Shapes blunder: Coles admits to second ‘Down Down’ discount failure

A former Coles executive has admitted the supermarket broke its own guidelines by promoting discounts on Arnott’s Shapes as part of its “Down Down” program too soon after raising its price, marking the second similar concession in as many days.

The Australian Competition and Consumer Commission is pursuing Coles over alleged “illusory discounts” in which the supermarket raised prices before putting products on specials that were often higher than they started out at.

On the third day of ACCC’s case, Coles’ former head of commercial strategy, Rebecca Thompson, was asked about her role in negotiating the price of a multipack of Arnott’s Shapes biscuits from early March to May 2022.

The price of the box of biscuits, sold for $5 for a lengthy period under the “Down Down” program, rose to $5.50 under the same program, albeit with a four-week “price establishment” period in between, the court heard.

Coles sold the biscuits at a “white ticket” price of $6.50 for one week before it ran a 30 per cent special the following week. It then reverted to the white ticket price of $6.50 for two weeks before returning to the “Down Down” program at a new price of $5.50.

Thompson said the agreement struck between Coles and Arnott’s had forgotten to factor in a biannual 30 per cent discount campaign on certain Arnott’s brands.

Thompson had been going off advice from an Arnott’s representative, who had suggested including the biscuits in the “Down Down” program on an earlier date, according to email exchanges heard by the court.

“We’d cause confusion with customers by having a multitude of callouts that say these are not included in the promotion,” said Thompson. “This was an anomaly … it was an error, and we tried to rectify it with as [little] confusion as possible.”

The ACCC’s lead barrister, Garry Rich, SC, put to Thompson that the pricing: “was not in accordance with the guardrails”.

“Yes, it was an error,” Thompson responded.

“You accept that the product had only been sold at that price for three out of the four weeks immediately prior to the ‘Down Down’ promotion commencing?” asked Rich. “Yes,” said Thompson.

“You say that it’s his [the Arnott’s representative] fault,” said Rich. “No, I’m saying it’s human error,” Thompson responded.

After running the 30 per cent special, the price of the biscuits should have been held at the white ticket price for four weeks before returning to the “Down Down” program, she later explained.

On Tuesday, Coles lead barrister John Sheahan, KC, said it was a “mistake” and an outlier that Coles had raised the price of 1.2kg tins of chicken and vegetable Nature’s Gift Wet Dog Food from $4 to a new price of $6 for just seven days before introducing the “Down Down” price of $4.50.

This followed evidence from Monday, when the court heard of internal emails from a senior Coles manager who said it was not in the spirit of the marketing campaign to advertise a product as “Down Down” when it was cheaper only four weeks earlier.

Sheahan told the court earlier in the week that Coles’ price rises were determined by market forces, including inflation and pressure from suppliers, and its discounts were genuine.

Coles business category manager Via Lavdas also appeared on the stand on Wednesday, where she was asked about the same product from Arnott’s.

Lavdas had struck an agreement with Arnott’s that the supermarket would permit a price rise by increasing the biscuits’ “white ticket” price to $6.50 for four weeks, before returning to $5.50 under the “Down Down” program for 52 weeks, the court heard.

“You only accepted an increased cost on the basis that the product would be sold on a ‘Down Down’ promotion for $5.50 after those four weeks for that product,” said Rich. “Correct. That was the agreement,” said Lavdas.

“You wanted to get to a ‘Down Down’ price within the minimum period prescribed by the … guardrails,” said Rich. Lavdas agreed.

The ACCC launched legal action against both Coles and Woolworths in late 2024, alleging that both supermarkets misled consumers through pricing promotions that were actually higher, or the same as, the previous regular price. The supermarkets deny the claims.