French sales start today, by law

Trading laws stipulate that there are two periods for sales in France. Winter sales from January to February and summer sales from June to July. In each case, the sales last for five weeks. All goods on sale must have been in the shop for a minimum of thirty days prior to the sale date – nu buying in cheap stock and selling it as a sale item. Reuctions must ne visibly displayed in percentage terms. labels must also show the old pre sale price and the new sale price. Retaiers are allowed to reduce their prices three times in the sales – after the first fortnight, and again in the final week.

Outside the official sale periods, retailers are allowed two weeks in the year, to use at their discretion, for extra sales such as pre-christmas sales or spring sales.

…Tomorrow morning [today] many shops (with permission from their local trading authorities) will be opening at 7am. Needless to say that the starting date is a national one decreed by the government.

Here is more information and I thank Bill Hawshaw for the pointer.

Comments

This was one of those things in Europe that induced no end of head-slapping for this American.

In the German press, I swear that "Wettbewerb" ("Competition") is preceeded by "ruinöser" ("ruinious") more often than not. The American assumption is that competition is inherently positive and regulation is necessary to ensure that anti-competitive behaviors don't occur. In the European psyche, the assumption is that competition is inherently dangerous and regulation is needed to ensure that it does not become "ruinious".

Germany also has a law regulating how much a price can be haggled down below the displayed value. Too much of a discount might unfairly favor better negotiaters.

P.S. The German Wikipedia article on "Ruinöser Wettbewerb" links to the English Wikipedia article on "Predatory Pricing" as its equivilent, but if you read the two articles you will see they are not really talking about the same thing.

In the Thatcher years there was much heated debate about liberalising Sunday trading in England. What struck me was that virtually nobody considered a potentially useful source of evidence, namely the liberal Sunday trading pattern in most of Scotland.

It is interesting to see how these kinds of capture differ across the globe. My understanding is that Japanese restrictions take the form of limiting entry through zoning and taxation that shuts out large efficient producers in the big cities. The Chinese -- despite their communist heritage -- don't seem to have any qualms about retail level "ruinous competition" (although they have other constraints) and are arguably more tolerant of raw competition in retail than the U.S.

Sounds pretty loosey-goosey; surely there's way of regulating retail more closely. Maybe consumers could be required to file records of all their purchases to make sure no one's engaging in "ruinous consumption", with heavy fines (redistributing the proceeds to the needy and other morally superiors) on those that buy more than the government decides they need.

I am once again left thinking that the French government is ridiculous. Given that France is a representative democracy, the people must be slightly ridiculous too. The interest groups that promote such regulations aren't ridiculous, but they are malign.

"Don't think it is for consumer protection. It is for business protection."

I think it's both.

"I find this both bizarre and disturbing."

What's bizarre and what's disturbing?

"The interest groups that promote such regulations aren't ridiculous, but they are malign."

WTF? What's malign? I for one prefer to know that when something is put on sale, it's actually on sale, and not some pretend sale that's only a mark-down from a mark-up.

As a consumer I want to be sure that when there is a sale, that sale is real. These laws are aimed exactly at curbing the practice of fake sales.

In Toronto, for example, I know stores, which post big SALE signs 365 days in a year!!! If they have a sale all the time, when is that they are selling at regular prices?

Also this last boxing day I went to several stores like FutureShop and BestBuy and guess what - with some small exceptions the prices were no different to where they were in the beginning of December and even November. These people are simply selling on regular prices all the time while randomly putting on the "sale" sign once in a while.

And don't get me started on the practice of NOT including the sales tax in the price tag...

These are downright dishonest practices aimed to TRICK the consumer to come to the store!

And thus civilization is lost. "Freedom is just too much of a hassle."

To those of you who think this is helping the consumer:

Although you think that sales without this legislation might be "fake" and that these laws curb this practice, you are mistaken for simple reasons that basic economics helps to illuminate. First, these firms can still "fake" sales even under these regulations - in fact it is easier. Sales normally emerge either due to real competition (I must lower my price in order to get customers) or they are "fakes" in which I pretend I have just lowered my price, when in fact it was always at that level--however the customer still can compare my price to the price in other stores, so I still must compete.

With this legislation, I cannot compete and lower my price throughout the year for brief periods at a loss to gain customers--so you have reduced competition. Since we all must wait for the sales period, it becomes easy to collude. We can all raise our prices by 20% for the whole year and then reduce them during the sales period. Since real competition is stifled, collusion becomes easier, and the stores benefit at the expense of the consumer.

The other way the legislation supposedly helps the consumer is through search costs. Yes, it does lower search costs - but only by eliminating the low price you are searching for! Now, instead of searching for a low price any day that you want something, you are forced to wait up to 5 months until the next sale. This does not seem to be a benefit to me - if the search costs exceed the benefit, then just buy at the most convenient place, on the other hand if you'd be willing to wait up to 5 months for a sale then presumably you'd also be willing to search a little bit today to find a sale.

SOmething very similar happens in Italy: sales are regulated by law, they can only take place during specific periods, and stores and shops are fined if they start sales earlier than when allowed to.

Don't think it is for consumer protection. It is for business protection.

For once I agree with Bill.

These kinds of laws are to protect business. And they help France and other places that regulate retail and agriculture maintain their reputations for being "quaint".

Do you know what a hassle it is to have to staff a business 7 days every week? If you can regulate that, it is one less factor you must compete on. This is what a nation of small shopkeepers wants, not a nation of consumers.

"Any way you look at it, it's ridiculous for a government to try to determine what constitutes a sale or not..."

Ah yes, the Anglo-Saxons, who have seen their economies crumble and discovered their governments to be completely corrupt, think they know when something is "ridiculous for a government". Too funny for words.

"Consumers just need to be intelligent enough to actually look at the price of the good (and not just the big sale sticker) when considering their purchase." First, there is no reason why governmental policy should favor, on every issue, the wants of the most "intelligent." Secondly, the way the system works in Europe provides useful additional information to the consumer. The consumer can still look and compare prices if he or she so chooses; much of what the law does is simply provide more information. Nothing wrong with that, I would think.

so this is what the french do with their excess leisure time!!

French scientist calculates Pi to 2.7 trillion digits

http://www.telegraph.co.uk/science/science-news/6942553/French-scientist-calculates-Pi-to-record-number-of-digits.html

Steve C:

Name a dominant European company formed after 1950 -- in any field, not just retail.

Hard to do.

Now do that for the US. Intel, AMD, Microsoft, WalMart, Dell, Amazon, eBay, Google, etc.

What drives this difference -- other than government regulation that enforces the status quo?

While I'm shocked by this French law, I'm even more shocked by the people on here defending it. It seems like there are always some people who support the nanny legislation. You want this law so that you know when real sales are going on and not just 365/year sales? Why don't you use this thing called "the internet" to comparison shop? Why don't you go to another store and see what their price is? If you don't care to do either, then you can feel pleased with yourself for buying a "sale" item (at full price) instead of a normally priced item (at full price).

How lazy are people these days? Western cultures are growing this bizarre entitlement complex where they want everything handed to them on a platter. I think that this kind of regulation - more than any statistic, projection, etc. - signals the end of America's vibrant economy.

That these kinds of laws are intended to protect stores rather than consumers is perfectly obvious if you look at the Amazon free-shipping case. :

http://www.nytimes.com/idg/IDG_002570DE00740E18002573AF005B04A4.html

You can be sure it was the French book sellers, not French book buyers who wanted to prevent Amazon from discounting more than 5% below the sticker price.

@consumer: Some of the buying public may believe that "On Sale" or "SALE" means "at a discounted price" but technically speaking "sale" literally means "they have goods on sale".

That part of the law I don't agree with. It okay to have sales anytime as long as they are real, i.e. the goods sold have been in stock for a while and offered for a higher price.

Who CARES if the goods have been in stock for a while and offered at a higher price? All a store has to do is stock some goods for a month, in some out of the way corner, marked at much higher than normal prices, with no expectation of selling them until, voila, SALE!

Who, in the internet age, relies on a store's 'SALE' sign to assure them they're getting a good deal as opposed, say, to doing an online price search before shopping?!?

"I think that this kind of regulation - more than any statistic, projection, etc. - signals the end of America's vibrant economy."

Well, then I guess it's lucky, for America's "vibrant" economy, that this kind of regulation exists in Europe and not in America. OTOH, America's so-called vibrant economy has managed to collapse all by itself, while the French and German economies aren't doing so badly. Hmm, I wonder if that is telling you anything.

"You can be sure it was the French book sellers, not French book buyers who wanted to prevent Amazon from discounting more than 5% below the sticker price. " And how are you so sure? What do you know about French book buyers and what they want? Seriously, WTF do you know? Can you possibly understand that there are trade-offs and that other people may make different choices? That cheapest is not always optimum for society? That French people may like downtowns which are vibrant and have small shops? I personally like having a physical bookstore a little over 100 meters where I live. If the price to keep that is preventing Amazon from discounting its books, then so be it.

"You can be sure it was the French book sellers, not French book buyers who wanted to prevent Amazon from discounting more than 5% below the sticker price. " And how are you so sure? - The real

A union of French booksellers successfully sued Amazon, but the retailer chose to pay the fines rather than discontinue the service. If the law was intended to help consumers, they did not appear to be thankful: At least 120,000 customers signed a petition to allow Amazon to keep the discount.

Victoria Shannon, “Amazon.com Is Challenging French Competition Law,† New York Times, January 14, 2008, at http://www.nytimes.com/2008/01/14/technology/14iht-amazon.4.9204272.html (November 18, 2009).

"At least 120,000 customers signed a petition to allow Amazon to keep the discount." Wow, that's less than 0.2% of the French population.

"At least 120,000 customers signed a petition to allow Amazon to keep the discount." Wow, that's less than 0.2% of the French population. - The real a

How many people usually sign petitions? About 50% of the population? Probably a fair bit less than that even shop regularly for books. Sorry, but 120,000 people signing a petition to allow a single retailer to keep a price (as opposed to a petition to end the death penalty or something) is a pretty large number. It does indicate that the consumer was not the main backer of the legislation which was clearly pushed through by the lawsuit by a union of booksellers. You are in denial.

Statement: "No consumer is harmed by voluntarily exchanging money for goods at a price the consumer agrees is fair"

real a's reply: "But would the consumer agree that it was "fair" if they learn that the "20% off" sign was a lie?"

Real a, you are dodging the issue. There was no harm. I agree that many if not most people are irrational -- they feel they can't get a "good deal" unless their deal is percieved to be better than someone else's.

Regardless of those irrational feelings, it doesn't change the fact that the original transaction was voluntary and left both participants in a better position than when they started.

If anything, a rational person should *thank* the sale sign for bringing a value-enhancing exchange to his/her attention.

"do you think it is bad for a shop to offer a discount?" Not always, no.

"You seem to be defending a law that makes discounting books illegal. " Actually, I'm not fussed one way or the other. I just object when people find such a law ridiculous or contrary to the rights of man. It's no such thing. It's simply one way of doing things and, seeing how it actually works, I can say it has advantages and disadvantages. If a country wants to do it that way, then fine with me.

"Do you think that shops should be forced to sell at high prices?" Well, that's pretty much the European system, with a huge VAT. I think it works well and I am all for it.

"Always at the same price?" Not too fussed one way or the other. I imagine it wouldn't work too well, but I could be wrong on this.

"That they should not be able to sell at "predatory" prices?" Again, not fussed one way or the other.

"And do you think most consumers feel this way also?" Um, maybe consumers all over the world are not uniform? And maybe, even if consumers qua consumers are "against" a huge VAT, those same consumers qua citizens are all for the social benefits that the VAT pays for.

One benign purpose of a 'sale' is to perform pricing experiments -- to vary the price around your assumed optimum without risk of devaluing the good. Taking away this instrument (or making it as blunt as the French have) is bad for customer and vendor both.

Price experimentation is especially crucial for startups and evolving markets, an area where the US dramatically outperforms the rest of the world.

and clearly higher prices are not very good for the consumer

If you define 'good' solely as the ability to acquire the most goods and services, then I'd certainly agree with you. In fact, I tend to lean that way myself.

However, there are lots of people that define 'good' in a more global sense. For these people there are other factors important to 'good': cultural preservation, job security, communal downtime, etc.

Government tends to reflect national wills, and I strongly suspect that it does so faithfully does so in this case. That there is a substantial minority who feel differently is also not surprising. At the point that they can elect a government to reflect their will, we'll see changes.

I find most of the comments harsh and quite ignorant. No one screws over anyone. If you used a business instead of an economics logic you could see the win-win in there: Extra costs would be generated through seasonal products idling in European retailers' warehouses during off-season. By liquidating them the short-term variable cost structure of the business can be improved. It is more some kind of a managed seasonal closing-down sale than anything else and is known as "Schlussverkauf" in German, "soldes [exceptionelles]" in French. The demand-side, the German / European customer, has grown accustomed to this mannerism.
Ultimately, there is just a wee bit more behind the story than some ugly, shiny sales signs on Main Street.

Hmmm, I think regulation of sales periods is certainly too much, but, having lived for some time in the US now, I have to say that American competition is far from just innovation and better service all the time...

I have noticed that American businesses have developed an incredible ability to trick consumers. I am talking about things like selling extended warranties worth 2 dollars for 20 dollars or more; creative pricing to inflate profits substantially over their theoretical perfect competition levels; all sorts of apparently justified fees and penalties designed to capture surplus from unaware consumers; schemes to surreptitiously sign-up people for bogus services that charge your credit card every month; and a long etcetera...

Well, this is an amazing information.

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