At Asian Trader we have been blowing the trumpet for PMPs for a long while. Not only are they a very timely way to merchandise products as inflation rages on and household budgets tighten, but they are also a specifically convenience channel tool that gives independents an edge to compete with the multiples – not only on price, but on convenience, choice and impulse.
It was noticeable last year that the traditional PMP price points – £1 being typical in snacks, for example – were under stress, and the decision of some producers to maintain pack size while increasing the price point to £1.15 was observed very closely.
As it was, consumers seemed happy with or at least understanding of the price rise, which was inevitable. Paradoxically, the open and signposted increase in prices for some PMPs communicated most strongly an ongoing element of trust between retailer and consumer. Many products in big stores had crept up in price by a sneaky 50 per cent or more, but such gouging had gone unannounced. Under those circumstances, a price-point rise in a PMP that announced it in bold, so to speak, was by far preferable.
“With the cost-of-living crisis forcing consumers to be even more savvy when shopping, offering value and delivering a strong, engaging message that provides shoppers with ‘value-confidence’ is more important than ever,” says Courtney Lewis, Customer Director for independent, convenience and wholesale at Premier Foods.
The shopper understands real world conditions and does not expect to be treated like an infant and lied to, and in that respect, a rise in the price of a PMP is preferable to another strategy followed by some suppliers, where the pack size is reduced instead of the RRP increased – shrinkflation, in other words.
“It seems in general the consumer would rather pay a bit more for the same size product – we suspect that consumers have noticed decreasing pack sizes for some time to the point that many products are now disappointing them because they contain so much less than in the past,” noted Sarah Coleman, Director of Communications at TWC. “There is an acceptance that prices are rising across the board and therefore now is a good time to raise prices – within reason.”
TWC’s Tom Fender believes that PMPs can even be the convenience equivalent of the supermarket chains’ clubcard, saying that trusted price mark can drive equivalent loyalty and footfall – so long as the retailer and wholesaler margin is maintained.
A TWC survey revealed that 80 per cent of independent retailers “are stocking PMPs in most major categories in their stores, and 85 per cent think that PMPs demonstrate good value for money. More than half said that PMPs allow them to compete on price with other stores, suggesting that a well-placed price mark can match the appeal of the ClubCard discount of nearby rivals such as Tesco Express,” he revealed,
Fender added that up to 80 per cent of the retailers surveyed said their customers would still buy PMPs if the price increased, indicating that the reassurance of the price mark is just as important than the price itself.
Importantly, he added that the largest section of consumer respondents would prefer to retain the same pack size and take a price increase. “Just 23 per cent wanted a pack size reduction to maintain the same price point.” That appears to be definitive confirmation that shrinkflation is not what shoppers want.