Dick Smith refutes claims of price gouging on face masks, hand sanitiser

Thursday, 9 April 2020

The Government has created a reporting mechanism, pricewatch@mbie.govt.nz, so that members of the public can flag instances of price gouging by retailers.

Dick Smith has been accused of ramping up the price of essential items, including face masks, hand sanitiser and gloves.

The Government's price gouging tip line Pricewatch, set up on March 30, has received 21 complaints about the online retailer.

Dick Smith, which is owned by Australian company Kogan, has been selling a pack of 50 face masks for $100, a 50ml bottle of Dettol hand sanitiser for $15 and a pack of 100 latex gloves for $44.

While the products have been out of stock at most NZ retailers, the prices seemed to have been marked up significantly.

Dick Smith says it has dropped the price of 326,863 products in March.

* Auckland pharmacy defends $150-per-litre price of 'premium' hand sanitiser

* Trade Me changes tack on hand sanitiser, face mask price hiking**

These latex gloves are being sold for $44.

The 50ml Dettol hand sanitiser retails for $4 at The Warehouse and a similar pack of 50 masks were priced at $10 at Office Max. Both items are sold out.

One customer on Facebook said: 'What's with the price of masks? This would appear to be a clear cut case of price gouging.'

While the products have been out of stock at most NZ retailers, the prices appear to have been marked up significantly.

Another customer, Jarrod Milligan, said he would not buy from the retailer because of its tactics.

'This was highly disingenuous behaviour for a major name such as Dick Smith'.

This hand sanitiser typically retails for $4.

But a Kogan spokeswoman refuted the claims of price gouging and said Dick Smith had dropped the price of 326,863 products in March.

She said Kogan used 'dynamic pricing' based on multiple factors including supply and demand of products, changes in costs from suppliers and global trading partners, stock availability, freight costs and delays, to determine prices.

'Unforeseen circumstances [are] creating uncertainty in how much stock we can secure from our suppliers in the current Covid-19 climate,' she said.

'During periods of demand spikes where demand by far outstrips supply, it is not uncommon for prices from suppliers, distributors and trading partners to rise.

'This is similar to Uber surge pricing and incentivises more manufacturers to start making those products which will eventually see them drop in price quickly as supply starts to outstrip demand. For instance, it's not a random event that so many factories around the world have been repurposed to manufacture masks and sanitiser.'

Data collected by price comparison website PriceSpy showed the price of some essential items almost doubled over the course of March.

Pricewatch has received more than 2500 emails so far.

A Ministry of Business, Innovation and Employment spokeswoman said while it was not illegal for businesses to increase their prices, the Fair Trading Act prohibited misleading and deceptive conduct and false representations.

'Due to shopping access being restricted to curtail the spread of Covid-19, there is a concern that some businesses may try to exploit consumers by increasing prices unnecessarily' she said.

'We are prioritising complaints where the price increase would hinder the Covid-19 response or recovery, or where there is no substitute for that product or service.'

If consumers suspected a business was providing false or misleading information as to why prices had increased, they could make a complaint to the Commerce Commission, she said.