TK Maxx, US based off-price department store is currently under fire in the UK. The department store has been accused of deceiving shoppers by inflating original retail prices on its branded items, misleading consumers into thinking they are getting a better deal than they actually are.
investigation carried out by Channel 4's Dispatches reported that the store is guilty of exaggerating original retail prices. TK Maxx, known for its large offering of designer and fashionable brands, which are 'up to 60 percent off,' usually displays its wares with an Recommended Retail Price (RRP) alongside the discounted store price. Channel 4 claims that the RRP shown in store is usually much higher than the actual retail price.
For example, in one store a coat from luxury brand Rohmir was displayed with a RRP of 2,225 pounds. However the designer argued that the coat original store price was only 800 pounds. Another example Channel 4 found was a French Connection sweater which has a RRP of 115 pounds, but was originally sold for 85 pounds according to the brand and a Diesel cardigan was given a RRP of 251 pounds, which the brand said was sold for 200.
Government guidelines state that a retailer should not use a recommended retail price “it differs significantly from the price at which the product is generally sold.” (Pricing Practices Guide, Department of Business Innovation & Skills, 1.6.1) Alsono Ercilla from the Trading Standards Institute told Channel 4: “If you want to rely on RRP when showing some price discount, you need to be confident that RRP really existed, in other words, that your competitors are using that RRP and if they’re not, you shouldn't be referring to that RRP . . . because it is clearly misleading to refer to a RRP that nobody else is using.”
TK Maxx's inflated RRPs can be misleading to consumers
Maxx responded to Channel 4 investigation and stated that the RRPs on their products were set after consulting with suppliers. A company spokesperson added that stores “only cite a RRP which has been provided . . . independently by the third-party seller” and “random spot checks” were implemented to ensure this. TK Maxx also stated that they deliver "high standards of value" and "strive to ensure that our customers are properly informed about the products they purchase." The company stressed that they "work closely with Trading Standards" to ensure the correct steps are taken and that "no-one is being misled."
Investigators also claimed to have found items from TK Maxx own brand products, such as Arabella and Addison, Kenar and Amaryllis Amphora, being advertise and sold as if they were discounted. TK Maxx replied that a small percentage of its product range is own label and added that it is “company policy not to put RRP on own brand products”. But in the instances where this occurred, it was due to an "human error".
Ercilla concludes: “When you have a business that’s setting their own RRP… You have to look at the law and the law says you shouldn't mislead with price and to the public, when they look at a RRP, they do not think and do not expect it to be the same business setting the RRP as the business that is selling the product, therefore I would say that by definition that's misleading.”
TK Maxx has grown within the UK over the past few years and currently has 260 stores throughout the country. In a time when British shoppers are becoming increasingly aware of their budget, consumers who look for the best price for designer brands are drawn in by TK Maxx's promise of “big labels, small prices,” and 10,000 new items a week.