Why Burnham’s crackdown on fake discounts is actually good news for your business

There’s been understandable backlash from brands so far. Promotions are one of the main ways brands attract customers, especially while household budgets are still stretched. Pessimistic retailers could easily view the new regulations as yet another burden among a perfect storm of higher costs and cautious consumers.

But honest retailers have got just as much to lose from misleading discounts as shoppers do. The government plans to consult on banning tactics such as fake ‘was’ prices, invented reductions and misleading recommended retail prices. The principle is simple: if something is advertised as half price, it should genuinely be half price.

You’d hope that was already the case. But in reality, we’ve all seen offers that don’t stand up to much scrutiny. Time after time, a product’s recommended retail price is suddenly hiked up just before it goes on sale. A ‘limited-time’ offer runs for weeks. A voucher offers 40% off, but excludes the brand’s most popular products, or only works once the customer reaches a minimum spend that’s buried deep in the small print.

Misleading tactics can work in the moment. The promise of a steep discount creates a sense of urgency and gives shoppers a reason to buy now. But the sale comes at a cost that is harder to see: like the boy who cried wolf, every fake bargain makes consumers a little more suspicious of the next offer. Customers are becoming jaded and sceptical: in fact, two-thirds of Britons believe brands regularly use fake discounts.

That suspicion doesn’t just stop with the retailer making the disingenuous offer. It affects brands offering genuine value through exclusive discount codes, loyalty rewards and carefully selected partnerships. This matters because when spending power is limited, trust becomes more important than ever - especially when customers are shopping online or interacting with a new brand. Once shoppers become dubious of a retailer, even a good offer loses some of its appeal.

The government has framed the crackdown largely as a cost-of-living measure, and rightly so. People watching every pound shouldn’t have to trawl through a product’s pricing history to work out whether they are actually saving money.

But this is also a commercial issue for retailers. Brands invest heavily in attracting shoppers: a record £46.7 billion was spent on advertising last year in the UK alone. But these brands risk losing customers at the final hurdle if their offer feels too good to be true. Fake discounts may lift sales for one campaign, but they can depress conversion rates for legitimate promotions later on.

The answer isn’t to stop using discounts. Promotions are a great way to introduce people to a brand, reward loyalty or encourage a purchase they were already considering. In fact, 70% of shoppers would consider trying a new product or brand if they were incentivised with a special offer.

Retailers need to make sure the value is genuine, and the discount is clear, easy to use and relevant to the person receiving it. A modest saving on something a customer actually wants or regularly orders - like 10% off the oat milk they put in their trolley every week, or free delivery on the winter coat they’ve been eyeing up for months - will often do more than a headline-grabbing discount surrounded by exclusions and small print.

Brands should also be transparent about the original price, how long an offer lasts and whether there are any minimum spends or product restrictions. Shoppers should be able to understand the deal without searching through several pages of terms and conditions.

Relevance is critical too. Retailers don’t need to throw the biggest possible discount at every shopper. By working with complementary brands, they can reach customers when an offer makes sense. Someone who has just booked a holiday is likely to be interested in a discount on luggage or travel accessories. A customer buying furniture might be interested in a cookware brand.

Regulation alone won’t be enough to revive customer trust in retail promotions. A lot of this will depend on how the rules are written and enforced after the consultation. The government has got to give businesses clear guidance, so responsible retailers can comply without struggling to make sense of vague standards.

But the direction is right. Brands should welcome the crackdown as an opportunity to make shoppers excited about promotions again. A discount can encourage a one-off purchase, but trust keeps a customer coming back. Retailers that sacrifice the second for the first are making a very expensive trade-off.

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Peter Smith is UK Managing Director at Sovendus.

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