On 21 October 2024, significant changes to the Price Marking Order 2004 (PMO) were made by enacting the Price Marking (Amendment) Order (SI 2024/1055). These amendments aim to enhance transparency and clarity in how businesses display prices to consumers, particularly in the groceries sector.
Key Highlights
- Exclusion of Deposits: Deposits are now excluded from the definitions of “selling price” and “unit price.”
- Legibility Requirements: Price indications, including selling price, unit price, commission, conversion rate or VAT changes must be displayed in a clear and reasonably sized font.
- Multiple Pricing: Traders offering products at different prices (e.g., standard vs. loyalty scheme prices) must display all prices and the conditions for each.
- Reduced Prices: Traders must show both the reduced selling price and the reduced unit price during general reductions.
- Revocation of Article 14: Provisions concerning units of quantity and Schedule 1, which defined relevant units of quantity, have been revoked.
- Exemptions: Certain products, such as assortments sold by weight and volume or at different prices outside the package, are exempt from unit price display requirements.
Why Does This Matter?
These amendments enhance transparency in consumer pricing, enabling shoppers to make well-informed decisions. They tackle issues highlighted by the Competition and Markets Authority (CMA) in their review of unit pricing within the groceries sector. By requiring clearer and more consistent price displays, the Order seeks to eliminate misleading pricing practices, whilst building consumer trust.
Understanding the amendments to the PMO is crucial for businesses for several reasons:
Compliance
- Legal Obligations: Businesses must comply with the new regulations to avoid penalties and legal issues. Non-compliance could result in fines or other enforcement actions.
- Preparation Time: The Order comes into force on 1 October 2025, giving businesses time to adjust their pricing displays and systems to meet the new regulatory requirements.
Consumer Trust
- Transparency: Clear and accurate pricing builds consumer trust. When customers can easily understand and compare prices, they are more likely to feel confident in their purchases.
- Customer Satisfaction: Transparent pricing can enhance the shopping experience, leading to higher customer satisfaction and loyalty.
- Brand Image: Demonstrating a commitment to transparency and fairness can improve a business’s brand image and reputation. Public perception can shift rapidly in the new technological era, with information being disseminated at increasingly faster rates. From a reputational perspective, there could be significant damage if businesses are seen to be non-compliant.
Operational Efficiency
- Streamlined Processes: Implementing clear and consistent pricing practices can streamline operations and reduce confusion for both staff and customers.
- Market Positioning: Businesses that adapt quickly and effectively to the new regulations can position themselves as consumer-friendly and trustworthy, potentially gaining a competitive edge.
- Reduced Disputes: Clear pricing can minimize disputes and misunderstandings with customers, leading to smoother transactions and fewer complaints.
By staying informed and proactive about these changes, businesses can ensure they remain compliant, build stronger relationships with their customers, and maintain a positive market presence.
What Next?
Consumers can expect to see clearer and more transparent pricing information in stores, making it easier to compare products and prices. In recent years, retailers have increasingly adopted different pricing for loyalty scheme members as a strategy to enhance customer retention and engagement. This trend is particularly evident in the UK, where major retailers like Tesco, Sainsbury’s, and Morrisons offer exclusive discounts to loyalty cardholders. As a reaction to this trend, the CMA have made Multiple Pricing one of the key focal points of the update to the PMO. Retailers must therefore ensure that loyalty and non-loyalty prices are clearly marked, conditions for member prices are understandable, and all prices include VAT, ensuring consumers are well-informed.
The CMA will likely continue to monitor compliance and the impact of these changes on consumer behaviour and market practices.
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