Suppliers are improving the shared margin on price-marked (PMPs) in convenience stores following pressure from wholesalers, but senior industry sources warned that there is still more to be done.
In 2022, a number of wholesalers boycotted PMP products from certain suppliers, who increased the wholesale price of some lines without adjusting the PMP accordingly.
However, several senior industry sources confirmed to Better Retailing that some brands had buckled to pressure from wholesalers and had made improvements. One source said: “It is getting better. Suppliers are listening and seeing the importance of the independent supply chain. We’re seeing improvements of about 2-3%. More still needs to be done, but it’s a step in the right direction.”
Another source added that the change was due to wholesalers continually stressing the issue to suppliers. They said: “We have pushed back hard on suppliers. If we don’t get an improvement, we will be prepared to divert more focus into standard packs, but this comes with the risk to volume, so we also need to be confident it’s the right decision.
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“Generally suppliers understand the inflationary costs of doing business, but the good ones are supporting this channel. They recognise that wholesalers and convenience retailers are more brand focused compared to the supermarkets, who are becoming even more focused on own label in their attempts to compete with discounters.”
Despite the improvement, the source said that there were some suppliers who were still failing to prevent a squeeze on shared margin.
Another senior figure added that the improvement in margin came at the expense of promotions available. They told Better Retailing: “One of our next major gripes is that the number of promotions available to wholesale and retailers has halved. Suppliers are blaming an increase in their costs for this.”
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