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The Competition Bureau's complaint is full of examples of what it calls HBC's "deceptive marketing practices." For example, a weekly Hudson's Bay flyer from the summer of 2013 advertised a Beautyrest TruEnergy Brooklyn queen mattress set on sale for $1,298 — $1,800 off the purported regular sale price of $3,098. Canada's Competition Act forbids retailers from misleading the public about the "ordinary selling price" of a product and sets out strict criteria for determining the selling price from which discounts can be calculated. The Competition Bureau says HBC didn't meet those criteria in its mattress sales, because it didn't sell enough non-discounted sleep sets to establish a "regular" price (in Competition Bureau parlance, this is known as "the volume test.") In the case of the Brooklyn mattress set, HBC only sold a single set at full price in the months before it offered a discount off that price in the summer of 2013, according to the bureau's findings. (That single sale was later returned, resulting in net sales of zero for the period studied by the bureau.)
The Competition Bureau also says HBC didn't offer regular prices for a long enough time to satisfy the "good faith" aspect of its other standard for establishing a regular sales price, known as "the time test." The Competition Bureau also says Hudson's Bay misled consumers into believing they were getting deals on inventory-clearance sales of mattresses and foundations, when in fact those sleep sets were being ordered new. That would contravene the Competition Act, which establishes standards for advertising products with a limited supply. A Hudson's Bay flyer, with highlights added by the Competition Bureau, shows how mattress sales were advertised as an 'inventory clearance' — language that the bureau believes could have misled consumers. By advertising a clearance sale in which supplies were limited, the Competition Bureau says, HBC customers "may have rushed their purchasing decision, limited the number of competing retailers they visited, or entered into purchases that they otherwise would not have made in the absence of the perceived savings."
The Competition Bureau says HBC was actually ordering mattresses from its suppliers to replenish its stock, instead of clearing out its existing inventory. The bureau alleges HBC has been engaged in the deceptive practices since March 2013. "We take compliance with all laws and regulations very seriously, and we believe our mattress pricing process is fair, competitive and in line with industry standards and the Competition Act," HBC spokesman Tiffany Bourre said in an emailed statement. "We disagree with the Competition Bureau's position and will vigorously oppose the application to the Competition Tribunal." In its application, the Competition Bureau is "seeking an end to what it considers to be deceptive marketing practices, and the payment of an administrative monetary penalty by HBC." Sales of mattress sets are worth about $1.2 billion in annual sales in Canada, according to the bureau's complaint. Why do we ask for your postal code? By providing your delivery postal code, you’ll allow us to:
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Find your new mattress now by selecting your preferred size. Select your mattress size Shop for mattress accessories Mattress accessories enhance your nighttime experience and extend the life of your mattress set. A bedframe is required for The Brick's lifetime warranty, while a mattress protector is required for our 180 day comfort guarantee. Select the mattress accessories you need today. Select your mattress accessoriesThe federal Competition Bureau is investigating whether Canada’s two major department-store retailers have touted bogus discounts of their mattresses. The bureau alleges the retailers “failed to offer certain sleep sets at the regular price or higher for a substantial period of time” and “made materially false or misleading representations to the public in relation to its clearance sales” of mattress sets, according to documents filed in court.Sears got caught about a decade ago for pitching false discounts on tires. Now the bureau is looking at mattress-set prices at Sears and Hudson’s Bay, demanding information on pricing and profit margins in a probe that could turn the estimated $1.8-billion-a year mattress-and-bed foundation business on its head.
Spokespersons for Sears and Hudson’s Bay said they’re co-operating with the investigation and are in the process of providing the information required under the court orders.Sears “is committed to ensuring its advertising makes only valid claims and otherwise meets all legal and regulatory requirements,” said Sears’ spokesman Vincent Power. He added the retailer welcomes “the opportunity to work with the bureau to establish best marketing practices that are applicable to the mattress supply industry.”Hudson’s Bay’s Tiffany Bourre said the country’s mattress retail segment is “highly competitive … Promotional pricing is common within the mattress retail industry.” She said the retailer’s process of pricing its mattresses “is in line with industry standards and, in its view, is in accordance with all Canadian laws and regulations.”Mattress retailing is an opaque sector in which it’s almost impossible for consumers to compare prices among merchants. Retailers tend to carry their own models with their own prices.
But many of the products are made by the industry’s two dominant manufacturers: Tempur Sealy International Inc. and Serta Simmons Bedding LLC.“There’s continual promotion among brands, and products look very similar,” said John Williams of retail consultancy J.C. Williams Group, which estimates 2013 mattress and foundation sales rose 3.6 per cent to $1.8-billion from a year earlier. “The continual sales are confusing. You never know whether you got the best deal.”Still, mattress retailers can generate high profit margins without the risk of having to stock much inventory, shipping products to customers directly from manufacturers, he said.Production is mostly done domestically to avoid costly overseas shipping of the bulky merchandise, said Ryan Trainer, president of the International Sleep Products Association in Alexandria, Va. Mattress companies have efficient “just in time” deliveries of customer purchases – often in just a few days compared to as many as 12 weeks in the furniture business, he said.
The bureau has clamped down on retailers for misleading sale prices in the past. In 2005, the Competition Tribunal ruled that Sears Canada promoted bogus tire prices in ads, resulting in a $100,000 administrative penalty and $387,000 in costs. Less than a year earlier, sporting goods retailer Forzani Group Ltd. (now owned by Canadian Tire Corp. Ltd.) agreed to pay $1.7-million to settle allegations it misled consumers about prices. And in 2003, clothier Suzy Shier Inc. agreed to pay a $1-million penalty in a similar matter.Today the bureau is seeking records from Sears and Hudson’s Bay going back to 2013, court documents say. The bureau’s inquiry found the retailers touted some of their mattress sets for sale at reduced prices for more than half of the time in a six-month period, the filings say. They allege there appears to be examples of the retailers offering mattress sets for sale for longer than a year.The bureau says it has reason to believe the retailers “did not sell a substantial volume of some sleep sets at the regular price or higher for a substantial period of time before making representations about the regular price,” according to the documents.