Guest column: PMP strategy must be addressed

Urging brand owners to take note, John Kinney, managing director of Unitas Wholesale, shares his concerns about the future of price-marked packs in the independent sector

Price-marked packs (PMPs) remain a serious point of contention right across the independent retail channel. While consumers welcome them for their promotional appeal and the perception of price transparency, the question has to be asked: are PMPs still beneficial for independent retailers and wholesalers as they struggle with rising cost pressures?

During 2025, retailers and wholesalers will be facing more challenges, not least increasing national insurance contributions and the national living wage, both of which are permanent increases to base operating costs.

DILEMMA

As PMP margins grow increasingly unviable in many areas, we are hearing requests from retailers and wholesalers for suppliers to reconsider their straight pack strategy for convenience. To achieve a reasonable retail margin, selling prices would need to rise, which is not feasible with a PMP structure. However this, of course, poses a dilemma. PMPs were originally introduced to allow brand owners the opportunity to maintain control over pricing, preventing excessive mark-ups and ensuring price alignment with their brand strategies. As we all know, pricing and brand identity are inextricably linked and losing control over how products are priced could jeopardise a brand’s all-important market position. Therefore, for retail pricing to align with brand plans most effectively, PMPs are essential.

During 2024, we saw many retailers pivot towards straight pack, a shift which presents challenge. Wholesalers cannot stock both pack variants for every SKU and there may not be an appropriately sized alternative product in the right case size. Moreover, unattractive packaging, such as plain brown boxes, that may be suitable for supermarkets simply do not appeal in a traditional cash and carry environment. Plus, beyond practicality and logistics, there lies a greater risk: undermining consumer trust. If the independent retail sector returns to inappropriate pricing, customers will seek out alternative outlets, with competitors more accessible than ever.

RESPONSIBILITY

The convenience channel has flourished in recent years because it evolved into a truly convenient option, meeting local customers’ needs with range, availability, quality and value. However, fierce competition from supermarkets, discounters, petrol station forecourts, dark stores and direct-to-store providers has intensified, leaving independent retailers to battle valiantly for market share while facing the challenge of limited control over a critical element – pricing – at a time when costs appear to be escalating.

So where does the responsibility for this lie? It has to lie with brand owners. They must revisit their PMP margin strategies to regain retailer support, maintain influence over consumer price points and prevent the market from shifting entirely to straight packs. If straight packs become the norm, brand owners may need to develop configurations that better suit the independent channel, such as smaller pack sizes in depot-friendly packaging, which will add cost to their operations.

The better independent retailer outlets do not rely solely on PMPs to build customer trust. They use promotions, maintain modern and clean shopping environments, offer fresh food, wide ranges and truly excellent service. These stores are often better positioned to set their prices in line with customer expectation and in doing so, maintain stronger margins. However, a significant number of stores lack the resources or serve the correct demographic to make this approach viable. These stores still handle a substantial volume of business and they cannot be ignored. Supporting them with appropriate shared margins on PMPs is critical to these retailers’ survival.

If margin issues remain unresolved, it may spell the end of support for PMPs from retailers. For brand owners who value the independent retail channel as a profitable route to market, I urge you to take note and to take urgent action. Addressing this challenge now could preserve these relationships and maintain the channel’s viability in the long term.

convenience customers guest column John Kinney price-marked packs retailers Unitas Wholesale