Misleading Advertising can backfire

Sunday, December 14, 2008

On Dec 6 Zellers ran this advertisement for a "gaming blowout", clearly showing games up to $59.99 "regular price " would be on sale 2 for $30, a phenomenal deal.

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A "blowout", from regular prices up to "59.99" would seem to imply something of significance, and of a temporary nature.

Zellers ran similar non game specific advertisements the previous 3 weeks, with mass confusion over what was actually on sale. The first week was "Selected games 2 for $30". The second weeks was "All discontinued games $29.99 or less for $12.99". On Dec 19 they will have "Selected games 2 for $30" again. Apparently all of those "sales" refer to the same group of games, who went from a regular price of $29.99 one week, to a regular price up to $59.99 the next. Some Zellers stores didn't even make available the games intended to be on sale for the first 3 weeks of advertisements, only offering their (or some of their) "value" games regular price 19.99 or less.

Numerous inquiries went to Zellers seeking clarification of what exactly was on sale, which eventually resulted in a list of games to justify the "to $59.99" ad. A few dozen game list was circulated that were all the games over $40 "regular price". For example:

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Anyone familiar with the game market would be quite surprised at these regular prices considering the rapid price depreciation games undergo. While all of these games were over 1 year old (some towards 5), zellers had a "regular" price higher then the brand new Xmas 2008 releases. I recognized a number of games I bought months or years ago for $10 elsewhere, and know many have been $20 or less elsewhere for quite some time. Since my local Zellers doesn't have any indication of price on the majority of games it is impossible to tell what "regular" price is.

One game I recently purchased at Zellers prior to this sale, is shown above "regular $69.99".

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Since I actually bought that game 2 weeks prior during Zellers "All discontinued games up to $29.99 for $12.99" sale (many Zellers stores sold every single game in the store under $30 for $12.99 after their own stores misunderstood the intent of that ad) I have the receipt

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Which clearly shows the regular $19.99 price it incorrectly scanned at, and the $12.99 shelf sign price it was sold at. I know that game had been sitting there at $19.99 price prior to these sales, it stood out as a rare one in the store with a price tag.

It appears Zellers has used the original MSRP from when these games were released long ago to justify advertising their "59.99 blowout", despite them not currently selling for that anywhere. At best this "sale" was a price reduction on some old games they got stuck with, although it appears even Zellers own price weren't what they claimed them to be.

Unfortunately for Zellers, this turned into perhaps one of the biggest backfires in the history of misleading advertising. Many of their own stores believed the advertisement meant "any" game up to $59.99. Others knew that was not intended, but agreed the ad was misleading, so sold "any" game at the sale price. Some Zellers claimed the ad was a typo, meant to say "up to $19.99" regular price, but no correction notices were posted. Many Zellers sold their entire stock of new release games at 2 for $30 for the entire week, as dozens of receipts like this one were posted online
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Competitors were also confused by Zellers, as those with price matching policies including Future Shop, Best Buy, Staples, Wal Mart, And Sears matched or beat Zellers "sale", selling new games at a huge loss. Many reports appeared online of competitors phoning zellers, with Zellers confirming any $59.99 game was 2 for $30. In what may be a first, a few Future Shops and Wal Marts posted corrections for Zellers flyer in their own stores

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The National Post covered the story after some boasted of buying hundreds of games between zellers an competitors http://www.financialpost.com/money/story.html?id=1071205

Zellers marketing department appears to have purposely tried to make out their "sale" was much more then it was. Some customers were left disappointed, in some cases not even able to purchase what was intended at the sale price. Others got the deal of a life time...at a huge loss to Zellers.

Perhaps next week zellers will have a flat screen television "blowout", using "regular" prices from years ago to show huge savings.