Trade Matters - The great PMP debate: How can brands make a strong case for price-marked packs?

It makes perfect sense on paper.

At a time when consumer confidence in convenience prices is low – a Which? survey last year found 75% of shoppers think the price of convenience store foods is too high and two-thirds believe they’re being ‘ripped off’ – what better way for independent retailers to show they’re being honest and transparent than by stocking price-marked packs (PMPs)?

Increasingly, however, some c-store owners are questioning whether PMPs genuinely offer good value to retailers – or, indeed, to shoppers.

In recent months, we’ve seen lively debate about price-marking in the trade press (see here and here) as retailers weigh up the need to signal value to shoppers with their own need to make a profit. Concern about some PMPs being ‘shrinkflated’ – i.e. getting smaller without the on-pack price coming down – has also been voiced.

It’s a potentially tricky area for brands to navigate, so we recently assembled the Clarion Retailer Collective to explore in detail how independent retailers feel about PMPs and what they’re looking for from brands.<

First, the good news: most retailers tell us they continue to support PMPs and believe they play a crucial role in building consumer trust, especially for those operating in low-income areas. “PMP for us has always been about trust,” says Sophie Williams of Broadway Convenience Store in Edinburgh. “The customer wants to trust that you’re not ripping them off.

But in the wake of a tough Autumn Budget and with cost-of-living pressures still high, there’s no question that retailers are asking challenges questions. “Whilst we are always inclined to do a price mark,” says Sophie, “you have to start being choosy about what you stock because times are tough.”

Avtar ‘Sid’ Sidhu of St John’s Budgens in Kenilworth agrees. “We have to be very strategic in how we balance our needs for the business and good value for the consumer,” he says.

So, what are retailers’ key messages for brands on PMPs? And how can brands build excitement and retailer support for their price-marked lines in the current climate?

Taking concerns about margin seriously

The most common complaint about PMPs comes down to this: retailers feel they’re not making enough money on them.

“Some of these PMPs are good value for the shopper, but they’re not delivering any value back to us because the margins are so low,” Costcutter retailer Paul Cheema tells us. “The retailer needs a minimum 25% margin. If the margin isn’t there, we’re now looking to delist that product and go back to plain pack. I think that’s an important message for brands.”

Ricky Sharma of the Thrifty’s chain in the North West raises a similar point. “We’ve always been led by price-marking because we’re in a low-income area,” he says, “but you have to be making the margin, otherwise you’re just a busy fool. The rates of sale for us are always better when it’s price-marked, but we’ve got to make some money out of it as well.”

Brands will, of course, have their own pricing strategies and may not want (or be able) to offer higher margins, but there is much to be gained from having an open and honest dialogue with retailers.

This is especially true as independents tell us they often feel brands simply don’t understand the pressures they’re under, and don’t take their concerns seriously.

“I don’t think they really understand convenience and what a convenience retailer needs to do to operate their store today,” says Paul. “There’s a big disconnect there. 2025 is going to be a very challenging year for retailers and brands have to start realising that.”

Acknowledging retailer needs, building channel-specific expertise, working in partnership with retailers and taking the time to explain the rationale behind pricing decisions can help create more constructive relationships – and ultimately unlock more support for PMPs.

Demonstrating the importance of PMPs to your category

When it comes to PMPs, category really matters.

Retailers tell us they are more likely to support PMPs in price-sensitive categories where they know price-marking makes a big difference to consumer choices. “Impulse is always key for PMPs,” says Ricky. “In household, toiletries and categories like that it’s a bit less important.”

However, brand communication on PMP does not always drill down to category level.

Instead, brands often focus on general arguments in favour of price-marking, such as building trust with shoppers and increasing transparency. Such observations are perfectly valid, but they are already well understood by most retailers.

Brands can make a bigger difference by demonstrating how PMPs drive value in their specific category and for their specific products. “Insight and industry data to qualify increased cash profit benefits for retailers to stock the PMP over non-PMP” are key, says Sid.

Where relevant, commissioning shopper surveys to explore attitudes to PMPs in relation to a particular category can further boost retailer engagement and secure greater share of voice in the trade press.

Supporting PMP launches to maximise distribution and retailer engagement

In a busy market, retailers say they are overwhelmed with NPD news and brands trying to get them to list new products, including new PMPs. But right now some independents are, in fact, looking to trim their ranges.

“We’re evaluating our space now after the Budget,” Paul tells us. “We’re really looking at which brands we’re going to keep. We’re paying a lot of attention to PMP packs because some of these PMPs are good value for the shopper, but they’re not delivering any value back to us because the margins are so low. If the margin isn’t there, we’re looking to delist that product and going back to plain pack. I think that’s an important message for brands.”

Brands that want to stand out and secure shelf space in this tough climate need to launch PMPs in the right way and offer retailers the right level of investment and support.

For Sid, this includes “clear, large and bold PMP pricing” and an approach that markets PMPs as an EDLP promotional price point. He would also like to see the non-PMP pricing struck through next to the PMP pricing “to drive home the value proposition and credentials” of a new line.

Other assets that can help support a PMP launch into convenience retail include free cases and kit for customer sampling, branded shelf edge labels (SELs), transfer vinyls, floor graphics and launch-specific digital assets, Sid suggests.

Sue Nithyanandan of Costcutter in Epsom also stresses the importance of high-quality branded assets. She tells us a recent PMP launch went down very well with her customers after she put it on Facebook and also used the brand’s point-of-sale (POS) materials.

Exclusivity and attractive promotional mechanics are also key for a successful launch. Sid highlights multibuy PMP mechanics to drive volume and value and also stresses the importance of being first-to-market and having an exclusivity period or exclusive variants for the convenience channel.

Crucially, the price-marking needs to make sense when compared to prices in other channels, suggests Sue. For a recent launch, she notes that “the multiples were selling them cheaper than our PMP”, adding “it’s a very strange marketplace at the moment”.

In the end, retailers say it all comes back to how serious brands are about working with independents. Retailers will support PMPs that deliver tangible value for the shopper and their own business – and they’ll support brands that show they’re committed to the convenience channel and want to work in partnership with retailers.

As Paul puts it: “Convenience is so important and some of these brands still focus only on the grocers. The support that’s happening in the grocers, they’ve got to give it to convenience. If a brand isn’t supporting us, we’ve got lots of alternatives.”

Is your brand ready to launch a PMP in the convenience sector? Let's make it happen! Get in touch with the Clarion trade team here at [email protected]