‘You can’t run a business on those margins’ – stores ditch PMPs as inflation continues to bite

Inflationary pressures are outstripping supplier ability to adjust price-marked packs (PMPs), leading to falling retail margins and stores moving to non-price-marked products.

Responding to retailer concern about falling margins on some pricemarked lines, a Nisa spokesperson revealed “in this period of significant disruption within supply chains and the pace that cost pressures are coming through the system, it has not been possible in every instance for suppliers to make these changes ahead of having to push through an increase in costs”.

Amit Puntambekar, of Ash’s Shop in Cambridgeshire, claimed he had seen, “almost a 5%-to-10% margin drop in pricemarked goods”, adding it was “no longer sustainable to stock PMPs”.

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Puntambekar said his store’s own-label line of £1 ham had decreased from 25% to 16% margin. “For a chilled product, that margin is not feasible. Now we have decided for some areas where we can’t get the margin, we are trying to replace the product with a non-PMP line,” he said. “We are making a judgement call line by line. I don’t think retailers should be accepting 15% or even 20% margin. You can’t run a business on those levels of margins. There is no point selling products and not making any profit on them.

“The best way to make a decision to move away from PMPs is to look at net profit per line and, if it is unprofitable, decide to replace it with something different, like invest in premium lines to get more net profit in that specific space of your store.”

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One Booker store owner said they had noticed on £1 Dairy Milk chocolate bars supplied by Booker the price remained the same, but the weight of the bar had decreased from 100g to 90g.

They said: “At the moment, it seems customers haven’t noticed the change in weight of the bars, but with the increase on PMPs, it is bound to go two ways: either the PMP price increases, or the weight of the product decreases, but the price remains the same.”

Trudy Davies, of Woosnam & Davies News in Llanidloes, Powys, said: “We are considering removing PMPs as costs go up and margins go down. It is about staying on top of things and keeping an eye on PMP prices.

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“Staying on top of the price increases adds to our workload because we are checking every item.”

Chocolate confectionery sharing bags looked to be one of the hardest-hit segments.

Booker was the only one of the ‘big three’ wholesalers to be listing all core price-marked lines from Mars and Mondelez at more than 20% retail margin.

Despite the pressures, suppliers continue to urge local stores to stock pricemarked goods to reassure price-conscious shoppers.

Recent research from Budweiser Brewing Group indicated two thirds of local stores continued to back PMPs.

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