MSE investigation reveals John Lewis IS 'knowingly undersold'

The high street stalwart did not drop its advertised prices on 15 out of 16 products it was informed were being sold for less by rivals – even though it agreed to pay out individual price match refunds. These included goods sold by major chains such as Tesco Direct and Toys R Us.

As part of its 'Never Knowingly Undersold' price pledge, John Lewis promises: "If we find that [high street competitors] are selling the same individual product, sold with the same service conditions, at a lower price, we'll meet that price in our shops and at johnlewis.com."

To test this, MoneySavingExpert researchers purchased a range of different items, all of which were cheaper elsewhere, over two consecutive days in March, from a number of different John Lewis stores and its website. For example, we bought a Bang & Olufsen Beoplay A2 portable Bluetooth speaker, which was sold for £299.95 by John Lewis but £239 by a competitor.

After the purchases, we monitored the price of 16 items it had agreed to issue price match refunds on – therefore accepting its price had been undercut. We checked prices online and in a selection of John Lewis stores, but it only cut the price of one of the items over the next seven days (it or its competitor was out of stock on three items, though while these items were still in stock, John Lewis hadn't dropped its price).

Even when we did a final check of johnlewis.com 14 days after purchase, John Lewis was STILL being undercut on 10 of the original items (it or its competitor was out of stock on four items, and a competitor's price had risen on the remaining item).

We asked John Lewis to explain why it had failed to reduce prices on so many products. It admitted a good chunk of the products had simply been missed by its "dedicated price-monitoring team", though argued other price matches were approved for individuals but the store prices on these items had not been dropped because competitor stores were not within eight miles – something it doesn't make clear on the main page on its website explaining the policy. It says it's now "reviewing its communications to ensure its policy is absolutely clear".

'John Lewis is much-loved, but it should put up or shut up'

Martin Lewis, founder of MoneySavingExpert.com, said: "John Lewis is a rightly much-loved store. It prides itself on its service and claim to be 'Never Knowingly Undersold'. 

"Yet while its service is generally right up there, our research shows John Lewis is not always the champion of price it wants people to think it is. After all, if it is agreeing to reduce prices because they qualify for its price match as they are cheaper elsewhere, and then continues to sell the same goods at the higher price to everyone else, it knows that it is being undersold elsewhere.

"The failure was not limited to a few items, which could have been put down to just having a bad day – it was well over 90% of them. Some of these are due to its processes simply not working, others due to its 'eight mile' policy – that effectively says it'll give individuals who ask a refund, but keep the price higher, and only reduce it for others who ask. If John Lewis wants to tout its 'Never Knowingly Undersold' catchphrase, it should put up or shut up, or it risks losing its great reputation.

"In fact across the market, I'd caution people to be wary of any shop, store or chain using price promises to imply a guarantee of cheapness. Stores offering them can set prices at any level they choose, as they've security because in the rare event someone bothers to do the research after they've bought, the worst thing that'll happen is they'll have to lower their margins to the same as another competitor. So they could actually get away with charging more, while many customers have the false sense of security that it's a cheap store."

What is the 'Never Knowingly Undersold' policy?

John Lewis has used the famous 'Never Knowingly Undersold' slogan since 1925, and it's effectively a price promise.

If a customer finds that an item is being sold by a competitor for less, John Lewis's published policy says it will match the price or refund customers the difference up to 28 days after purchase. To qualify for the price match refund, the item must be:

• From a 'high street competitor', which John Lewis told us means they have to have at least one physical shop open to the general public on what it described as the "UK mainland" – they can't be online-only.

• Identical, so the same size, colour, model, make etc.

• In stock, not simply available to order at a later date.

• With the same fitting or installation.

John Lewis says it made 2.5 million price match reductions last year.

And when asked to explain how it drops prices across stores (as a general enquiry, before it knew about our investigation), a spokesperson said: "National prices are checked every day and adjusted as quickly as we can across all shops and our website. This is typically the next day, but can be up to 48 hours [after] depending on the nature of the price change or promotion."

MSE investigation reveals John Lewis IS 'knowingly undersold'

The research in detail – John Lewis failed to reduce prices on 15 out of 16 products

Our investigation put the John Lewis price promise to the test, to see if the retailer would reduce prices after being told items were available cheaper elsewhere. On 22 and 23 March a team of MSE researchers purchased different items we'd found being sold cheaper by competitors, and then monitored the price of 16 items it had agreed to issue price match refunds on. Of these:

• We bought seven items from johnlewis.com, and the remaining nine items in store – four at its Oxford Street shop in central London, three at the Trafford Centre in Manchester and two in Chelmsford, Essex.

• We then submitted a price match request for each item from the same place they were bought, either in store or online, over two consecutive days – therefore alerting John Lewis that a competitor was selling the item cheaper.

• We then monitored John Lewis's prices for all 16 items over the following week, checking prices online and those of any items that we found in stock across all three stores, one, four and seven days after purchase. We also kept monitoring the competitors' prices to check they still undercut John Lewis.

We found John Lewis reduced the price of just one of the 16 items – Microsoft Office, from £79.95 to £59.95 to beat Argos – despite competitors continuing to undercut John Lewis's prices throughout the week after purchase. (Three items had gone out of stock at John Lewis or the competitor.)

Furthermore, even the one price reduction wasn't fully communicated to customers. While John Lewis cut the price of Microsoft Office online, the display price in stores wasn't cut at any point we checked during the following seven days, though when our researcher took a copy of Microsoft Office to the till at the Manchester store it scanned at £59.95 rather than the advertised £79.95.

Here's a full list of the items we bought and price-matched:

What does John Lewis say?

A spokesperson for John Lewis said: "Never Knowingly Undersold means that we proactively check the prices of tens of thousands of products every day so our customers can be confident of getting the best possible price on the high street.

"Our terms and conditions are very clear and if a customer has found an identical product, sold with the same conditions, we would match the price. We have a dedicated price-monitoring team who proactively check the prices of tens of thousands of branded products at our high street competitors every day, including products on their websites."

Challenged on why it had failed to drop the prices of 15 out of 16 items, John Lewis told us:

• Five items were "not picked up". Regarding the Disney doll, Lego Duplo, Monopoly game, SanDisk memory card and Speedo swimsuit, John Lewis said: "Unfortunately on this occasion these products were not picked up to be priced nationally, however the customer did pay the lower price. We have ensured that they have now been added to our price match system and our buying teams will change the price accordingly."

• One item was price-matched SEVEN weeks after we first submitted a price match request. John Lewis said the Lego Batman keylight, which admittedly we found just 1p cheaper at Argos, was price-matched nationally... but only "last week", seven weeks after our price match request.

• Nine items were only price-matched on an individual basis. John Lewis said the BT baby monitor was only price-matched "on an individual basis", because Maplin's website stated "this item will be shipped from an alternate warehouse", and this meant John Lewis couldn't "determine whether Never Knowingly Undersold would apply to this product nationwide". Regarding the Bang & Olufsen A2 speaker and headphones, Casio watch, EasyCamp tent, GHD hair styler, Havaianas flips flops, Herschel backpack and Ray-Ban sunglasses, John Lewis said: "When a customer comes to us with a product sold elsewhere at a lower price, we will honour the lower price for that individual customer in line with our policy. If the product is available at a lower price within an eight-mile radius, we will price-match for all customers at that shop. The products were not available within the eight-mile radius, so were not price-matched more widely, however, the customer was offered the lower price on that individual occasion."

  When challenged on why prices had not been dropped in response to competitors offering products nationally via their websites, John Lewis admitted: "We do not move our national price on shops such as these because they are not nationwide high street retailers."

  However, John Lewis's main 'Never Knowingly Undersold' page, which explains how the policy works, does not at any point explain that its definition of a high street competitor requires a retailer to be nationwide, and it earlier told us it simply needs to have at least one store on the "UK mainland". It added: "We will take a look at our communications on Never Knowingly Undersold to ensure that this is absolutely clear."