Opportunities to improve unit pricing and modernise the Price Marking Order

Executive Summary

Clear and transparent pricing is essential as people try to deal with the cost of living crisis.

The Which? consumer insight tracker shows that increasing numbers of people are having to cut back, shop around and trade down when shopping for food and groceries.

Unfortunately, some current pricing practices don’t make it as easy as it should be to compare prices and work out what is best value. This is particularly the case for unit pricing which, when working well, enables consumers to easily compare the price of different products sold in different quantities and easily see which is the best value. Our research [1] shows that the current way that unit pricing is provided can often be confusing.

This is partly because the Price Marking Order 2004 (PMO), which sets out the requirements for how prices should be displayed, is outdated and in need of reform. But it is also because different retailers interpret the current law and guidance differently, with some making it easier to compare prices than others. There is now an opportunity to change this as the Competition and Markets Authority (CMA) is undertaking a review of unit pricing, and the Chancellor has committed to act on its findings and update the PMO.

There are some immediate improvements that can be made by clarifying current guidance, as well as changes that need to be made to the PMO so that pricing laws are fit for purpose longer-term.

Immediate improvements

• Making it easier to assess if promotions offer best value: Unit pricing is not always provided on promotions, and this is a particular issue for some supermarket loyalty card pricing. Supermarkets currently take different approaches, and practices can also vary in-store and online. We recently highlighted how we thought Tesco could potentially be in breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) because it does not include unit pricing on Clubcard prices, in contrast to Sainsbury’s who do this for Nectar prices [2]. Guidance should be urgently updated to make it clear how unit pricing should be provided for different promotions, including that it should be provided for loyalty card pricing. The Competition and Markets Authority (CMA) and the Department for Business and Trade (DBT) should provide clarity on the need to immediately comply with the CPRs.
• Improving legibility of unit pricing: Which? investigations have found a great deal of variation in terms of prominence, size relative to the selling price and use of colours or contrast within, as well as across supermarkets. Current legislation and guidance is not very clear about what is appropriate. Clearer guidance should therefore be provided, setting out what is best practice. There is an International Standards Organisation (ISO 21041: 2018) standard on unit pricing, which should be used by supermarkets – but greater clarity from government is also needed.

Updating the Price Marking Order

The PMO, which specifies how the selling and unit price is to be provided, dates from 2004 and the market, as well as the way that people shop and compare products, has changed significantly since then. The Order also has several weaknesses that limit the ease of use of unit pricing and make compliance unnecessarily challenging.

The UK now has the flexibility to amend the Order so that it sets out simpler requirements that work better for both consumers and businesses. There are four main improvements that should be prioritised:

• Promotions: In addition to updating current guidance, the DBT should update Article 9 of the PMO, reflecting the requirements of the CPRs so that the Order is clear about how the unit price should be displayed for different types of promotions both in-store and online, including mandating that where supermarkets offer promotions specifically for loyalty card customers, a unit price for the promotional deal should be displayed along with the selling price.
• Small shop exemption and national chains: There is an exemption for small stores in the Order, which currently includes supermarket convenience stores. Article 5 should, therefore, be revised to take account of the nature of current retail provision, for example, by removal of the exemption for small shops where those shops belong to a national chain or by amending this exemption to refer to annual turnover, rather than floor space, to ensure that unit pricing is always provided in these shops.
• Prominence and legibility: The DBT should update Article 7 of the PMO so that it has more explicit provisions about how unit pricing should be displayed so that requirements are easier for businesses to follow and it is easy for consumers to read and use unit pricing, whether in-store or online. The advice set out in ISO 21041: 2018 on unit pricing should be taken into account.
• Consistency and comparability: The DBT should review Schedule 1 of the Order, which specifies a range of units that should be used for different types of products, other thanper kilogram, litre or item, with the aim of ensuring much greater clarity and consistency of units used. This will make pricing requirements simpler for businesses to follow and easier for consumers to use.

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The need for reform of pricing

The Price Marking Order 2004 implemented Directive 98/6/EC on consumer protection in the indication of the prices offered to consumers and is therefore retained EU law. 

The government has stated that it will review the Order to take account of a review that the CMA is currently undertaking into how unit pricing is provided. This is an important opportunity to ensure that it is fit for purpose, reflects current trading practices, including the growth of online shopping, and effectively supports consumers in choosing the best deal for their needs.

Clarity and comparability of pricing is particularly important as consumers navigate the cost of living crisis and rapid increases in the prices of foods and other consumer goods. The UK is no longer constrained by the EU Directive, which may previously have limited the scope for reform of the Order and therefore can ensure that it better meets consumers’ and businesses' needs.

The Order sets out how the selling price should be provided to consumers and also how the unit price should be provided. Unit pricing enables consumers to compare the price of products sold in different quantities by a standard unit so that they can see which is the best value for their needs.

Our research [3] shows that there are significant savings for people to make if they shop around– but also that the current way that unit pricing is provided can be confusing for consumers and not always enable them to easily identify the best deal (see Annex 1 for more details of our analysis and consumer research - available in the downloadable full report).

In August 2022, a Which? survey [4], representative of the general population, found that 6 in 10 (58%) people self-reported that they did regularly use unit pricing, but that this varied depending on age and income. Whereas 63% of people 65 and over said that they ‘always’ or ‘often’ used the unit price to compare products, only 48% of 18–24-year-olds did. Those who are most likely to benefit from using the unit price are also least likely to use it. Half of people in socioeconomic groups DE said that they used the unit price, compared to 63% of those ingroups AB.

Our research has found a number of problems which make unit pricing more difficult to use. These include a lack of prominence of the unit price relative to the selling price, more general issues with legibility, inconsistency of units used for the same product category (or those that consumers are likely to make comparisons between), missing unit pricing information and different terms used to refer to a unit. We also found that unit pricing is not always provided for promotional offers. This is a particular issue with the recent shift towards loyalty card pricing by some supermarkets where different practices have been adopted.

Improving unit pricing is a long-standing issue that needs to be addressed and particularly in light of the current cost of living crisis when it is even more essential that people can easily compare prices. In 2015, Which? made a super-complaint to the CMA about a number of issues in relation to pricing practices in the groceries market [5]. This included unclear unit pricing. The CMA investigated the issues and made a number of recommendations for how unit pricing should be improved, but these have not been addressed adequately. There is now an opportunity to look again at the issues that emerged from the super-complaint, but also take a fresh look at how the Order can be improved at such a crucial time when consumers need clear and transparent pricing.

Areas for improvement

The current PMO specifies which products should provide a unit price, the units that should be used and how the unit price should be displayed. We have set out below the problems with each of these aspects and how the PMO can be improved.

1. Products covered and units specified

The current PMO specifies which products should provide a unit price. The unit price is defined as: the final price, including VAT and all other taxes, for one kilogram, one litre, one metre, one square metre or one cubic metre of a product, except (i) in respect of the products specified in Schedule 1, where unit price means the final price including VAT and all other taxes for the corresponding units of quantity set out in that Schedule; and (ii) in respect of products sold by number, where unit price means the final price including VAT and all other taxes for an individual item of the product.

Schedule 1 specifies a range of different units that can be used, for example, per 100g for bread and per 10g for herbs and spices. But these no longer necessarily reflect the way that consumers make comparisons. For example, raw meat and fish products will be sold per Kg, whereas cooked or ready-to-eat meat and fish has to be per 100g. Fruit and vegetables are a particular challenge where depending on the product and its extent of processing, the unit may be per item or each, per Kg or per 100g.

Our research has found that the different units may be used by different manufacturers for the same products because of ambiguity within the Order (see Annex 2 - available in the downloadable full report). This is, for example, an issue for certain sauces. Mayonnaise will have a unit price ‘per 100g’ or ‘per 100ml’depending on the manufacturer. The number of different units can also lead to supermarkets making mistakes and displaying the incorrect unit.

More generally, there is an opportunity to simplify the Order so that the requirements within it, including the products that are covered, are much more explicit and easier for both businesses and consumers to understand. Working out which products are included, for example, currently also requires the Weights and Measures Act 1985 and associated legislation to be taken into account.

This was an issue that Which? raised when we made our super-complaint several years ago and which the CMA agreed with. It recommended that the government continued with a review of Schedule 1 to the PMO, with a view to clarifying and simplifying the requirements, considering evidence about the advantages and disadvantages of simpler and more futureproofed approaches, with fewer exceptions. At the time, the scope for changing the Schedule was limited because Directive 98/6/EC had to be taken into account.

The Department for Business and Trade (DBT) should now review the relevant provisions of the PMO, including Article 5 and Schedule 1, informed by consumer research into how consumers can most easily compare products, with the aim of ensuring much greater clarity and consistency of units used and products covered.

2. Unit pricing for promotions

Article 9 of the PMO states that traders selling goods as part of a general price reduction below the usual selling price may comply with their obligations under the PMO by indicating by a general notice that the products are or may be for sale at a reduction, provided that the details of the reduction are prominently displayed, unambiguous, easily identifiable and clearly legible. The CMA’s interpretation was that this implied that traders do not need to give the unit price for the reduced product, as long as they indicate clearly and unambiguously that the product is on sale at a reduced price.

The guidance within the Chartered Trading Standards Institute’s (CTSI) Business Companion is that: 

“promotional offers should be unit-priced to reflect the single standard item. Retailers may give additional information if they wish (for example, the ‘reduced unit price if purchasing a multi-buy’ offer may be shown) as long as it is clear to which goods it relates. Limited period promotions (such as 10% extra free) that relate to individual product lines may retain the unit price of the standard item or pack for the period of the offer. Retailers may give additional information if they wish – for example, they may show the unit prices of both the standard and promotional items but they must be absolutely clear to which item they relate.”

We have found different practices across retailers as to whether the unit price for promotional offers is shown and whether it is given for the reduced item, as well as for the standard item. Some supermarkets do not provide unit pricing where there is a price reduction, while others do this quite explicitly.

The way that promotions are being used by supermarkets, as well as other retailers, is constantly evolving. An important development has been the introduction of offers that are exclusive to loyalty card holders. Several supermarkets now provide these offers, but Tesco, in particular, stands out as it is the biggest supermarket by market share and now mainly provides special offers in the form of Clubcard prices. Tesco does not provide unit pricing for its Clubcard prices. In contrast, Sainsbury’s does provide unit pricing on its Nectar card prices.

While it can be easy for consumers to see that the Clubcard price is cheaper than the non-Clubcard price, without a unit price displayed, it can be difficult to compare whether the product that is on offer is still the best deal compared to other products within that category or the prices within a different supermarket.

The CMA also investigated and made recommendations in relation to promotions as a result of our super-complaint. In its response, it highlighted a potentially complex interaction between the requirements of the PMO, its accompanying guidance (which was then provided by the Department for Business, Industry and Trade but consistent with that now set out in the CTSI Business Companion) and the CPRs in relation to the provision of unit price information for products on promotion. This includes both products that are subject to a7 opportunities to improve unit pricing and modernise the price marking order general price reduction and volume promotions. It set out that under the CPRs, it could be argued that only displaying the old unit price information may constitute a misleading action under Regulation 5 (even though that may be envisioned by the PMO). Similarly, failing to display the new, lower price for a reduced item could be considered a misleading omission under Regulation 6, as it has the potential to constitute material information which the average consumer needs to take an informed decision. We have reviewed the CPRs and agree with the CMA’s analysis when it previously looked at this issue.

To encourage a more consistent use of unit pricing for products on promotion, the CMA recommended reviewing and clarifying the legal requirements set out in Article 9 of the PMO, and the associated guidance with particular reference to the requirements of the CPRs.This clarity is even more important now, as consumers navigate a cost of living crisis and need to be able to easily identify which products are best value. Promotions now come in many forms and so guidance needs to set out clearly how unit pricing information should be displayed. Provision of information on multi-buy offers that include a combination of product options will be more complex than for multi-buy offers on the same product or price reductions for example.

Which? research has found that consumers are suspicious about special offers, with 63% of people saying that they do not always trust that special offers will be better value and lack of unit pricing on special offers is a particular area of concern. Over half (52%) said that unit prices are not as clear on special offers so they find them difficult to compare to similar items.

The PMO should be updated to ensure that consumers can easily assess whether products on promotion offer them the best deal for their needs or not, by revising Article 9 and updating associated guidance to address different types of promotional offers. This should reflect the requirements of the Consumer Protection from Unfair Trading Regulations 2008, particularly Regulations 5 and 6. Amendments to Article 9 should make it clear how the unit price should be displayed for promotions both in-store and online, including for multi-buys and price reductions. It should be made clear that where supermarkets offer promotions in the form of loyalty card prices, a unit price should be displayed along with the selling price.

3. Provision of unit pricing in small shops

The PMO exempts small shops from having to provide the unit price along with the selling price. Article 5 states that the requirement to display the unit price shall not apply to: 

“any product which is pre-packaged in a constant quantity which is or may be for sale in a small shop, by an itinerant trading or from a vending machine.”

Under the definitions, a “small shop” means any shop which has a “relevant floor area” not exceeding 280 square metres.

Although unit pricing is generally still provided by supermarkets in smaller stores, there is no obligation for them to do this, and the provisions within the Order do not, therefore, apply to how they decide to do this.

At a time when we know consumers are comparing prices much more carefully and consumers in lower income areas may be reliant on smaller stores for their shopping because they are what is available where they live, it is essential that these national stores are brought within the provisions of an updated and modernised PMO.

The exemption for small stores within Article 5 of the PMO should be revised to take account of the nature of current retail provision, for example, by removal of the exemption for small shops where those shops belong to a national chain or by amending this exemption to refer to annual turnover, rather than floor space.

4. Prominence and legibility

Article 7 of the PMO requires that the indication of the unit price should be ‘unambiguous, easily identifiable and clearly legible’, but it does not prescribe the way the requirement is met.

Our research has found a lot of variation in the way that the unit price is displayed, including differences within a store. In some situations, the unit pricing can be very difficult to identify, let alone read, as the examples in Annex 2 (available in the downloadable full report) show. Issues can include the size of the font used, the size of the unit price relative to the selling price and the colours and contrast used.

The advice in CTSI’s Business Companion on the PMO is that:

• pricing information must be available and clearly visible to consumers without them having to ask for assistance in order to see it.
• legibility refers to a consumer with normal sight. Traders must also comply with the Equality Act 2010 and take account of the special needs of the elderly and disabled groups.

The International Standards Organisation (ISO) has developed a standard on unit pricing, which goes further in advising on good practice. This was adopted in 2018 and sets out the principle that: 

“The unit price should be displayed to ensure the greatest possible noticeability and legibility for all potential consumers, including those with special needs or vulnerable groups. This can be achieved by taking into account display characteristics, such as printdensity, font size, font type, colour and contrast, and white space.” [6]

It sets out provisions as to how this should be achieved within section 8, for example:

• Font size – The unit price should be displayed using the largest practical font size possible. When the selling price font size is increased (e.g. on promotional labels), the size of the unit price font should be proportionately increased. The unit price font size intended for consumer use should be more prominent than information intended for the retailer only(e.g. barcode, product position, supplier number, product code).
• Colour and contrast – Black text on a white background is recommended for maximum contrast. A coloured background can be used to enhance noticeability of unit price information, but should not reduce the legibility of the unit price. The use of coloured text for the unit price information should be avoided.
• White space – White space should be used around the unit price. Mixing the unit price with other text should be avoided.
• Border(s) and box – The use of border(s) or a box around the unit price can increase its noticeability. These should be used on labels with limited white space to help consumers notice the unit price.

The standard also includes examples of best practice unit pricing shelf edge labels (see Annex 3 - available in the downloadable full report).

Following Which?’s super-complaint in 2015, the CMA recommended that the government produce best practice guidelines on the legibility of unit pricing information, to provide greater clarity about the requirements of the PMO in this regard. It also emphasised that this would help Trading Standards Services and Primary Authorities assess compliance. Although CTSI reviewed the pricing practices guide, guidance on compliance with the PMO did not change.

DBT should update Article 7 of the PMO so that it has more explicit provisions about how unit pricing should be displayed so that it is easy for all consumers to read and use, whether in-store or online, taking into account the advice set out in ISO 21041: 2018. This should be supplemented by updated guidance which includes examples of best practices for different types of shelf-edge labels and online displays. In updating the Order and guidance, DBT should ensure that it reflects the findings of consumer research into what format works best.

Enforcing compliance

The PMO needs to be modernised in a number of ways. It is, however, also essential that compliance with provisions within the Order is taken seriously. Our consumer research shows very starkly how people are increasingly having to cut back on spending, shop around and trade down. Our research assessing the current state of unit pricing, however, suggests that businesses and enforcement bodies are not currently taking pricing issues seriously enough. This includes compliance with the CPRs as well as with the PMO. It is crucial that provision of clear, transparent pricing becomes a priority.

Businesses and Trading Standards Services need to give greater priority to ensuring that pricing is compliant with current pricing legislation and work with the DBT to make sure that it is as clear and easy for consumers to use as possible.

For Annex 1 to 3, download the full report:

Footnotes

[1] Which? magazine, September 2022  ↑

[2] Tesco told Which? that its labelling had been approved by Trading Standards  ↑

[3] Which? magazine, September 2022  ↑

[4] The survey was an online, nationally representative survey of 2,791 UK adults, conducted 8th - 9th August 2022 by Yonder Consulting  ↑

[5] Groceries pricing super-complaint UK Gov, April 2015  ↑

[6] Permission to reproduce extracts from British Standards is granted by BSI. British Standards can be obtained in PDF or hard copy formats from BSI Knowledge or by contacting BSI Customer Services for hardcopies only: Tel: +44 (0)20 8996 9001, Email: cservices@bsigroup.com  ↑

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