'Trusted PMPs in C-store can match appeal of ClubCard discount'

Trusted price mark can drive equivalent loyalty and footfall- as long as the retailer and wholesaler margin is maintained, states a new report by TWC and FWD suggesting that price marked packs are convenience stores’ answer to the supermarket's ClubCard.

The survey of independent retailers reveals that 80 per cent 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.

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 more important than the price itself. However, there was a difference of opinion on how to pass on the price increase, with 49 per cent saying they would prefer the pack size to be reduced to keep the price point, and 45 per cent saying their customers would be prepared to pay more for the same pack.

Consumers were less divided on this, with the largest proportion of those asked (42 per cent of respondents) saying they 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.

The crucial factor here is the shared margin for wholesalers and retailers. The survey found that in just 4 per cent of cases the margin has fallen in the year to July 2022, and in fact on almost a quarter (23 per cent) of Price Marked Packs the margin had risen to compensate for the increased costs of doing business.

Tom Fender, Development Director at TWC said: “The key challenge the sector faces is to balance being competitive with being sustainable, and that there needs to sufficient margin to achieve this without pushing the price too high.

“The solution is for wholesalers, retailers and suppliers to work together on driving effective deep cut promotions on high volume or KVI lines to drive footfall and trial, and ensure that our channel competes against the strong promotions Tesco is running via ClubCard.

“What we are finding is that independent retailers believe that the price mark is the promotional tool to do that.”

Margin Assessment, Price Marked Packs, Shrinkflation and Indie Retailers’ Competitive Set was commissioned by FWD and carried out by TWC. The findings were presented to FWD members

Trusted price mark can drive equivalent loyalty and footfall- as long as the retailer and wholesaler margin is maintained, states a new report by TWC and FWD suggesting that price marked packs are convenience stores’ answer to the supermarket’s ClubCard.

The survey of independent retailers reveals that 80 per cent 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.

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 more important than the price itself. However there was a difference of opinion on how to pass on the price increase, with 49 per cent saying they would prefer the pack size to be reduced to keep the price point, and 45 per cent saying their customers would be prepared to pay more for the same pack.

Consumers were less divided on this, with the largest proportion of those asked (42 per cent of respondents) saying they 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.

The crucial factor here is the shared margin for wholesalers and retailers. The survey found that in just 4 per cent of cases the margin has fallen in the year to July 2022, and in fact on almost a quarter (23 per cent) of Price Marked Packs the margin had risen to compensate for the increased costs of doing business.

Tom Fender, Development Director at TWC said: “The key challenge the sector faces is to balance being competitive with being sustainable, and that there needs to sufficient margin to achieve this without pushing the price too high.

“The solution is for wholesalers, retailers and suppliers to work together on driving effective deep cut promotions on high volume or KVI lines to drive footfall and trial, and ensure that our channel competes against the strong promotions Tesco is running via ClubCard.

“What we are finding is that independent retailers believe that the price mark is the promotional tool to do that.”

Margin Assessment, Price Marked Packs, Shrinkflation and Indie Retailers’ Competitive Set was commissioned by FWD and carried out by TWC. The findings were presented to FWD members the association’s Business Lunch in February. It can be downloaded here.

the association’s Business Lunch in February. It can be downloaded here.