Following the announcement of Economy Minister, Mr. Naftali Bennett, and director of the Consumer Protection and Fair Trade Authority, Adv. Tamar Pinkus, that retail chains in Israel will be obliged to round their prices up or down as of January 2014 and will be barred from charging prices ending in 99 agorot ‒ the polling agency Geocartography conducted a survey on behalf of the Israel Consumer Council to check the scope of the phenomenon at 280 points-of-sale of chain stores to find out how the public views the new trend.
The way prices are displayed ‒ results of the survey
A survey on the way prices are displayed was carried out by inspecting the prices of about 40 basic products, collected at 280 points-of-sale of retail chain stores in October 2013. The total survey was based on an unprecedented number of 10,143 samples from various points-of-sale. The following are the findings of the survey:
59% of the prices sampled end in the number 9; 12 % of prices end in the number 5; and only 7% of prices end in 0.
Prices ending in 99 agorot are the most common and amount to 41.7% of all prices examined.
Pricing policy of retail chain stores
The price ending cannot be significantly attributed to the type of retail chain (such as Discount Ironi). For example, the proportion of prices ending in 9 in “Shufersal Deal" was the same as that in “Shufersal Sheli” and likewise regarding “Mega Bool” and “Mega Bair”.
Another interesting fact is that the proportion of products ending in 9 agorot in the two major chains in the country is quite different. In Mega the proportion of prices ending in p is 30% higher compared to Shufersal (75% and 45% respectively).
The retail chains that were found to have a proportionally higher number of products ending with 9 agorot are Bitan Wines (88%) and Machsanei HaShuk (86%).
The findings of Geocartography’s poll on behalf of the Israel Consumer Council
According to the poll, 85% of the public believe that the reason businesses do not round their prices to the nearest shekel and end them 95 or 99 agorot is because they want to mislead the consumer and trick him into thinking that the price of the product is lower than it really is.
In the poll, the public was asked why businesses don’t round their prices and end them in 95 or 99 agorot.
22% replied: “In order to cheat buyers. /To deceive people. /To confuse people. /To mislead the public.”
21% replied: “It makes the price appear lower. /It sounds like less money. /It looks like less money. /It feels like we are spending less money.”
20% replied: “It sounds cheap. / It looks cheap. /It gives a feeling that you buying at a cheaper price.”
The public were also asked if they think that pricing in this way is fair or unfair.
85% believe that pricing this way is totally unfair or not terribly fair, compared to 15% who believe it is very fair or moderately fair.
88% of women responded that displaying prices that end in 95 or 99 is totally not fair and not terribly fair, compared with 81% of men.
89% of those aged 55 and above responded that displaying prices that are not round is very fair or moderately fair, compared to 77% of those aged 18 to 34.
Te public were also asked to what extent they support the recent proposal of making businesses only display prices that end in multiples of 10 agorot and prohibiting prices that end in 99 agorot.
82% very much and moderately support the proposal.
18% totally don’t support and don’t really support the proposal.
It is interesting that 85% of men support the proposal compared to 79% women.
When consumers were told that prices would probably go up (such as from NIS 11.95 to NIS 12.00) should the proposal be implemented, 76% said they support and moderately support a rise in price, compared to 24% who totally don’t support and don’t really support a rise in price.
87 % of above average earners support the proposal to implement the proposal, compared with 75 % of those with below average income.
The CEO of the Israel Consumer Council, Mr. Ehud Peleg says that displaying prices ending in 9 or 99 agorot clearly indicates dishonesty in trade. "Retailers are attempting to psychologically manipulate the consumer into thinking a product is cheaper than it really is. They are displaying a fictitious price to the cash payer who will in reality pay a higher price, given the fact that he will not receive change because the agora is long out of circulation.”
Adv. Peleg adds that proof that this is a deliberate pricing policy of retail chain management, comes from the findings of the Consumer Council Patrol which show that the price of 60 % of the products sampled ended in 9 agorot, compared to only a few percent of products whose prices end in 1 to 4 agorot ‒ a huge gap, suggesting a deliberate intention. Adv. Peleg: "Certainty with regard to price is a basic right of a consumer and a condition for him to be able to make an informed purchase decision. I congratulate the Economy Minister and the Fair Trade Authority on their decision to stop the unfair practices that have hurt many consumers."