Retailers – and a manufacturer - on the enduring power of PMPs

Pricemarked packs (PMPs) can been seen in stores up and down the country, and the received wisdom would have you believe them to be a godsend for the convenience sector, offering a signpost that shoppers will get the best prices.

On the back of Pepsico’s channel exclusive Dinamita crisps, which come in a £1.25 PMP, Convenience Store heard from several retailers as well as supplier Pepsico to get the inside scoop on this packaging phenomenon….

Ian Lewis (right), director at the Spar in Minster Lovell, explains that his store wouldn’t be without such lines. “Stocking PMPs is really important. The minute you stop doing that, customers just flip and supply issues sometimes will really highlight that. If you’ve got ten products that are all pricemarked, and one of them isn’t available, it really sticks out, and it might be someone’s favourite. They’ll then wonder why they’re paying £1.99 when they used to pay £1.35 or whatever it is. It baffles customers.

“Showing value to customers is key. We know shoppers are cutting down on their spending – I’ve seen it. Anything we can do now to drive sales is important.”

Atul Sodha, who runs a Londis in Middlesex, agrees. “The £1.25 price point actually does look cooler on shelf and on the whole, the chocolate bars, - when laid out uniformly - look good too. So pricemarking is a tool to lead shoppers to the fixtures. You’ve got so many different pack sizes, when you think about price, intended market, where you’re going to place the products in store, it all helps.”

Understandably, suppliers too are onboard with the concept of the PMP. Nic Storey (below left), senior sales director at Pepsico and who was a key figure in the launch of the Dinamita range, says he’s on a mission to help convenience retailers. “As manufacturers, we’ve got to support this channel,” he explains. “I like the idea of this channel having something to compete with against the main grocery channel.”

Storey says that, while he understands that for some categories at least, convenience stores will only be considered for distress purchases, for impulse buys, convenience can really compete. “This is an exciting, impulsive category, and it’s one where you don’t have to compete with the supermarkets because no one wants to wait for a delivery slot if they’re hungry.

“There’s also more promiscuity where people are more willing to try something. Sure, they’ll go for their favourite half the time, but they’re also willing to give things a go. The way we saw Dinamita was as a chance to give this this channel a leg up and make it more competitive, you’ve got something that they haven’t got.

“In fact, I think the price of PMP products is almost an irrelevance. Sure, you might condense the PMP range and open up the sharing side. But the core of your business is going to be in that PMP format and it’ll be the same for other categories as well. It’s a bit of a silver bullet. This is almost bedding it in as a sampling campaign, giving people the chance to try it. So while it’s not been our operating model up until now, we want to use this as a benchmark case study, we say actually this is how we can make it work.

“But I was nervous when we moved from £1 to £1.25. We were the first in the category. I had sleepless nights that week but actually, it’s had great impact and you can see that. When we looked at these packs, we thought, okay, how’s that going to work on shelf? But with the rest of the Extra Flamin’ Hot range - Doritos, Max and Wotsits Crunchy - all at £1.25, it feels like the right thing to have that.

“It also means it can slot in well. We’ve got our planogram in over 2,000 stores out there and that will grow. So if we can have that seamlessly go in, I think it really works. That’s not to say that every PMP should be a £1.25. We’ve looked at others. There’s a 49p range we have that works really well because you’ve got people with a lower budget. So we know there are different price points at work, and we’ll look at that in the future as well. There might be other things where we say actually a £1.99 pack is better for that pack size, or whatever.”

Finally, director at Chahal Retail, Chas Chahal (right), advises that any price rises seen in PMPs wouldn’t necessarily translate to non-PMP equivalents. “I think customers definitely notice increases in prices. One shopper told me he’d noticed how much multipacks of chocolate bars have increased. So customers do notice - but with PMPs there’s more confidence.

“If I was to put the price increase on a plain pack on the shelf edge label, customers would complain. But having the manufacturer’s price there and knowing it’s what they recommended - that gives shoppers confidence of where the market is, and no matter what we read in the press about inflation, pressures across sectors - the PMPs help to keep that shopper confidence. It’s about how we can bring value to the consumer. So a lot of the things we do in store in terms of layout may be based on our locality and the demographic.

“There’s a preconceived notion that in affluent areas people are freer with their money, but in actual fact the opposite is true. We get customers who come in and if there is a pricemarked area, and it looks good, they know it’s a good store and it offers good value. And value doesn’t necessarily have to mean cheap. But those customers recognise that they get value from this store and then they might put more in their baskets with that in mind.”