Communicating value to your shoppers with price-marked packs, while keeping your margins sustainable is a tough balance to strike. Nikki Allen looks at how to find the middle ground that works for your store
Why stock PMPs?
There are clear advantages to stocking price-marked packs (PMPs). Nearly half of shoppers are more likely to buy a product if a PMP is visible, while 83% of retailers say PMPs sell faster than equivalent non-price-marked packs.
“More than two thirds of consumers buy PMPs in convenience stores,” says Dan Newell, confections marketing manager at Mars Wrigley. “As well as offering good value, they help retailers build a sense of confidence and trust with shoppers,” he says.
“PMPs offer a number of advantages for cash-conscious shoppers and retailers alike,” agrees Susan Nash, trade communications manager at Mondelez International. For shoppers, they offer reassurance that they’re not being overcharged, while for retailers, speed of sales and convenience make them a good option.
The positive impact of PMPs has boosted business for retailer Amit Patel of Belvedere News, Food and Wine in Kent. He says he tries to stock as many PMPs as possible. “Everything is driven by value for shoppers now, so we try to stock PMPs in as many sectors as we can,” he explains.
“The market for PMPs remains hugely important, with many shoppers looking to them as a source of value,” adds Mandy Bobrowski, marketing director at Burton’s Biscuit Company. In the impulsive biscuit category in particular, she adds, they are especially helpful for driving sales.
PMPs are effective at driving sales in impulse categories, including confectionery, crisps and snacks, and soft drinks. “Price-marked soft drinks are delivering 26% more value than non-price-marked packs and driving growth by 6%,” says Rich Fisher, category development manager at Red Bull.
Three ways to sell
1. Create a secondary site
“Introducing a secondary display in a high-traffic area can be really effective for driving sales as it will improve visibility,” says Mondelez’s Susan Nash.
2. Get creative with eye-catching inspiration
Create theatre around your store with posters and recipe cards showcasing products that are great value – or use them to encourage shoppers to trade up.
3. Make PMPs visible
Highlight the value you offer to shoppers as soon as they enter your store by making PMPs one of the first things they see.
Perry Sanu, Costcutter Silvertown, London
“It’s important to get the right balance between showing we offer value and keeping good enough margins, so I stock a mix of PMPs and non-price-marked lines.
PMPs definitely help communicate value to customers and I think it’s good for us to have the option of stocking them.
“As the multiples don’t usually have them, it gives us a point of difference over them, too. But I only stock them if the margin is good enough, as that’s the only time they’re really worth having.”
How to promote value
When it comes to communicating good value in your store, PMPs are a clear win for independents. More than 75% of shoppers say PMPs help a convenience store’s price image, while 38% agree PMPs reassure them that they’re not being overcharged.
“PMPs give shoppers confidence in a store’s pricing, and they are often perceived by shoppers as a promotion in their own right,” says Helen Boulter, channel controller at Taylors of Harrogate. Stocking the same brands as supermarkets, along with PMPs, can help independents compete, she advises. The company recently launched a £1.89 PMP for its Yorkshire Tea Decaf.
Making sure the PMP is set at a price that denotes this good value to shoppers, without hugely impacting on retailers’ profits at the same time, is something more suppliers are taking note of. Some are adjusting the prices of their PMP products, like P&G for its household brand Flash, to try and reach a happy medium.
While there are advantages of running PMPs, there are certain factors to consider.
Susan Nash, trade communications manager at Mondelez International, says these include product format, category, unit price, customer profile, seasonality, frequency of purchase and
“PMPs are a type of promotion, so retailers should be advised to consider how much of their stock they want to be perceived as ‘on promotion’,” she explains.
Allison Deluca, Dairy Crest customer marketing manager, says that speed and ease are important factors driving shoppers to choose convenience stores over other formats.
To capitalise on this, retailers should ensure that they adopt the best merchandising principles. This includes stocking a core range of bestsellers, remembering that the top 20% of lines make up 80% of category sales.
“With product quality and brand familiarity driving selection for almost half of post-millennial shoppers and 40% of older shoppers, stock well-known brands to instil consumer confidence and drive conversion,” Deluca adds.
Adam Dipoti, Todmorden News Centre, West Yorkshire
“There’s without a doubt advantages to stocking PMPs. We make less profit with this sales method, but on the other hand there’s a quicker turnover.
“However, we have also seen disadvantages to PMPs within soft drinks with two-for-£1.50 deals, where we could have driven higher spend. Some categories like chocolate have been very good for us. Taking Cadbury for example, we have definitely seen a rise in sale when they promote PMPs.”
Getting the right balance
For Iqbal Sadiq of Spar in Glasgow, lower margins from PMPs are a price he’s willing to pay for an uplift in sales volumes.
“In general, I don’t mind the lower margin – if they mean I can shift more of a product, then it’s worth it,” he explains
But for many retailers, filling their stores with PMPs is unsustainable – especially as inflation continues to rise. Inflation rose by more than 3% according the most recent ONS figures.
Amy Fisher, Dairy Crest marketing controller, says you can strike a balance by knowing your shoppers. “It’s important retailers use their knowledge of their local customers to determine the appropriate blend of PMP and non-price-marked lines,” she says.
“For example, in more affluent areas where customer demand can support a convenience premium, PMPs may not always be appropriate.”
Mondelez’ Susan Nash says: “It can be confusing to have PMPs where retailers are offering promotions, such as meal deals, so check the PMP price doesn’t undermine another promotion in store, confuse or, even worse, mislead the consumer,” she urges.
And for those stores who may struggle with the lower margin that PMP lines may bring, suppliers suggest boosting sales of non-PMP lines with effective displays and merchandising.
“There are plenty of opportunities for convenience stores to trade their shoppers up and increase basket-spend,” says Shah Khan, marketing manager at Aviko.
“Linked deals will encourage shoppers to buy complete meals and spend that bit more, while stocking exclusive brands like Aviko which aren’t widely available in multiples will encourage shoppers to try something new and special.”
By offering a range of premium lines and bestselling brands at great value in each category, you can make sure that your store continues to drive footfall.
1. Make sure PMPs are merchandised in the relevant category fixture, following the recommended planogram for the category.
2. Ensure that PMPs do not undermine any cross-promotions, such as meal deals
3. Use PoS to highlight your best offers throughout your store
4. Use your EPoS to monitor PMPs closely to measure the success of specific lines
5. Compare your prices to the local competition to make sure that you are offering good value on popular brands