PMPs To price-mark or not to price-mark?

The debate around pricemarked packs (PMP) has been a longstanding one among retailers and one that has grown in seriousness amid the cost-of-living crisis.

With customers’ finances increasingly stretched, the pressure on retailers to offer and promote products at affordable prices is far higher than normal. But the cost-of-living crisis has also put significant pressure on stores.

The need to extract every penny of profit from every sale has meant that PMPs, which can limit options when it comes to margins, have fallen out of favour with some retailers, w ith even wholesalers expressing outrage at some of the price-marked product margins on offer

Tom Fender, development direc-

tor at The Wholesale Company (TWC), says: “The key challenge the sector faces is to balance being competitive with being sustainable, and that there needs to be a sufficient margin to achieve this without pushing the price too high. What we are finding is that independent retailers believe that the price-mark is the promotional tool to do that.”

In Favour Of Pmps

The benefits of PMP s relate to customer concerns around costs. When they can see that the price hasn’t been chosen by the store, then there are fewer fears that it has been artificially raised or could be purchased more cheaply elsewhere.

For many retailers, PMPs enable

Customers always prefer PMPs

Research Findings From Fwd And Twc

80% of retailers surveyed said their customers would still buy PMPs even if the price increased, indicating that the reassurance of the price - mark is more important than the price itself.

49% of retailers s aid they would prefer the pack size to be reduced if it meant they could keep the same price, and 45% said their customers would be prepared to pay more for the same pack.

4 2% of consumers said they would prefer to retain the same pack size and take a price increase. Just 23% wanted a pack-size reduction to maintain the same price.

4% o f cases have seen the margin fall in the year to July 2022, and for almost a quarter (23%) of PMPs, the margin had risen to compensate for the increased costs of doing business. them to compete with discounts from multiples, such as Asda Rewards and Tesco’s Clubcard.

A survey of 150 independent retailers by the Federation of Wholesale Distributors (FWD) and TWC found that 80% are stocking PMPs in most major categories and that 85% think that PMPs demonstrate good value for money.

“ The customers always prefer PMPs and you can build that customer confidence,” says Jey Sivapalan, whose 1 Stop Convenience (Go Local) in Derby stocks PMPs whenever they are available across any category.

“It builds customer loyalty and customer happiness, especially now when price is a key factor. We stock PMPs in groceries, soft drinks, alcohol – anything we carry is price-marked if we can get it.”

A s well as helping to drive customer footfall and loyalty, Sivapalan has also found that PMPs are good growers of overall basket spend, with the highly visible price