Ill-conceived supermarket pricing promotions are costing retailers a fortune thanks to the army of eagle-eyed consumers who dedicate their lives to identifying loopholes. But who are these people?
Last year, on a bright fresh Easter Saturday morning, something peculiar happened in Portsmouth. Lights flashing and sirens blaring, a police car roared up behind a small white van and flagged it down. A cursory search of the driver revealed wads of Tesco vouchers the police believed were fakes, used to buy trolley-loads of goods. The driver was banged up in a cell overnight, while the police raided his house looking for ill-gotten gains. “They took a lot of stuff,” he says. “Fortunately, they didn’t check the attic!”
It’s a neat punchline, but the supermarkets aren’t laughing. They are under attack from a rapidly expanding online army of anonymous consumers, who are employing increasingly sophisticated tactics to wheel away shopping for next to nothing.
But who are these people? What motivates them? And are they acting legally by taking advantage of price gaffes, software errors and ill-thought out promotions - or do their actions border on fraud?
The driver pulled over in Portsmouth is a classic example of this new breed of agitator. He’s a delivery driver for a Hampshire-based wine company and, more importantly, a MoneySavingExpert.com regular who, to keep his real identity anonymous, goes by the moniker ‘Henlans the master shopper’. Had the police ventured into his attic, they would have encountered a scene straight out of US show Extreme Couponing as it’s packed to the rafters with grocery items.
Apple iPads for £50 at Tesco: gaffe or PR stunt?
Mountain bikes, iPads and Terry’s Chocolate Oranges have all hit the headlines during the last 12 months as a result of Tesco price gaffes online.
Although Chocolate Oranges went for 29p and the mountain bikes for a quid, it was the iPad 3 for £49.99 that caught the eye - a whopping 92% discount on the eve of its March launch.
Tesco let shoppers keep the chocolate, but it slammed the door on the bikes and the iPad 3, blaming an IT error and emailing disappointed shoppers to apologise for the cancelled order.
A spokesman later added: “We like to offer our customers unbeatable value, but unfortunately this is an IT error that is currently being corrected.”
Twitter users were all over it, with one user commenting: “Have a feeling the £50 Tesco iPad 3 ‘glitch’ was in fact a rather genius PR stunt to massively plump their pre-orders”. Meanwhile, ‘Tesco Direct’ and ‘Every Little Helps’ started trending on Twitter.
PR guru and creative head at Dynamo PR, Paul Bowles, is careful not to explicitly accuse Tesco of making deliberate errors, but says: “If you do a Google search you can see it has happened often with Tesco, and it always seems to happen with hugely popular consumer items. Perhaps it’s a problem with their website, but it feels like an orchestrated piece of PR activity.”
With the iPads, no money changed hands. But Denis Davies, who bought three mountain bikes from Tesco Direct for a pound in September, had £3 deducted from his bank account and received confirmation of his order. He argues: “If you take the money and confirm my order, isn’t that a done deal?”
Nope. Tesco’s back is covered by its small print, which states: ‘If, by mistake, we have underpriced an item, we will not be liable to supply that item to you at the stated price, provided that we notify you before we despatch the item to you.’
Contract law also refers to ‘obvious’ errors and it’s pretty obvious selling a bike for £1 is an error. Not that this is likely to stop the growing legions of savvy shoppers from trying to exploit it.
Double the trouble
Henlans is just one of many people who took full advantage of Tesco’s disastrous decision to launch Double the Difference (DTD) in February 2011. Intended to scupper the success of Asda’s 10% Price Guarantee, DTD saw Tesco attempt to beat Asda at its own game by issuing vouchers for double the price difference if an identical product could be found cheaper at Asda. Unfortunately for Tesco, plenty could.
For instance, Tesco was selling Hardys wine for £10.49, while Asda had it on promotion for £4.78. That meant a shopper buying a £10.49 bottle of Hardys at Tesco could claim a voucher for £11.72, effectively getting paid £1.23 to buy the wine. With popular forums like MSE and HotUKDeals spreading the word, hundreds of shoppers ran riot, buying caseloads of wine, steaks, shampoo and homeware items before dropping the shopping home, printing out a voucher and heading back out to do it all over again.
After four weeks, with the crisis escalating by the day, Tesco stepped in and imposed a £20 cap on vouchers. Undeterred, shoppers simply ran up vouchers of £20 a time instead. Finally, eight weeks after it launched, Tesco caved in and cut DTD to an infra dig Just the Difference instead. By then, Henlans had built shelving into the eaves of his attic to store his shopping.
“We estimate that 20% of redeemed coupons are misredeemed. If your voucher is used, as an issuer you’re going to be upset”
A bruised and angry Tesco called in police, fearing widespread voucher fraud, either by shoppers re-using vouchers at tills or tinkering with voucher totals during the home printing process. Henlans was scooped up in the net.
A couple of weeks after being pulled over, the case against him was dropped after police were satisfied his vouchers were the real deal. DTD was so generous that he didn’t need to fake them.
If Asda felt a sense of schadenfreude, it didn’t last long, however. This October, Henlans hit new heights of infamy when he found himself splashed all over the home page of the Daily Mail website after Asda’s Price Guarantee (APG) website went haywire. Forum members discovered that if they bought products that Asda’s rivals had on multibuy promotions, alongside certain ‘trigger’ products like a pot of Ambrosia rice pudding, Asda’s APG website generated erroneous vouchers that covered the cost of their shop. Like Tesco before it, Asda was giving away shopping for free.
Hundreds of shoppers piled in, guided by step-by-step instructions on consumer forums. Henlans filled his trusty van over and over again, telling the Daily Mail he had made £8,760 in four weeks. Once again, his attic was left creaking by the time Asda stepped in to cap vouchers at £15.
The DTD and APG débacles are just two high-profile examples of the price gaffes and glitches that are exploited on a weekly basis by members of forums such as MoneySavingExpert.com. But just because bargain hunters rush as one to take advantage, things are not always harmonious.
In the aftermath of the Asda glitch, Henlans found himself under fire from some posters for being so public about exploiting the APG, while other members praised him for helping them out, providing lists and testing out trigger products. Tired of the criticism, Henlans retired, penning an emotional goodbye post, although he wasn’t gone for long. Nine days later, he’d made a comeback, claiming to have been bombarded with private messages asking him to return.
Martin Lewis started the MoneySavingExpert website in 2003. It now boasts around 40 million visitors a year, with over five million people receiving email bulletins with the latest promotions. The Grocer caught up with Lewis, ranked number one on our annual power list , to discuss deal-chasing consumers
How has the internet shifted the balance of power from retailer to consumer? The difference now is that if a retailer makes a mistake, large amounts of people can swiftly take advantage. We are starting to give consumers the ability to say, ‘Hold on, I remember the pack being a different size, you are trying to shaft me!’ We’re heading towards giving the masses the ability to understand supermarket pricing models.
MSE highlights good offers as well as gaffes. On balance, do supermarkets benefit? We are not here to pump retailers up and we are not here to knock them down. We are here to help consumers. Supermarkets have the ability to benefit, they are starting to understand us. Tesco is the best at understanding the power we have to generate short-term traffic and gain. It can be a powerful mechanism for them. A glitch may cost them money in the short term, but it gets people in their stores.
Are you a popular man at Tesco towers? I don’t know. Big conglomerates like to be in control and we are very far from controllable. I focus on Tesco because it’s the biggest, most people shop there and Clubcard is easy to manipulate. So am I popular at Tesco? I’m the type of person that Tesco would shake hands with - with its fingers crossed behind its back.
How do you limit fraudulent activities being discussed in posts? If someone libels or advocates fraudulent behaviour, we take it down. We have done that many times. We are happy to push boundaries and take companies on, but we are not happy for our users to break the law.
Is Martin Lewis the savviest shopper of them all? I’m a good, savvy shopper but sometimes, even though the deal might not be the best, I do it because I am time-poor. I am sure there are many people who are better than me.
His reappearance won’t have been welcomed by all. But it isn’t just adverse publicity some forum members are worried about. During the Asda glitch, a minority of forum posters crossed the line, with some confessing to returning the shopping they bought with a dodgy APG voucher for a cash refund, then repeating the process. Their actions received short shrift from other members who encouraged them not to, or at least to stop boasting about it, over fears it went beyond savvy shopping and into a legal grey area. It was the same during DTD, with one poster blasting shoppers who claimed to be re-using vouchers, saying: “Whilst none of us are legal experts, many perceive this would be fraudulent. It’s not worth it. DTD is good enough as it is.”
The forum owners themselves are also careful to ensure teams of administrators delete posts or threads that promote illegal or fraudulent activity. “We will act immediately if someone is recommending manipulating URLs or other illegal activities,” says HotUKDeals founder Paul Nikkel. He does not believe such posts are acceptable, but equally does not accept the blame laid at the forum’s door by Tesco for pulling DTD.
“I found Tesco’s reaction a little humorous,” he laughs. “They were so confident with their pricing, they said: ‘We can offer you this!’ But as soon as people took advantage, they said ‘Hey! No! You’re spoiling the fun!’ Big retailers have always had an information advantage over consumers. Now, thanks to the internet, consumers can find out what is cheapest, then leverage it against them. Consumers called Tesco’s bluff. It’s disingenuous to say some shoppers are ruining it for others. Who are the ‘others’? The people that don’t have the information on what good pricing is, or people who take everything Tesco says at face value?”
“Consumers called Tesco’s bluff and it’s disingenuous for them to say shoppers are ruining it for others”
Paul Nikkel, HotUKDeals
Certainly, Tesco didn’t bargain on super-geek David Whitehouse, an MSE member who set up a website just after DTD launched dedicated to identifying cheaper products at Asda and ranking them in order of the biggest price differential. The site updated automatically every night and fellow forum members, used to scrolling through hundreds of posts to find the best deals, loved it. Whitehouse, who works for Marks & Spencer and lives with his wife and three kids in Stockton-on-Tees, says his motivation for creating TrolleyChecker was simply to “meet the demand for information on how to make the most of Tesco’s promotion, and an opportunity to make that information easily available”.
But unlike Henlans, Whitehouse didn’t find himself banged up overnight. After The Grocer tracked him down, he appeared on BBC Radio 4 and was interviewed by The Sunday Telegraph. Then, like a computer hacker offered a job by NASA,he found himself giving a presentation at Aldi HQ and being asked by directors David Hills and Louise Roche to name his price and consider relocating. “Unfortunately, due to personal circumstances, this wasn’t possible,” he says. Whitehouse kept going with TrolleyChecker, though. It’s since gone mobile and now includes Sainsbury’s.
It’s not just Tesco and Asda that have trouble with their vouchers. Straightforward voucher abuse is costing the industry £1.5m a year in consumer care voucher fraud alone, according to coupon specialist Valassis. It says customers are using a combination of ‘misredemption’ and ‘malredemption’. The former involves redeeming a voucher at the checkout when you haven’t bought the product, and malredemption, a murkier practice, ranges from Photoshop whizzkids altering voucher totals to a shopper using a self-service checkout to scan the same voucher several times.
“We estimate 20% of redeemed coupons are misredeemed,” says Valassis UK & Europe MD Charles D’Oyly. “If your coupon is misredeemed by a customer buying a different brand from your category, and they used your voucher to get money off it, as an issuer you’re going to be upset.”
D’Oyly says supermarkets are fighting back against the consumers Tesco once commended for their “ingenuity and determination” - before it lost its sense of humour and called in the fraud squad. They’re showing far more interest in systems such as the Valassis e-clearing platform, which eliminates misredemption through real-time validation at the till, he claims.
The appeal is that human “error” is removed. “You can take away the human element so you are not dependent on the cashier,” he explains. “The system does the checks, it asks how much it can be redeemed for, or if it has been redeemed before. We have had a lot more interest in 2012.”
It can expect plenty more again in 2013 - because retailers show no sign of letting up on the voucher front. Tesco has revamped its price promise website and is trialling a voucher print-out system at the till in Northern Ireland, similar to Sainsbury’s Brand Match, but also covering own-label. It will be hoping everything goes smoothly, especially with a thread dedicated to the promotion already established on MSE. No doubt Henlans will add a contribution or two - he confesses to The Grocer that he is “addicted to glitches,” adding, ominously, “I am now on to the next one.”
If you’re a savvy shopper, stay tuned. If you’re a supermarket, consider yourself warned.