Wednesday, 23 January 2013

Consumers spend less with unit pricing

Ian Jarratt from Queensland Consumers Association, a member of CI member Consumers Federation of Australia, explains why consumer organisations need to get behind unit pricing. 

Consumers can gain major benefits when unit prices are provided and are easy to notice, read and use.

When shown in conjunction with an item’s selling price, they increase price transparency and competition.

But without pressure from consumers, retailers and governments rarely do anything to provide, or improve, unit pricing. This is why more consumer organisations should campaign for grocery retailers to provide best practice grocery unit pricing - price per standard unit of measure (per kg/litre/each, etc.) - for pre-packaged food and other grocery items.

Consumer benefits

The main benefit for consumers is that unit prices greatly facilitate many types of value comparisons including those between package sizes, brands, product types, package types, packaged/unpackaged products, and between “special offers” and regular prices.

The unit prices of the same product and of similar and substitute products often vary enormously. So, consumers can use unit prices to get much better value for money and this can result in substantially reduced total expenditure on groceries. 

For most consumers, especially the poor, food and grocery products account for a high proportion of total expenditure. Therefore, the benefits resulting from using unit price information can be significant for these and many other consumers.

Unit pricing also removes the need for shoppers to spend time calculating unit prices themselves and helps them to spot hidden price increases when, as is common, the amount in the package is reduced but the selling price is not.

Successful consumer campaigns

Here are some examples of successful consumer campaigns for the provision of, or for better, unit pricing from several parts of the world.

Provision
  • In the US more than 50 years ago, consumer organisations played a vital role in persuading many supermarkets to provide unit prices voluntarily. This was a world first and a response to a massive increase in the proportion of grocery items being sold in fixed measure packages, rather than loose from bulk, and an explosion in the number of package sizes used by manufacturers. (This retailing revolution has also occurred, or is occurring, in many other countries, including developing countries.)
  • In Europe during the last decades of the 20th Century, pressure from consumer groups resulted in the compulsory provision of unit prices, initially only in several Scandinavian countries, and then in each of the 27 member nations of the European Union.
  • In 2009, the provision of grocery unit pricing became compulsory in Australia after a long and hard-fought consumer campaign. 
Improvement

In the 1970s, consumers campaigned for, and achieved, compulsory unit pricing in several US states. 

In the UK, where provision is compulsory, a campaign for improvements, started in 2011 by the consumer watchdog Which?, has already resulted in some supermarkets voluntarily deciding to improve their systems.

The campaign also seeks changes to the content, interpretation and enforcement of the legislation.

In the US, largely due to consumer pressure, a national working group set up in 2012 is developing best practice guidelines for the voluntary provision of unit pricing by retailers.

Future needs

There is still enormous scope and a great need for more consumer organisations in all parts of the world to campaign for the provision of best practice grocery unit pricing. 

Obviously, campaigns are needed wherever unit prices are not being provided but consumers are buying significant amounts of pre-packaged grocery products.

But, campaigns are also often needed for better unit pricing even if it is being provided now. 

This is because the unit prices are not fully used by consumers due to some big problems with the system including: unit prices that are difficult for consumers to notice and/or read; unit prices not being provided for special offers, some products/brands, internet sales and in advertisements; and the use of non uniform/inconsistent units of measure.

To facilitate price transparency, it is widely accepted and adopted public policy that grocery items loose from bulk should be unit priced using standardised/uniform units of measure, such as per kg or per litre. 

This policy should also be applied to pre-packaged grocery items, the demand for which is increasing everywhere.

To do so, the unit price of these products should be provided, in addition to the selling price. This would allow consumers to easily compare prices and values between packaged products – and, importantly, to also compare products sold pre-packaged and loose from bulk.

The challenge for consumer organisations everywhere is to first recognise the need for best practice unit pricing of pre-packed grocery items, and to then start campaigning for their  provision by retailers.

Best practice unit prices:
  • Are accurate, very prominent and very legible, and located very close to the selling price;
  • Are provided: for products sold in stores and on-line, for regular and special selling prices, even if the unit price is the same as the selling price, and in advertisements showing selling prices;
  • Use the same unit of measure for a product type, whether sold in a constant or random measure pre-pack or loose from bulk, and for similar product types; and
  • Are presented uniformly/consistently between retailers.

Consumer organisations should also help increase consumer awareness of unit pricing and the many ways it can be used to get better value. This is required where retailers provide unit prices and where consumers still have to calculate unit prices themselves.

Consumer organisations wanting more information about, or with views on, grocery unit pricing can contact me at unitpricing@australiamail.com.

1 comment:

  1. It is highly essential to protect the consumers. By this, a consumer can able to avail the day to day usable products in right weight, quality, price. It will easy to transport from one place to another. The consumer organisation shall campaign to create awareness among the consumers and govt. level as well. Because unless until, the govt. will not adopt this method, the implementation of unit price can not be worked out.

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