Price marked packs are one of the biggest trends to sweep through convenience retail in recent years, but to what extent do they help grow sales? Is it all about perception of value or do retailers actually generate more profits by flashing their prices on pack?
by Mia Hunt
With new research suggesting that 71% of consumers are more likely to buy price-marked packs as a result of perceived better value, PMPs have made a big impact in the convenience channel in the last couple of years and with shoppers coming to expect it in their local store, there aren’t many categories left that haven’t seen price flashes appear on packaging.
Aside from reassuring consumers of a low price guarantee, PMPs have the added benefit of allowing retailers to predict profit margins and maximise sales through increased demand. But how can retailers ensure they are protecting their margins while remaining competitive?
The importance of PMPs
UK economic conditions and changing consumer attitudes over the last few years have ensured that good value lines and promotions are here to stay; people are keen to make their money go further making value more important than ever before. Consumers are looking for transparency to make an informed decision about where to buy and what products they can trust. In convenience, this has led to the growth of price marked packs.
According to Emma Hunt, Vimto UK Marketing Controller, PMPs work particularly well on the packaging of strong and recognisable brands, providing independent retailers with a trusted mechanic to offer value-for-money.
“Value is extremely important to consumers nowadays,” she says. “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 creating real on shelf presence, which in turn drives quicker purchase decisions. And research shows that both shoppers and retailers are reassured by PMPs with most retailers more likely to stock a new product if it offered a PMP as well as a plain pack.
“Whilst retailers need to keep an eye on their profit margins, the allure of a PMP will help to increase impulse purchases, encourage repeat custom and ultimately drive stock through more quickly.”
New and upcoming PMPs and promotions
With barely a category left untouched by the demand for PMPs, we round-up some of the recent launches and some of those due to drop later in the year.
Mars has extended its PMP range – which includes Maltesers and M&M’s treat bags and Galaxy sharing blocks – to include Mars, Snickers, Twix, Bounty and Maltesers singles, all now available for an rrp of 50p. In addition, a Maltesers Teasers single will be available in the New Year.
“We’re excited to continue to grow our range of price-marked packs with the addition some of our best sellers,” says Bep Dhaliwal, Trade Communications Manager, Mars Chocolate UK. “Retailers not only see PMPs as better value for themselves and their customers, but also as a key footfall driver, attracting more shoppers to store and ultimately generating sales growth.”
To support the launch of the new PMPs, retailers will be able to choose from a range of POS and display solutions from February including standees, aisle flags and shelf barkers.
PepsiCo has been busy on the PMP front too. With the crisps, snacks and nuts segment worth £2.8bn and with sales up £31m year on year and growing faster than other impulse category, PMPs are leading the way with 57% of shoppers looking for value. In line with that trend, PepsiCo has launched price-marked singles packs to popular core ranges including Walkers standard bags, Wotsits, Quavers and Doritos at 50p.
In Scotland, Walkers has 11 out of the top 12 best-selling £1 price-marked pack lines and with sharing occasions becoming increasingly popular, £1 PMPs are growing at 18%, now owning 54% of the sharing segment.
Walkers PMP crisps sell on average 20% quicker in impulse than non-PMP variants and with the move back to 50p, PepsiCo expects that to accelerate even further. Meanwhile, the new Walkers 75p PMP Grab Bags will continue to offer retailers an incremental sales opportunity, increasing sale by 7%, and three case stackers are available to help engage with shoppers.
And for the Doritos brand, the top three best-selling £1 PMP sharing lines in Scotland are Doritos Chilli Heatwave, Doritos Tangy Cheese and Doritos Cool Original.
As for the chilled foods category – worth £3.8bn in convenience and set to grow a further £6bn by 2018 – Fresh to Store’s new ‘Favourites’ range was launched in response to retailer demand for more value offerings. The range includes 80 new products including meatballs, yoghurts, desserts and ready meals, with many price marked at £1.
And Kerry Foods has brought out a range of price-marked packs as part of its Building a Nation of Chilled Experts programme, to cater for key consumer missions in convenience: food to go, top up and meal for tonight.
Packs with the price flashes now include some of Kerry Foods’ most popular snacking lines, such as Cheestrings singles and the newly re-branded LowLow Snack Packs Caramelised Onion and Red Pepper variants.
Retailers can also offer two PMP options on Richmond – either at £1.49 or £2.29 – while the Mattessons range of Fridge Raiders and Sliced Cooked Meats both also carry on-pack flashes.
“Price-marked packs will be a key element in our Building a Nation of Chilled Experts programme to help retailers optimise their chilled offering,” says Clare Bocking, Sales Director for Convenience at Kerry Foods. “We truly believe in the future of chilled in the convenience channel and continue to share practical advice and solutions across our brands to maximise sales of chilled products.”
At Kepak, Rustlers Super 6 was launched, accelerating demand for its price-marked products by offering Rustlers top-selling SKUs all price-marked at £1.99.
The Rustlers Super 6 PMP range includes the Rustlers Quarter Pounder, the Rustlers BBQ Rib, the Rustlers Chicken Sandwich, the Rustlers Deluxe (Bacon Cheeseburger), the Rustlers Southern Fried Chicken Hot Sub and the Rustlers Hot Panini Pepperoni.
Unsurprisingly, Angela Daulby, Channel Director of Kepak Convenience Foods, highlights that products that come in priced-marked packs are likely to have even stronger appeal when backed up by national TV advertising.
The company has announced a multi-million investment to double sales in the convenience channel in the next three years, with TV advertising, major on-pack activity, NPD and a new look for the Rustlers brand.
The role of PMPs in driving trial in new products
Transparent pricing through PMPs should generate consumer confidence by demonstrating they are getting the best price, driving impulse purchases and higher sales for the retailer. But that isn’t the only benefit, as Melanie Billows Marketing Controller for Easy, points out, “PMPs can be particularly useful in encouraging trial of new products”.
Amy Burgess, Trade Communications Manager at Coca-Cola Enterprises (CCE) adds that almost half (43%) of shoppers claim they would be more likely to try a new line if it was sold with a PMP. “Our research shows that PMPs can have a direct impact on helping retailers to achieve incremental growth, with 11% of shoppers claiming that they are most influenced by PMPs when deciding on a particular product to buy in a convenience store,” she says.
When it comes to merchandising, PMPs are often used to launch new products or variants with specialist packaging and eye-drawing price point, and retailers often viewing them in the same light as promotions.
“Retailers should make sure that PMPs are easy to see, and that they are stocked in prominent places where impulse shoppers can take advantage of them,” says Mark Roberts, Trade Marketing Manager at Perfetti Van Melle. “With nearly two thirds of shoppers buying on impulse in stores, it’s essential to tap into this growing audience.”
Matt Goddard, Head of Impulse Field Sales at PepsiCo, says that to maximise on sales, retailers should stock a range of the best-selling price-marked packs – and ensure it’s a range that is right for them. If you only have space for five single lines then he recommends you stock the top five best-selling price-marked packs, and if you have room for 30 then stock the top sellers accordingly.
Research by PepsiCo shows that one in four convenience shoppers buy crisps, snacks & nuts on impulse, so retailers are encouraged to maximise on these purchases through great visibility around their store. For example, more shoppers buy single serve a snack when it is merchandised front of store with juice and sandwiches.
“Crisps and snacks shoppers only spend 20 seconds at a fixture so why not site crisps and snacks at a till point, so shoppers are able to make impulse purchases,” advises Goddard. “And by cross-merchandising with other relevant product categories, this will allow retailers to boost basket spend.”
Vimto’s Hunt agrees that PMPs are particularly successful at the till point, allowing retailers to take advantage of impulse purchases while shoppers are queuing.
“Stock PMPs of well-supported and recognised brands as the shopper will see this as a good deal and drive loyalty,” she adds. “Stock PMPs of various formats to fit all occasions, such as an RTD to drink on-the-go or a two-litre carbonate for an ‘at-home’ gathering or on the way to a party. And ensure a chilled offering of PMPs to attract customers looking to consume immediately.”