The rise of price-marking has transformed the convenience trading landscape – but several years on, this promotional tactic is still provoking concern among some retailers. Price-marked packs (PMPs) have become the driving force of sales in key impulse categories such as soft drinks, snacks and confectionery. They satisfy the needs of suppliers and some shoppers – but are convenience retailers ultimately paying the price for this long-term approach?
A growing number of convenience retailers have adopted price-marking (although it is difficult to avoid stocking PMPs in some categories) and seen it work. A strong argument for PMPs (largely from suppliers) is that they help improve an outlet’s value offering and overcome the common perception that impulse stores are expensive. Some retailers appreciate them simply because they do away with the time-consuming process of pricing-up.
Bottom line
The impact of PMPs is evident from figures released by HIM Research & Consulting. It shows 83% of retailers feel PMPs sell faster than non-PMPs and 59% say they are more likely to stock a new product if it is price-marked. In addition, 33% of shoppers believe PMPs are cheaper.
Despite these benefits, the true cost of PMPs remains in doubt. The Retail Data Partnership concludes that “despite increased sales volume, PMP products might be contributing much less to the bottom line for retailers” (see panel). Not all retailers are convinced that PMPs are good for business and argue that multiple retailers and discounters never use them. But with PMPs established over many years, it will be very hard to wean shoppers off them should the tactic ever fall out of favour.
PMPs have made their biggest impact in soft drinks, where all the major suppliers use them and the majority of leading brands now offer them. However, their influence has now spread far and wide across many categories and it takes a brave retailer to ignore them!
Scott Meredith, UK sales director at Lucozade Ribena Suntory, says: “PMPs are incredibly important when it comes to demonstrating value to soft drinks shoppers. Retailers should stock up on price-marked formats of the most popular impulse brands to drive sales in this profitable category. We know price-marked soft drinks have a faster rate-of-sale than non-PMP products and this rate-of-sale has increased in the past year.
Value image
“What’s more, stocking PMPs could be beneficial for sales elsewhere in-store. We know that 76% of convenience shoppers think PMPs improve a store’s overall price image, showing shoppers they’re getting the best value around. Providing a visibly low price on products across various categories will certainly encourage shoppers to spend more in-store and keep them coming back.”
Rich Fisher, category development manager at Red Bull UK, says: “Price-marked soft drinks are delivering 26% more value than plain packs and driving growth by 6%, so are vital for retailers. PMPs provide customer confidence in brands and help to increase basket spend, with 44% of shoppers more likely to buy a product if a PMP is visible. PMPs continue to play a strong role in convenience outlets by delivering a greater perception of value to consumers, with 76% of shoppers saying PMPs help a convenience store’s price image, and 38% of shoppers agree that PMPs reassure them they are not being overcharged.”
Impulse purchases
Ed Jones, senior customer marketing manager at drinks supplier Nichols, says: “Value is extremely important to consumers nowadays. They are looking for transparency and confidence that the products they are purchasing aren’t overpriced. PMPs also make shopping easier for the consumer, as they are clearly marked, which in turn drives quicker purchase decisions. While retailers need to keep an eye on their profit margins, the allure of PMPs will help to increase impulse purchase, encourage repeat custom and ultimately drive stock through more quickly.” The company’s new flavour for its Levi Roots range, Exotic Kick, was developed exclusively for the convenience sector and is now available in a 500ml PET £1 PMP.
Price comparison
Barr Soft Drinks also has an extensive price-marked range, including Irn-Bru, Rubicon, KA, Barr and Rockstar. “With the growing emphasis on price comparison, shoppers have become savvier than ever when it comes to cost, with price-marking providing a simple and visible way of demonstrating value,” says Adrian Troy, the company’s marketing director. “It’s important to understand that the value shoppers are seeking is not just about cost. Shoppers want low prices without compromising on taste, with value, choice and convenience remaining fundamental to decision-making.”
Matt Collins, sales director for convenience, wholesale, discounters and foodservice at KP Snacks, says: “Crisps and snacks remain a vital category in convenience, with 82% of shoppers buying them on impulse. Our £1 PMP ranges are growing at 24% compared with non-PMP formats, which are declining. We’re seeing the demand for PMP formats remaining strong, as they provide shoppers with much-needed value from the bigger eat they are looking for and offset any potential price perceptions. And while we continue to increase our range of PMPs, we also continue to offer a comprehensive range of non-PMP to give retailers choice.
Complementary products
“Our £1 PMP range is out-performing the category, with growth of 32%, and this success can be attributed to the strength of our brands as well as the right format. Our 39p PMP singles range is also growing ahead of the market.”
“Tea shoppers typically spend more time in store than other buyers and are most likely to add food items to their basket to have with tea, like bread items, pastries and biscuits,” says Brett Grimshaw, business sector controller for convenience and out-of-home at Tetley. “Price-marking’s ability to encourage purchase can have knock-on effects, encouraging shoppers to add these and other complementary products to their basket.
“Despite the clear benefits of PMPs, it is important they are used carefully and considered as part of a wider mix of activity. It’s about getting the balance right between offering the right price-mark to encourage higher volume sales of essential products like everyday black tea, and leaving space for higher-value teas like fruit and herbals and green, which deliver greater margin sales and don’t necessarily need to be sold in PMPs.”
Jen Draper, head of marketing at drinks company Global Brands, says: “PMPs are one of the most common sights in convenience stores. Brands from all over the retail landscape choose to offer them as a way to grab consumers’ attention. Consumers are used to seeing price-marked goods in stores and often like the idea of buying packs that have a set price. Convenience shoppers think PMPs offer better value than supermarket equivalents, so PMPs are seen as the epitome of value, offering peace of mind for consumers. As PMPs are a familiar sight in independent stores, and not in multiple grocers, they often draw in consumers by offering perceived better value than supermarkets. We have a number of our core products in a PMP format.”
Top sellers
Kepak Convenience Foods recognises the importance of PMPs and offers its top-selling SKUs of Rustlers with a stickered price of £2. “Price-sensitive shoppers are looking for value, so they are reassured when they see market-leading brands in PMPs,” says Angela Daulby, UK group sales director. “We understand PMPs have a key role to play, and that’s why our PMPs are available at accessible price-points that help to attract new customers and encourage repeat purchase.” The company launched Rustlers All Day Breakfast Sausage Muffin (price-marked at £1.50) in April.
Gary Routledge, Quorn Foods’ national account manager, says: “We’ve launched a core price-marked range to make meat reduction really easy for consumers by providing tasty ways to make meat-free versions of their favourite meals. Our focus on family SKUs has played a significant role in the brand’s growth. This is really good news for the convenience channel, particularly those who have been quick to recognise the rapid growth in shopper demand for frozen meat-free products.
“Price-sensitive shoppers are always looking for value for money. Coupled with the rise in consumers reducing meat consumption, this enables retailers to take advantage when stocking Quorn’s price-marked range.”
Purchase intent
Other suppliers are also expanding their PMP ranges. Mars Wrigley Confectionery has launched 46-pellet bottles of Extra sugar-free gum price-marked at £2 across its best-selling flavours, peppermint and spearmint. “The bottle format continues to tap into the growing demand for keeping teeth clean and breath fresh after snacking on-the-go,” says Dan Newell, confections marketing manager. “For retailers, the launch of the PMP bottle will help to improve rate-of-sale, as purchase intent in the gum category has been shown to significantly decline when priced above £2.”
Mark Roberts, trade marketing manager at Perfetti Van Melle, says: “PMPs are extremely important to the confectionery category and are an offering retailers cannot afford to forget. Not only do they increase impulse sales, they instil confidence in shoppers when purchasing sweet treats. Retailers need to have a solid offering of PMP confectionery products, siting them in key locations around their store to guarantee they are capitalising on sale opportunities.
Solid offering
“PMPs allow people to feel comfortable with their purchase and recognise they are receiving the best value for their money. Retailers need to have a solid offering of PMP confectionery products, siting them in key locations around their store to guarantee they are capitalising on sale opportunities. Our Smint £1 PMP is likely to draw attention when displayed by coffee machines or by bottled water for those shoppers looking for refreshment.”
Yazoo has recently added a new flavour, Choc Mint, which is now available as a £1 PMP for a 400ml pack and was chosen after consumers voted for the flavour they would most like to try. Wayne Thompson, customer marketing manager, says: “PMPs are an essential part of the Yazoo range, and the formats available are some of our best-selling products. Following the success of the permanent 400ml range, we launched one-litre PMPs to tap into a new market of flavoured milk drinkers. Part of our strategy for growth is through our PMP formats and our £1 400ml PMP bottles are one of our best-selling SKUs. Last year, we introduced price-marked one-litre bottles to target consumers who enjoy sharing their flavoured milk and we have found these work best when sited alongside other milk products.”
Absolute transparency
Another supplier putting more faith in PMPs is Mars Ice Cream, which has introduced tubs of Mars and Snickers in the convenience channel both featuring a £3 price sticker. Michelle Frost, general manager at Mars Chocolate Drinks & Treats, says: “We are aware that price is a decision for the majority of shoppers, so introducing our ice-cream tubs in a PMP offers absolute transparency and price clarity.”
Burton’s Biscuit Company claims to have been one of the first to feature price-marking and still uses the tactic on brands including Jammie Dodgers, Wagon Wheels and Maryland Choc Chip. Mandy Bobrowski, the company’s UK and Ireland marketing director, says: “Biscuit shoppers are impulsive, so utilising PMPs to drive impulse purchases is a great way to boost profits.”
By Martin Geary
