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Kohl’s sued: allegedly jacking prices up before cutting them

The 9th circuit court of appeals has ruled that a shopper has grounds to sue Kohl’s for allegations of deceptive pricing for marking prices up so a price reduction looks more dramatic than it is. The outcome of this case could have a widespread impact on retail.

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Alleging deceptive pricing practices

One of the most gratifying aspects of shopping is going into one of your favorite stores and seeing that an item is one sale for a significantly lower price than it is normally sold at. The art of the sales discount has been shoppers’ siren song for decades, even though many know that the original advertised price has been marked up in order to make shoppers feel that the discount is a great deal.

However, a shopper in California is seeking legal recourse against Kohl’s for what he alleges is deceptive price representation. The case was dismissed in 2010 by the U.S. District Court, but the 9th Circuit Court of Appeals reversed that decision last week.

“Price advertisements matter,” Judge Stephen Reinhardt wrote for a three-judge panel. “When a consumer purchases merchandise on the basis of false price information and when the consumer alleges that he would not have made the purchase but for the misrepresentation, he has standing to sue.”

Marking items up so discounts are void

The shopper, Antonio S. Hinojos, argued that Kohl’s advertised 50 percent off of its originally priced $299 Samsonite luggage, and discounts on Chap polo shirts were misleading because the sales price came out to be what these items would normally sell for. By substantially marking up items in order to then slash prices through discounts, it can be argued that retailers deceive consumers on the original value and quality of the items being sold.

To provide an example, if consumers think they are receiving a deal because of a discount, buy those items and then try to sell them for the original price, they would find that they would not recoup that original sticker value because it was highly marked up, thereby losing money.

If the court ultimately decides against Kohl’s and implements these restrictions for other retailers as well, it will dramatically change the way that stores conduct sales. Perhaps at that point, more stores will have to implement JC Penney’s recent experiment of doing away with sales and regularly offering lower prices overall. Shoppers have been trained to chase markdowns, but now, they may have to get used to less drastic price slashes.

Destiny Bennett is a journalist who has earned double communications' degrees in Journalism and Public Relations, as well as a certification in Business from The University of Texas at Austin. She has written stories for AustinWoman Magazine as well as various University of Texas publications and enjoys the art of telling a story. Her interests include finance, technology, social media...and watching HGTV religiously.

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Business News

Hawaiian missile strike fallout: The importance of clarity in crisis communication

(BUSINESS) Companies can learn quite a bit from the recent Hawaiian missile clusterflip, particularly about timeliness and clarity in crisis communications.

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The federal investigation into the Hawaii civil defense snafu earlier this month revealed that there were serious errors in how the training exercise was conducted between two shifts and in the ongoing performance concerns of the employee directly responsible for sending out the alert.

For 38 minutes, citizens and visitors in the Hawaiian Islands cowered in fear, alerted to take immediate shelter by messages that were received on cellphones and broadcast on TV stations across the state. While officials attempted to calm the populace by taking to Twitter immediately to quell the concerns, many people were not—understandably—taking to tweeting what may have been their last thoughts, and thus were not informed until a follow up message was broadcast to cellphones nearly 40 minutes later.

The Federal Communications Commission, which conducted the federal portion of the investigation into the incident, put partial blame on a lack of clarity about the drill between the Hawaii Emergency Management Agency supervisors of the evening and the morning shifts and a subsequent lack of supervision.

The night-shift supervisor wanted to test the preparedness of the morning-shift workers with an unannounced drill, according to the FCC report. While the day-shift supervisor was allegedly aware that the drill was to take place, he thought that it was to test the night-shift personnel, not the morning crew. As such, he was not prepared to oversee the drill.

The test, which followed normal protocols, involved the night-shift supervisor playing a prerecorded message to emergency personnel warning them that a threat was imminent. The recording, which was simulating real notification from the U.S. Pacific Command, did include the words “Exercise, exercise, exercise,” according to the FCC report, but it also stated “This is not a drill” – which is what workers would expect to hear in a real warning for an active missile alert.

Adding to the confusion was that the worker who was responsible for transmitting the alert as an active emergency heard the language that reflected that it was not a drill, but did not hear the “exercise” language in the tape playback. The employee, believing that it was an actual alert, rather than a drill, responded affirmatively to a prompt asking “Are you sure that you want to send this Alert?”, said the FCC. He was, according to both the FCC and the state investigation into the incident, the only employee to believe that it was an actual alert, and the only worker not to hear the “exercise” portion of the drill.

Adding to the confusion was the revelation by Hawaii state officials on Tuesday that the employee in question had a troubled work history stretching back over the past decade.

The state investigation revealed that the employee had been counseled and corrected for poor performance over the previous 10 years, including that, on at least two occasions, the employee also “confused real life events and drills.” While other members of the employee’s team were reportedly uncomfortable with him and his work for some time, this mistake proved to be the final action of his career with the Hawaii Emergency Management Agency, as he was terminated last week, pending appeal.

Vern T. Miyagi, administrator of the Hawaii Emergency Management Agency, resigned Tuesday morning as the investigation results were released and “has taken full responsibility” for the incident, according to Major General Joe Logan, the state adjutant general, who oversees the agency.

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Target launches same day delivery and we’re too happy

(BUSINESS NEWS) Target is launching same day delivery – will we save money by nixing impulse buys, or will the convenience make us spend even more!?

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If a retailer is going to keep up with the likes of Amazon and Walmart these days, they’ve got to be able to offer superfast delivery. Retail giant Target is getting in the game, with pilot programs beginning tests of same-day delivery in Birmingham, Alabama, and in Tampa and parts of South Florida starting this month.

The delivery service is made possible through a collaboration with online grocery delivery service Shipt, which Target purchased for $550 million back in December. But with Target same-day delivery, you can order more than just groceries. Your items are hand selected by a human being shopping within your nearest Target store, so you can purchase items from any department.

The deliveries themselves are free, but that’s after you buy a membership. For one month, a membership costs $14, or $99 a year, saving you $69 when you spring for the yearlong membership. And that’s for orders over $35 – if you just need a package of toilet paper or a frozen pizza, you’ll have to pay a $7 delivery charge. There’s another catch: prices on same-delivery items could differ from the price you’d get in the store.

But how do you know your personal shopper will pick the perfectly ripe avocado, or the right shade of eyeshadow? The app allows you to “connect with your shopper and get live updates from the aisles,” so that you can “inspect every single item.” Shoppers will “even learn your pickiest produce preferences – to make sure everything we deliver is just the thing you like.” Target will hire 100,000 shoppers to help fulfill online orders.

Once your personal shopper has assembled your order, you’ll receive it on your doorstep the same day, sometimes in as little as one hour.

If this test program goes well, Target will expand the service to other stores. They’re already planning to launch same-day delivery from stores in Arizona, Oklahoma, Texas, Tennessee, Georgia, North Carolina, and South Carolina starting next week.

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Old Navy fires 3 employees for racial profiling caught on cam

(BUSINESS NEWS) Old Navy has landed in hot water after a shopper showed some questionable behaviors – the company has now responded by sending out pink slips.

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Old Navy has fired three employees at a West Des Moines store after James Conley III, a 29-year-old black man, posted a video showing evidence that he was racially profiled while shopping.

The video went viral, causing the Old Navy location to shut down for one day, and for the corporate headquarters to launch an investigation. A few days later, three employees were terminated.

Conley, who calls himself a frequent shopper who came to Old Navy almost weekly, says that he was accused by employees of stealing the jacket that he came into the store wearing – an Old Navy jacket he had received for Christmas.

An employee rescanned Conley’s jacket to verified it had been paid for. Conley asked a manager to review the security footage to prove that he was wearing the jacket when he arrived. Although the security footage cleared Conley, the manager did not show their face again, and Conley did not receive an apology.

“Don’t ever come to Old Navy, ‘cause they’ll stereotype you if you’re black,” he says in the video.

Old Navy posted an apology on Facebook, saying that the “situation was a violation of our policies and values,” and that the company “is committed to ensuring that our stores are an environment where everyone feels welcome.” Old Navy also used this post to announce that three employees had been fired as a result of the incident.

Conley says that at first he thought he would “remain silent,” but decided to post the video he’d taken, saying that anybody “should be able to go shopping without being racially profiled.” He has hired an attorney and may seek monetary damages. Unfortunately, such incidents of racial profiling are all too common, but in this case, Conley has used social media and his legal rights to take a stand.

In a press conference at the attorney general’s office, Conley described the situation as “really embarrassing,” and “nothing I want anyone to go through, ever.”

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