Wholesalers need to embrace PMPs for the mutual benefit of retailers and consumers, writes Simon King
Temporary price reductions, ‘round pound’ deals and price marked packs (PMPs) are the most popular forms of promotion with convenience store shoppers, IGD Shopper Vista research has shown, with the latter helping retailers offer value reassurance to their customers and driving an improved rate of sale and price perception.
Added to that, research from the him! Omni-Channel Barometer also shows that 50% of consumers trust price-marked-packs more than plain packs.
Susan Nash, trade communications manager at Mondelez International, notes that wholesalers have a number of variables to take into consideration when it comes to PMPs, including product format, product category, unit price, customer profile, seasonality, frequency of purchase and store environment.
The rewards for getting things right makes it worthwhile – price-marked biscuits in the convenience and impulse channels are now worth £37m, with value sales up 12% year-on-year, and accounting for a third of all-year-round biscuit sales in the sector, their highest ever share.
David Costello, head of category and shopper management at Burton’s Biscuit Company, says: “As one of the first FMCG companies to introduce PMPs, we know how important they are to shopkeepers keen to offer their customers Britain’s best-loved brands at competitive prices. That’s why our PMPs are available at accessible price points that will help to attract new customers and encourage purchase from brand loyalists and impulse shoppers.”
Costello also urges wholesalers to advise retail customers on the importance of those biscuit sectors that are currently driving growth – in particular, “treatier” biscuits, which account for more than 45% of basket spend on biscuits, and savoury biscuits, which are growing seven times faster than the total savoury market.
How do PMPs fare in the Soft drinks category?
PMPs are also prevalent in the soft drinks category, where suppliers both large and small have embraced them.
Nigel Paine is GB commercial director of out of home at Britvic Soft Drinks. The company’s PMPs include 49p cans across its carbonates and fruit carbonates range, comprising the likes of Pepsi MAX, 7UP and Tango, and it also offers 99p PMPs across its bottle formats of these carbonates. He says: “Recent studies highlight that soft drinks are a key category in which consumers are more likely to make a purchase when PMPs are available. In particular, ‘single serve’ drinks benefit from clear pricemarking to attract the attention of consumers on an impulse mission.”
Rich Fisher, category development manager at Red Bull UK, notes that 44% of shoppers are 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 PMP helps a convenience store price image,” he says.
Thus, with PMPs being used more frequently as manufacturers across all categories realise their importance, there is a need to continually innovate to maintain impact and continue to deliver great value.
Adrian Troy, head of marketing at AG Barr, says the company has incorporated an additional multi-buy element with its next generation of PMPs: “This benefits retailers as it encourages additional purchase while still delivering profit, and consumers feel like they are getting even better value,” he adds.
Elsewhere, the confectionery category has seen a rise in the number of PMPs available as consumers look for value.
How are PMPs a bonus for confectionery?
Dan Newell, confections marketing manager at Wrigley, tells Better Wholesaling that the company extended its range of PMPs in July 2015 for its best-selling sugar confectionery brands Skittles and Starburst, with the introduction of four additional hanging bags with a £1 RRP price flash.
He adds: “The £1 RRP price point is a key sales driver for the convenience channel, as it provides consumers with the assurance that their purchase is good value. We have seen an increase in sales of 82% in our PMP hanging bags since the launch of our latest PMP lines.”
Mark Roberts, trade marketing manager at Mentos and Chupa Chups manufacturer Perfetti Van Melle, says: “Our independent research goes as far as to show that 80% of confectionery purchases are influenced in store, and over 30% of those are purely impulse driven.
“This gives retailers a fantastic opportunity to influence shopper spend. Pricemarked grab bags offer retailers a fantastic, compelling offering in-store.”
Matt Collins, trading controller for convenience and wholesale at KP Snacks, highlights the importance of considering location, shopper demographics and space available when it comes to PMPs. He points out that if KP is putting a price on its packs, it still makes sure that it is offering a “very competitive margin through the chain to enable everyone to operate how they need to operate.”
Such a consideration is important at a time of price deflation and increased competition from the major multiple’s c-store estate, the growth of the discounters, and Amazon entering the grocery market.
Will it affect the grocery market?
Dairy is one category that, for some time, has been experiencing price deflation, much of which has been driven by rebasing of retailer price points on block butter and a shift in promotional emphasis away from spreads and towards spreadable butter, according to Amy Fisher, Dairy Crest’s senior shopper marketing manager. She adds: “In such a price-driven environment, it has become even more important for convenience retailers to offer transparent and competitive price points to their customers.
“In April 2015, Dairy Crest revised its butters and spreads pricemarked offer to help retailers carefully manage their overall outlay and stock levels, whilst also enabling them to compete more effectively in the market, attracting shoppers who are looking for value for money on their purchases.”
Fisher says an Utterly Butterly 250g £1 PMP was launched to specifically target shoppers on the “top-up mission”.
In a similar vein, in September 2015, Dairy Crest launched a Cathedral City Selections Mini Bag PMP exclusive to the convenience channel, with a £1 pricemark.
Bel UK believes that PMP products have a key role to play in growing the cheese category, as well as helping retailers to improve the rate of sale and profit-on-return.
Chloé Féminier, Bel UK’s head of insight and planning, highlights the company’s Mini Babybel net of six original cheeses at the PMP price of £1.99.
Rustlers owner Kepak Convenience Foods tells Better Wholesaling that growing demand for PMPs provides increased sales opportunities for wholesalers as they enable retailers to meet the needs of today’s cost-conscious shoppers.
Angela Daulby, channel director at Kepak Convenience Foods, says: “Retailers recognise that today’s price-sensitive shoppers are looking for value for money and are reassured when they see market-leading, must-stock brands in pricemarked packs.”
In depot, it is important that wholesalers position PMPs in high footfall areas, as there is strong appeal for independent retailers and their customers.
Mondelez’s Nash says: “Wholesalers should make sure they have a great display in key areas to maximise impulse purchasing, as research has shown that 70% of purchasing decisions are made in store.
“Ensuring every customer notices a PMP or any promotional offer is critical because the number one reason for purchasing on impulse is incentivised by a deal or promotion. A secondary PoS display in a high-traffic area can be very effective as it will improve visibility.”
KP’s Collins adds: “The key advantages of PMPs are that they help retailers with pricing architecture but also that they give consumers confidence going into a store that the product is competitively priced.
“As a manufacturer we have to make sure that we offer it at the right margin through the chain to make sure it is worthwhile for the retailer to stock it as well. It has to be a win-win for everyone – the right margin, the right consumer proposition and the right opportunity for the retailer.”
Convenience channel shoppers are reacting to the rising cost of living by looking for market-leading products that offer good value for money and provide a treat.
Overall, PMPs are as relevant to shoppers today as they were five years ago, and have arguably become more so for retailers. Price and value remains a key driver for shoppers in today’s climate, and most convenience retailers agree that they are a useful way to re-enforce both a positive price perception, and trust in their store and their prices.