Unit Pricing in Supermarkets: Review of Past Evidence from Academic and Industry Studies

Abstract

This document was prepared to inform the work of the International Standards Organisation’s Committee ISP/PC 294 developing a guidance standard for unit pricing. Unit price (from now on UP) is the price per a standardised unit of measure presented to consumers at a point of sale (such as on a supermarket shelf). The document reviews existing studies conducted by academic and other organisations on UP, and summarises current legislative practices in different countries. Key recommendations for the development of a Unit Price guidance standard: Part 1 – Addressing awareness, barriers and benefits consumer awareness and usage of UP: Consumers demonstrated higher levels of UP awareness and usage in more recent studies (compared to those conducted in 70s/80s). This may be due to the longer presence of UP labels on the shelves. However, the level of UP usage varies considerably between studies with a lot of room for growth. We recommend a two-part approach conducted simultaneously: 1) Consistent, prominent and legible provision of UP across retailers (to ease consumer learning process by multiple exposures to UP); combined with, 2) Mass communication program aimed to educate consumers on UP application in typical buying situations. A particular effort should be made to target low socioeconomic groups and younger consumers – both groups are the least likely to currently use UP, but are the most likely to benefit greatly from it. Benefits of UP: Research studies identified numerous benefits of UP including: • The ability to save money on groceries (by switching to cheaper alternatives); • Improved accuracy, speed and ease of decision-making; and • Better price recall, facilitating more well-informed decisions. We recommend that UP education campaigns use the above benefits of UP, as these have been shown to be valuable outcomes for consumers. Barriers to UP adoption: Past research has pointed out a number of problems that could reduce UP usage by consumers, and its diligent provision by retailers. Issues with consumer (un)awareness or lack of understanding, and poor perceptions, could be addressed by changing consumer perceptions through education programs. Barriers to retail provision (such as cost of implementation, or lack of guidance on how best to do it) would require the systematic support and monitoring from the Government, for example, through subsidising the cost of UP installation for small retailers and consistent effort on further clarification of established UP principles – the aim of the best practice guidance standard. To overcome the above-mentioned barriers, the UP information should be: • Presented at a point of sale in a consistent, prominent and legible manner across all retailers. This could be achieved with a unified best practice guide, and, potentially mandated provision and presentation guidelines; • Visual presentation of the UP should require very limited cognitive effort from consumers – it should be intuitively easy to use; • The UP information should be clearly marked as being different from the main selling price – to avoid any potential confusion among consumers; • The UP presentation should incorporate best practice on labeling and information processing, including the use of font type, size, height, color, verbal signposting (words “unit price”), and consistent and prominent position on price label clearly delineated from the main selling price. Part 2 – Specific recommendations regarding provision of UP Consistency of UP provision: • From consumer learning and adoption perspectives, the more retailers consistently provide UP information (in terms of display, units of measure used and products covered) the easier it is for consumers to learn and adopt UP. Consistency of provision is also likely to facilitate consumer education and reduce the time of adoption. • Mandatory UP schemes should be accompanied by requirements designed to achieve high levels of consistency in UP provision within and between retailers. • High levels of provision consistency when provision is voluntary are likely to be facilitated by the availability of best practice guides. These could also make it easier for retailers to voluntarily adopt UP provision, especially small and medium retailers who may not have special staff to make decisions about how UP should be provided. Visual presentation of UP - The following elements of the UP presentation influence how easily consumers can locate, attend to and use the UP information: • Font height (larger) is shown to facilitate ease of UP use. However, care should be taken not to create a confusion with the selling price; color highlight, empty space or dividers on price labels could also be used to separate the UP information from the rest of the price label thus creating a dedicated space for UP; • Positioning of the UP information in a prominent location on a price label could improve its use. Better locations are next to the main selling price because this is the most important part of the price label and consumers will naturally look in that area (as opposed to parts of the label where bar code or technical information is displayed); • Color (yellow or orange) is a good way to increase consumer attention to UP information, although potential cost implications for retailers have to be considered; • Showing the words “unit price” could be useful in some situations; care should be taken not to overload the price label and the area devoted to UP with too much “noise” – careful layout and font choices are important; • To reiterate the point of the previous section, consistency in visual presentation of the UP information across multiple retailers. If different retailers use different layouts, this will make it harder for consumers (who naturally shop across different stores) to find and use the UP.