Popular sales promotion techniques such as “sales below cost” could be severely limited under the new European Commission proposals on sales promotion, warns the Incorporated Society of British Advertisers (ISBA).
Sales below cost is a tactic used extensively by retailers such as Asda and Tesco. This draft proposal means that retailers will be banned from selling below cost price in certain countries such as France and Belgium. ISBA director of public affairs Ian Twinn says the move would mean that it would be difficult for companies and customers to set up and shop across borders. The proposal was initially intended to harmonise rules governing sales promotion across the EU’s 25 member states.
The proposals, yet to be approved by EU governments, are designed to break down national barriers on sales promotions. They are currently with the European Council of Ministers, which has yet to announce a date when it will rule on the proposals.
Most EU states restrict or ban many of the sales tactics used in the UK. If such restrictions were to be adopted as EU law, it is feared that it would hit the UK sales promotion industry hard. The industry employs 25,000 people and generates annual sales of over &£20bn.