Commerce Commission complaint lodged over 'misleading' New World Smeg knife block promotion

Wednesday, 20 January 2021

New World ordered 50,000 of the Smeg knife blocks but admit they have very few left, and cannot get more.

A frustrated New World customer who cannot get one of the supermarket chain's promotional knife blocks has lodged a Commerce Commission complaint alleging a breach of the Fair Trading Act.

New World’s owner Foodstuffs has run a highly-successful giveaway of Smeg knives and knifeblocks over summer. But the company has all but run out of the blocks and says it cannot get any more.

The customer, an Auckland businessman who didn’t want to be named, said he believed continuing the promotion when New World knew the star attraction was unavailable amounted to misleading conduct under the Act.

Foodstuffs says it is confident it hasn’t breached the law, but Consumer New Zealand say the man may have a case – and says New World stores that have run out of stock should be posting signs to warn customers before they buy groceries in the hope of securing a knife block.

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Jon Duffy said New World should be expected to be “sophisticated” in their supply estimates.

Customers were given stickers to collect based on their spending, and 40 stickers and $50 secured a knife block. The businessman said he had telephoned 20 New World branches around Auckland and all had run out “some time ago”. He had a complete set of six knives, but no block.

“Where it is misleading is that they’ve got no blocks left, they don’t intend to get any more in, but they are still running the promotion,” the man said.

He said if New World promised to get in more stock to meet demand, “the vast majority would say ‘that’s not good enough, but we will accept it’. But this is like allowing people to earn Airpoints, and not having enough flights for them to redeem the points on.

New World’s owners Foodstuffs are “confident” they’ve met their legal obligations.

“Section nine of the Fair Trading Act says ‘no person in trade shall engage in deceptive or misleading conduct’,” the man said. “You don’t have to intend to deceive to be guilty.”

In his formal complaint to the Commerce Commission, the man wrote he was “lodging [it] on behalf of tens of thousands of upset and disgruntled customers”.

Consumer NZ chief executive Jon Duffy said the man was “possibly on the right track' – but had more grounds to complain under a separate section of the Fair Trading Act, which covers ‘bait advertising’. It's a criminal offence for someone to advertise something they have no intent to supply.

Duffy said while New World had clearly intended to supply the blocks, the legal test could be whether it had behaved reasonably when estimating how many blocks it would need to meet demand – especially after a shortfall last year in a similar promotion which supplied drinking glasses.

Duffy said given consumers were likely to have altered their purchasing behaviour to spend more at New World to secure the stickers, it was “pretty incumbent on businesses to get their stocks right, and you might expect a business as sophisticated as Foodstuffs, when they run this type of promo, to be able to get their insight right…. it comes down to the reasonableness of the analysis that Foodstuffs did to anticipate demand here.”

Duffy – who has a few of the knives at home and had hoped to get a knife block himself – said it would be fair to expect those stores which had run out to post warning signs before customers filled their trolleys.

Foodstuffs head of corporate affairs Antoinette Laird said the chain was “confident we have met our legal requirements under the Fair Trading Act. The promotion was incredibly popular and it was clearly advertised to customers that product was available ‘while stocks last’.

“By the end of the promotion Kiwi homes will have one million SMEG knives in their kitchens, along with 50,000 knife blocks – which was every knife block SMEG could manufacture and we could get our hands on.”

Laird said “technically” it hadn’t run out of knife blocks as it knew some South Island stores still had some left. She admitted it would not be easy for the Aucklander to get his knife block and there was no central log of which stores still had them in stock.

“He might be able to drive to a store out of Auckland but I’d suggest he call in advance before making the trip.”

A Commerce Commission spokesman said: “In general it is an offence under the Fair Trading Act to mislead consumers about the availability of products.

“We note that New World has advised consumers that knife blocks are in limited supply with most stores sold out. However, we have not investigated this promotion and can make no comment on New World’s conduct in this instance.”