Background: Coles is part of the duopoly in Australia's supermarket sector - competing head to head with Woolworths for grocery market dominance. This week, however, the focus has shifted from supermarket aisles to the courtroom. The ACCC has launched Federal Court proceedings against Coles, alleging misleading discount pricing practices.

What happened: The ACCC claims Coles temporarily increased prices on certain products before promoting them as discounted. In one example, a dog fod product was priced at $4 for most of the year, but then it was lifted to $6 briefly, before being marketed as "discounted" at $4.50 - which is still above it's long-standing price. The allegation is that these tactics created a false impression of savings by using inflated reference prices.

What else: Regulators argue that when the anchor price is artificially raised, the advertised discount becomes misleading.

What's the key learning?

💡Prince anchoring is a behavioural economics principle where consumers rely heavily on the first reference price they see when judging value. It works because shoppers don't track the price history of hundreds of grocery items; instead, they use shortcuts as signals that value exists.

💡Retailers from fashion to airlines use reference pricing. However, when brands such as Michael Hill and MyHouse exaggerated Black Friday savings, the ACCC stepped in with infringement notices.

💡If the "was" price was never meaningfully charged, the saving is an illusion. And clearly, the ACCC ain't willing to let consumers be mislead.. so Coles may need to re-consider its "down down" promotionin in the future.