Textiles Inc. is a major chain of fabric sellers. In this market, there are a few high-end sellers of fashion designer fabrics, some small independents, and three chains, with Textiles being the largest and most profitable. Textiles thrives on its ability to attract customers, often through discount pricing.
Every few weeks Textiles has a major promotion, with certain materials being sold at a reduced cost. The business sells both regular fabrics and fashion fabrics. Textiles tends to discount the regular fabrics to get purchasers in the door, who are then inevitably drawn to the attractively arranged, high-markup fashion fabrics with sample clothing and patterns prominently displayed. After a while, even though advertisements state that fabric prices are reduced by 30 percent and even 50 percent, regular customers have become so accustomed to these reductions that they seldom expect to pay the full price.
These practices are attracting the attention of competitors, who have notified the Competition Bureau. Why is the bureau likely to be interested in Textiles’s pricing practices?