Expert slams Aldi and Kmart’s ‘unethical’ savings ploy for ‘taking advantage of shoppers': 'It's nuts'

Kmart and Aldi are under fire for the minuscule savings being disguised as special or reduced-cost buys. A 58-year-old Aldi shopper told Yahoo Finance she was “really, really disappointed” when she received an email detailing the supermarket's "latest reductions" to find some as little as 4 cents.

But it's not just Aldi, a marketing expert said Kmart is just as guilty after noticing a 'price drop' sign above a pile of $6.75 t-shirts that were $7 earlier this month. The issue has a widespread impact on millions of Australian shoppers who struggle to tell if a promotional tag is a genuine discount, new research found.

“It’s a disgrace to even advertise '4c' as a 'saving' on any item, and it certainly doesn’t have me wanting to rush in to stock up. I had thought better of Aldi," the Moreton Bay woman said.

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Six items can be seen with slight discounts, including New Season Lentils and Cannellini Beans dropping by four cents and Inner Goodness Unsweetened Almond Milk Organic 1L falling by 10 cents.

“I have to ask, are these truly specials? I would deem only one out of six items shown as a true special at $1.50 off the regular price,” she said, referring to a discounted pack of port schnitzel.

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She's not alone.

“I think doing four cents off is in a way just saying, ‘you really are idiots and we've got you fooled’ and I hate that, I really do," Dr Andrew Hughes from the Australian National University told Yahoo Finance.

The College of Business and Economics lecturer had his own experience in a Tuggeranong Kmart, in Canberra on Saturday.

“I thought, wow, is that how much you think of us, that that’s a reduction? It’s like 25 cents. And I get it. It’s still 25c but to me, it’s just 25c. It’s nuts," Hughes said.

“They put the date on it so it’s like saying: ‘We dropped the price! What more do you want!’. But we have no idea what the price may have been at the start of this year, so is it really a reduction or just done to make it seem like one?”

How Aussie shoppers grappling with rising costs are fooled

Hughes claimed the advertisements are branding tactics to “prove that prices are going down not up”.

But, noted this was problematic given we don't really know the details of why prices had gone down.

“What they’re not saying is whether it's the actual price equity (eg, per 100 gram) or that the price is the same as the packet,” Hughes said.

“We don't know if the fabric is lesser quality than what it was when it was $7 and I might have preferred the $7 price knowing that the quality of the fabric is still better."

Hughes said this type of marketing was not "evil" but was "really unethical".

"It's taking advantage of people's lack of knowledge about prices on a day-to-day basis, and that people will buy on the lowest cost item," he said.

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Consumer advocacy group CHOICE said retailers did not acknowledge the "harm" caused by confusing labelling - like 'prices dropped' or 'super savers', and called for more information to be supplied so Australians can work the truth out for themselves.

"This is particularly concerning considering many people are trying to make their grocery shop as affordable as possible in a cost of living crisis," Rosie Thomas said.

Their investigation found a 'prices dropped' tag in Woolworths, similar to the one found in Kmart, as deceptive as the price on the bottle of coconut water hadn't actually been dropped for almost five years.

Consumers are reminded it's not just the wording on tags that can lead them to believe there's a special. Colours like red and yellow are also used to indicate a sense of urgency, which retail marketing expert Louise Grimmer said was "design to get people purchasing".

"It's all about that scarcity effect," the University of Tasmania academic said.

"People think I better get in quickly and I better buy this because usually a special or a discount is only for a specified period of time."

How do Aldi and Kmart price reductions work? Retailers rebuttal

Aldi

Aldi has four different labels; 'super savers', 'limited time only', 'special buys' and 'price reductions'.

A spokesperson told Yahoo Finance the email the Queensland woman received were showing the latter, and represented an item's price being lowered permanently.

Kmart

Kmart would not comment on the price drop sign featuring the 25c saving specifically, but has previously told Yahoo Finance it does not do sales or specials that indicate a temporary drop as it is committed to reducing prices permanently where possible.

Kmart said that when it lowers prices on items they remain in place for good and it has done so on more than 1,300 products in the past year.