Is Price Transparency the New Normal? A quantitative study on the impact of the "last lowest price" on shopping behavior

Abstract: In the last couple of years, scandals involving retailers using deceptive sales tactics have become increasingly prominent. By manipulating the price before a sale, retailers have been able to make their sales promotion seem more attractive to the shopper than it really is, causing shoppers to make purchasing decisions under false premises. Due to this, the European Union (EU) updated its directive on consumer protection law to add a new section stating that retailers must now disclose the "last lowest price" (LLP), which is the lowest price a product has been at during a price promotion within the previous 30 days. Sweden, being a member of the EU, implemented this directive into national legislation in September 2022, under which Swedish retailers must now include the LLP when presenting the price of a product. This thesis used a quantitative study to examine how consumers' purchasing behavior and attitudes toward the retailer are affected by the addition of the new reference price (the LLP). The findings showed that disclosing the LLP increases perceived transparency, while being exposed to the LLP decreases purchase intentions. It is inconclusive if the relationship is mediated by transparency, fairness, and perceived value, likewise, it is inconclusive if the relationship is moderated by the price consciousness of the shopper. Given the novelty of the law, we strongly encourage further research into this topic and its potential interconnected variables, and we hope that our thesis can serve as a valuable starting point for investigating how the LLP may influence consumers' purchasing behavior.