large manufactures are making huge losses. I'm not saying their business model cant be improved, but business that doesnt make a profit is a bad thing, they might not be able to afford to invest in new technology and may even go bust in the long term.
Knowing what the RRP should be, wil mean you know a bargin when you see in, and if everyone is selling at RRP, then it will force the larger retailers to improve their business, instead of having mindless monkeys working there who dont have a clue about what they are selling.
I popped in to my local dealer yesterday who commented that they welcome the return of RRP. They claim that some of the multiples often sell TV's below cost price, not sure if that is true, but it seems utterly sensless if that is the case. Perhaps they hope to profit from sales of other items? The dealer said that their buying price is often higher than the advertised price of some multiples! Again, this sounds hard to believe, but i have come to know and trust the shop over recent years and therefore feel inclined to believe them. He said that because of the massive competition, they no longer carry certain brands and products because they cannot make money from them. Whilst I want a fair price for when I buy an item, I rather like the idea of having a shop near where I live that I can visit to see a good range of products and audition them. My local town appears to have a few more empty shops which is very sad, maybe we have to take a very close look at our collective ethics and think carefully about how the future might look if more shops cannot survive with their margins continually squeezed. Do we want the Supermarket giants to be the only place to buy from? Ultimately our actions will determine the future of retailing...
Not arguing re price differences between online and bricks and mortar or banning online sales. Just saying that going to a shop for a demonstration with no intention of buying there, and instead going off and finding the cheapest price online, is both unethical and further threatens those shops you're relying on to act as 'showrooms' for your online purchases.
This will be a great idea if the manufacturers can again quote a RRP on their website as it will be very easy to see who is offering a real discount. for too long high street mulitple stores have been able to "create" an inflated price upon launch, only to "slash" the price a month later to what it should have been in the first place.
I'd also guess if the manufacturer doesn't give a RRP from now on, I'd guess they're not too fussed about the products worth...
yes, I know, costs of selling... But on other hand all that shop disadvantages will give them an great advantage over online retailers if people want to by something about they are not sure. Problem is that price difference is not only a teener or courier charge. Or maybe people already know what they want and they do not need a demo. Nobody can ban online sales. If there will be the same price for a shop and online shop - online shop still will be winner by that selling cost argument. Who we will blame then?
Problem is, the costs of selling through a shop are higher than those of selling by mail order – premises, the need to provide demonstration facilities, staff and so on. But that doesn't excuse having a demonstration in one place and then buying online just to get a lower price.
Why shop can not keep a similar price to online retailers price? Then people will demo and will buy in one place. And they will move enough boxes to make a living. Do you think it is very comfortable to demo in one place, then spend time to find it online, miss a courier and then wait till saturday to go collect it to post office? Too many shops just still live in last century.
Hi,
Surely an RRP is only an indicative price? The actual price will be lower than this - hence the appearance of a 'bargain'. If two TV's are advertised both at £1000 but TV 'A' has an RRP of £1500 and TV 'B' has an RRP of £1350, TV 'A' seems to be the better bargain as a saving of £500 has been made over a saving of £350.
At the end of the day if you don't think the TV is worth £1000 then don't buy it.
RRP's can be set at any level to show a false saving on the actual price.
An item is only worth the amount someone is willing to pay for it.
Cheers,
Cofnchtr.
Completely agree, much rather pay an extra tenner for something if it means I have a human being to turn to for advice when I have a problem.
WAKEY WAKEY!
It's about time and hopefully not to late. Far to many people are getting the "demo's" and advice from "shops" and then buying online and mail order. People are going to wake up one day and wonder why they can no longer see and touch and listen and get advice on the products before buying.
Retailers are not manipulative, they have to make a profit to pay rent and rates and staff, the overheads are much higher than that of the online retailers and mail order retailers who can work on lower margins by shifting more boxes without the overheads.
It ain't just about price!!
Long live the "SHOP"
At least now we might have somewhere to buy electrical goods in years to come, when was the last time you heard of a retailer turning a profit...
I agree, it sounds as if it rules in favour of the manipulative retailer.
This is a bad deal for consumers in my opinion.
This doesn't particularly sound like a good thing for the bargain hunting buyer?