Wegmans Modifying Pricing Claims After Costco Challenge

The National Advertising Division (NAD), an investigative unit of the advertising industry system of self-regulation, has recommended that Rochester, N.Y.-based Wegmans Food Markets Inc. change certain in-store comparison pricing displays following a challenge by Costco Wholesale Corp.

Among the claims by Wegmans that Costco challenged were:

• “Who has time to comparison shop? We do. We check hundreds of prices each week so you don’t have to.”
• “Don’t shop around town … shop at Wegmans and save.”
• “Prices checked on [date]”

NAD also considered whether Wegmans’ advertising implied that certain products sold at Issaquah, Wash.-based Costco were more expensive than the same products sold at Wegmans, or that consumers didn’t have to do their own comparison shopping because Wegmans had already done it for them.

According to Costco, Wegmans’ in-store point-of-sale displays made false and misleading claims comparing the prices of certain food items sold at its stores with products at Costco. The displays featured various Wegmans products, listed side by side with certain Costco products, all of which were portrayed as more expensive than the comparable Wegmans items. Costco said that the prices shown for the Costco products were often false and actually lower than the ones shown for the Wegmans products.

Costco also maintained that Wegmans compared items that were dissimilar while suggesting to shoppers that the items were the same and less expensive at Wegmans, thereby creating the impression Wegmans sold the same item for less, when that wasn’t the case. 

In response to Costco’s challenge, Wegmans told NAD that it developed its in-store, price-comparison advertising through such practices as weekly trips to competing stores.

In its decision, NAD noted the advertiser’s current competitor price-checking and posting was in keeping with precedent established by the Federal Trade Commission and NAD, and that a week was a reasonable period of time to check on prices to keep them current. However, following its review of the Costco challenge, NAD determined that Wegmans’ pricing claims should also be accompanied by a clear, conspicuous and prominent disclosure of the date of the comparison-shopping strategy and a clear statement that such prices are subject to change.

The division additionally recommended that Wegmans’ point-of-sale boards be maintained with pricing accurately attributable to Costco’s prices, that Wegmans compare prices of like items when both parties sell identical products, and, in cases when products aren’t the same, that the point-of-sale display either note that a comparison isn’t applicable or describe more accurately the products being compared. 

NAD found that Wegmans’ claim “Who as the time to comparison shop? We do. We check hundreds of prices each week so you don’t have to” was adequately qualified, but with respect to “Don’t shop around town … shop at Wegmans and save,” the division concluded that the first phrase, instructing consumers not to comparison shop, directly contradicted the recommended qualifier that prices are subject to change. NAD noted, however, that nothing in its decision prevented the grocer from claiming that consumers can “Shop at Wegmans and save.”

Wegmans responded that it “appreciates, and will comply with, each of the NAD’s helpful recommendations. For example, Wegmans agrees with the sensible suggestion that it modify certain language in favor of the succinct and accurate phrase ‘Shop at Wegmans and save.’”

Administered by the New York-based Council of Better Business Bureaus, the Advertising Self-Regulatory Council establishes the policies and procedures for advertising industry self-regulation, encompassing the National Advertising Division (NAD), Children’s Advertising Review Unit (CARU), National Advertising Review Board (NARB), Electronic Retailing Self-Regulation Program (ERSP) and Online Interest-Based Advertising Accountability Program (Accountability Program).