NAD Examines Pricing Claims at Wegmans Following Costco Challenge; Recommends Certain Modifications to Comparative Price Displays

New York, NY – Feb. 22,  2017 – The National Advertising Division has recommended Wegmans Food Markets, Inc., a mid-Atlantic grocery store chain, modify certain in-store comparison pricing displays following a challenge by Costco Wholesale Corporation.

NAD is an investigative unit of the advertising industry system of self-regulation. It is administered by the Council of Better Business Bureaus.

Costco challenged claims that included:

  • “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 the advertising at issue implied that certain products sold at Costco are more expensive than the same products sold at Wegmans or that consumers don’t need to do their own comparison shopping because Wegmans has already done the work for them.

Costco asserted that 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 sold by Costco. These displays featured a series of Wegmans’ products, listed side-by-side with a list of Costco products. In each case, the prices displayed indicated that the Wegmans’ products were less expensive. Costco argued that the price displayed for the Costco product was often false and actually lower than the one displayed for the Wegmans product.

Costco further argued that Wegmans compared items that were dissimilar while suggesting to consumers that the items were the same and less expensive at Wegmans. Costco contended that the net effect was to suggest that Wegmans sells the same item for less, when that was not the case.  Compounding the misleading message, Costco argued, was that the price comparisons appeared on signage below a misleading header which reads: “Who has time to comparison shop? We do. We check hundreds of prices each week so you don’t have to.”

Wegmans described for NAD its process for developing its in-store, price-comparison advertising, which includes weekly visits to competing stores.

NAD noted in its decision that the advertiser’s current competitor price-checking and posting was in keeping with precedent established by the Federal Trade Commission and NAD and that one week was a reasonable period of time to check on prices to keep them current.

Following its review of the evidence in the record, NAD determined that the advertiser’s pricing claims should, in addition, be  accompanied by a clear, conspicuous and prominent disclosure of the date of the comparison shopping strategy and a clear statement that prices are subject to change.  NAD also recommended that Wegmans’ point-of-sale boards be maintained with pricing accurately attributable to Costco’s prices.

NAD recommended the advertiser compare prices of like items when both parties sell identical products. And where products are not identical, NAD recommended that the point-of-sale display either note that a comparison is not applicable or describe more accurately the products that are being compared.

NAD concluded 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” is adequately qualified.  However, with respect to the claim, “Don’t shop around town … shop at Wegmans and save,” NAD concluded that the first phrase, instructing consumers not to comparison shop, directly contradicts the recommended qualifier that prices are subject to change.  NAD noted, however, that nothing in its decision precludes the advertiser from claiming that consumers can “Shop at Wegmans and save.”

Wegmans, in its advertiser’s statement, said the company “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.’”

Note: A recommendation by NAD to modify or discontinue a claim is not a finding of wrongdoing and an advertiser’s voluntary discontinuance or modification of claims should not be construed as an admission of impropriety. It is the policy of NAD not to endorse any company, product, or service. Decisions finding that advertising claims have been substantiated should not be construed as endorsements.