Research and analysis

Summary of consumer research and unit pricing analysis

Published 30 January 2024

Summary

In January 2023 the CMA began work on the use of unit pricing in-store and online in the groceries sector.  We published a report in July 2023, setting out findings from our compliance review of retailers’ use of unit pricing (‘compliance review report’). In July we also made recommendations to UK Government to reform unit pricing legislation and have since responded to the Department for Business and Trade’s (DBT) consultation on proposed reforms to the Price Marking Order 2004 (the PMO).^{[footnote 1] [footnote 2]} On 24 January 2024, the Government set out its proposed reforms to the PMO. ^{[footnote 3]}  The CMA welcomes the proposals to update the law to help shoppers access information that is easier to compare and is more meaningful when shopping for groceries.

Today we are publishing the findings from our further work on unit pricing. These are:

• the findings from qualitative research with consumers (conducted on our behalf by a market research agency) to better understand how and when UK shoppers make use of unit pricing information when shopping for grocery products (‘consumer research’)^{[footnote 4]}

• the findings from our analysis of the unit prices of a basket of grocery products. We have assessed the extent to which the unit prices of grocery products vary according to their size and packaging and, in turn, the extent to which unit pricing information can help people identify savings when grocery shopping (‘unit pricing analysis’)^{[footnote 5]}

The purpose of this short report is to set out the key highlights from both pieces of work. Alongside this, we are also publishing a short guide for shoppers aimed at raising awareness of unit pricing. We hope this will be a useful tool to help people compare the prices of products when shopping for groceries.^{[footnote 6]}

The CMA’s work on unit pricing is part of an ongoing programme of work to help tackle cost of living pressures when people are shopping for groceries. In July 2023, we published an update on our work looking at grocery retail competition^{[footnote 7]} and in November 2023 we published a second update which considered drivers of price increases in the groceries supply chain and looked more closely at a number of specific product segments.  We explained that the CMA would be undertaking further work in relation to infant formula, to examine whether ineffective competition in that market could be leading to higher prices.^{[footnote 8]}

This month we have also begun a review into loyalty pricing by supermarkets.^{[footnote 9]}  We will publish further updates on our work in the groceries market this year.

Consumer research findings and Unit Pricing Analysis work – highlights

Consumers’ awareness, understanding and use of unit pricing information

Unit pricing is a labelling system for displaying the cost of different products by reference to standard units of weight or volume. Unit pricing helps shoppers by allowing them to compare the relative costs of products, irrespective of their size, so that they can work out which is the best value for their needs.

Unit pricing is an important tool, particularly at a time when shoppers are reported to be changing their shopping habits.  For example, the Office for National Statistics reported in November 2023 that around half of all adults are shopping around more because of cost-of-living pressures.^{[footnote 10]}

However, our qualitative consumer research found that amongst the shoppers that took part awareness, understanding and use of unit pricing varied greatly.^{[footnote 11]}  The term ‘unit pricing’ was not generally recognised amongst shoppers in the sample but most were familiar with the concept of comparing prices based on unit measurements.  Where shoppers were aware, knowledge of the value of unit pricing was commonly learnt from other people such as family and friends. Although indicative rather than representative, around half of the shoppers that took part in the research used unit pricing (to varying degrees) and half did not. The shoppers that used unit pricing found it a helpful tool to compare the prices of different products and get value for money.

Interestingly the consumer research did not find differences between demographic groups (such as household income) in terms of their awareness or use of unit pricing. While some shoppers appeared more pre-disposed to its use based on their attitudes and related behaviours, including those describing themselves as being price conscious or having an analytical mindset.

The consumer research found some evidence of shoppers using unit pricing more in response to the cost-of-living pressures, this was limited to those who already knew about unit pricing and had previously used it. Importantly the research did not find that shoppers on the very lowest income levels were using unit pricing more, nor were they prompted to do so because of financial pressures.

The research identified that unit pricing information is competing for a shopper’s attention with a lot of other information, such as promotions and special offers that grocery retailers display prominently across their stores. Unlike promotions and special offers, unit pricing is not displayed in a way to catch a shopper’s attention, and some shoppers that took part in the research said that the way in which it is displayed can act as a barrier to use. Some shoppers described unit pricing as too discreet, for example due to small font size, faint colours, and placement of the information, making it easy to overlook when shopping in store or scrolling online to select items.

In our view, this finding supports the recommendation we previously made to UK Government in July 2023 for the PMO to be revised to specify how unit pricing information should be displayed to better help shoppers notice and read it.^{[footnote 12]}  We welcome the Government’s proposal to set out clearer legibility criteria for unit pricing information for in-store labels. We recommend that consideration is also given to the legibility of unit pricing information displayed online.

Shoppers in our research that used unit pricing did not use it for all products. Unit pricing was mainly used to compare store cupboard essentials with a long shelf life and household cleaning products where price played an important role in the shopper’s decision making. It was less commonly used for items seen as luxuries or treats (which varied between individual participants) where quality matters and for product categories such as fresh food where the association by some shoppers between unit pricing and buying in bulk made its use feel unsuitable as it potentially could lead to food waste.

Shoppers in the research most commonly used unit pricing when:

• comparing the same product in different formats to check whether a product in a particular format was cheaper
• making substantial purchases, for example to assess the value of expensive products such as olive oil
• helping to select a product when overwhelmed by choice, for example. when shoppers had to choose between similar sized items and different brands
• verifying supermarket deals: some participants that were sceptical about promotions used unit pricing to confirm whether a deal was good value for money
• shopping for new or infrequently purchased products to establish the value of products
• when a product they buy regularly looks different, for example if they notice a reduction in the size or quantity
• buying in bulk

Unit pricing was seen to be more relevant to shoppers when they perceive the value of a product to be primarily about price. But even then shoppers that took part in the research did not always use unit pricing to identify the best deal.

Factors that influence use of unit pricing

The research also found how much shoppers use unit pricing varies between their shopping trips: factors such as how much time they have that day, who they are shopping with, how tired they feel, as well as the prominence and consistency of unit price information impact on how much they use it on any given shop.

Importantly the consumer research identified that different units of measurements across similar products acted as a barrier to the use of unit pricing information.  Different unit measurements being used for the same type of product made it hard for shoppers to compare on a like-for-like basis - an issue also highlighted in our compliance review findings report and also seen during our unit pricing analysis work. For example, mayonnaise being unit priced by weight or by volume and fresh fruit and vegetables being sold by weight or by item. ^{[footnote 13] [footnote 14]}  It also goes to the recommendation that we made to UK Government to reform the PMO, and related weights and measurements legislation, to achieve greater consistency in unit pricing information to make it easier for shoppers to make meaningful comparisons.  We welcome the Government’s proposal to mandate the use of consistent unit pricing measures.

Whilst unit pricing was used both in-store and online, shoppers that took part in our research were observed to use unit pricing more when shopping in-store. Online shoppers in our research were seen to rely on features such as favourites lists or previously bought items and spent less time comparing the cost of items.

We also found that shoppers in our research that did use unit pricing information still did not check it during every shopping trip – for some, memory played a role. For example, some shoppers mentioned times in the past when they had used unit pricing information – such as during phases of concentrated attention on unit pricing – which they would then recall when making subsequent decisions, sometimes using this information as an anchor to assess good value.  In our short guide for shoppers, we are alerting people to the risk that they might be losing out on items that are better value for money when they automatically put certain products in their basket without making up to date comparisons.

As highlighted in our compliance review report, online shopping gives retailers greater opportunity to help shoppers engage with unit pricing information.   We consider that online shopping functionality could be made more useful in helping shoppers spot the best deals for them by unit price.^{[footnote 15]} We reiterate our earlier recommendation to retailers across the groceries sector to explore options for giving their customers the ability to sort products by unit price on their online channels.

Shoppers may be losing out by relying on assumptions about what is best value

Some shoppers that participated in our consumer research relied on assumptions or ‘rules of thumb’ when deciding which products are the best value.  Examples included assuming that bigger pack sizes are always better value for money than smaller pack sizes and that products on promotion offer greater value than products which are not. Shoppers that prioritised making grocery shopping as quick and easy as possible were most likely to rely on rules of thumb or make assumptions.

We sought to test these rules of thumb regarding which products are the cheapest per unit by analysing a basket of 26 everyday grocery products.^{[footnote 16]} We found that rules of thumb do not always hold true and relying on such assumptions in isolation could sometimes lead to shoppers paying more per unit.

For the basket of products we looked at, we found that shoppers could generally benefit from lower unit prices as pack size increased.  But the magnitude of savings possible by moving up pack sizes varied across products and savings per unit from trading up a pack size were not always equal for each increase in pack size.^{[footnote 17]} For certain items there were large savings per unit from sizing up from the smallest pack, for example:

• milk where the unit price of a 4 pint bottle was almost 60% cheaper per unit than a 1 pint bottle

• standard sized tins of baked beans and chopped tomatoes which, on average, had a unit price 45% - 50% less than the small tins

The savings from moving up a pack size may also differ across products. For example, much larger per unit savings could be made by buying the largest pack instead of the smallest pack in branded wheat biscuits (a saving on average of almost 40% per unit) than in branded washing up liquid (a saving on average of 5% per unit). We also saw that the savings from moving up a pack size can differ across retailers.

Interestingly our analysis also showed that whilst it was usual for bigger packs to have a lower unit price than smaller packs, this wasn’t always true.  We saw examples in our basket of groceries of larger packs having higher unit prices. These examples included toilet roll, cheese and laundry detergent pods. Assuming larger packs always have a lower unit price could therefore sometimes lead to shoppers paying more per unit. Of course, we understand that buying a larger pack size may not be an option for all shoppers including those who may be constrained by a tight weekly budget, limited storage space or a desire not to buy more of a product than was needed.

Whether a product was on offer or discounted was identified as influencing purchases of shoppers in the consumer research, and not just by those who identified as being particularly price conscious, and promotion information was a key consideration used by some shoppers to assess value.  For the basket of products we looked at, our unit pricing analysis found that products on promotion often had the cheapest price per unit.  But we also saw examples where products on promotion had an equal or more expensive unit price than alternative pack sizes which were not on promotion.  For example, we identified instances of ketchup and laundry detergent packs on promotion that were more expensive on a unit price basis than other sized packs. We also found examples (for example mayonnaise) where products on multi-buy offers were still more expensive on a per unit price basis than a different pack size that was not on offer.

Unit pricing can help shoppers identify savings

These findings help to reinforce the importance of unit pricing when comparing products. Unit pricing can be a useful tool for shoppers so that they can easily compare products and identify which offer them the best value.  In our short guide for shoppers, we are encouraging shoppers not to make assumptions that could lead them to buy groceries that are not the best value for them.

Many grocery products are offered in a wide range of sizes and formats. While it might be relatively easy to compare some options (such as a twin pack of tins with an equivalent single tin), sometimes the sizes are not easy to compare, for example because their sizes are not simple multiples, pack sizes differ between brands, or because there are promotions on some options but not on others.

In our pricing analysis work, we considered whether unit pricing could be used to help shoppers make savings when shopping across different pack sizes and packaging formats including when products are on promotion.

We found that unit pricing can help shoppers identify savings on their grocery shopping by showing them which option is the cheapest per unit within a range of products when this is not easy to work out by comparing the selling prices alone.  For example, when:

• comparing loose to prepacked fruit and vegetables
• there is a lot of variation in pack and/ or content sizes within or across brands, such as with toilet rolls
• pack sizes are not simple multiples of each other, such as for tinned baked beans and chopped tomatoes, cheddar cheese, and fish fingers, as opposed to items that come in more standardised packaging such as pasta and rice
• there is a mixture of pack sizes and promotions

Conclusions

Our consumer research shows that some shoppers already find unit pricing helpful. Importantly it highlights that there is scope for more shoppers to use unit pricing, and also for those shoppers who do use it, to use it more regularly. The research highlights the types of purchases where shoppers find it can be most useful.

Our pricing analysis highlights the value of unit pricing when comparing between grocery items too - revealing that shoppers’ commonly held assumptions about what products are cheapest on a per unit basis aren’t always right and that the pricing of some products relative to others can be surprising.

We understand that there are factors that affect shoppers’ ability and willingness to use unit pricing. For example, their weekly budget may not be able to stretch to a bigger pack size or they may have very limited storage space at home. Likewise, we know from the consumer research that it can sometimes be difficult to devote attention to comparing unit pricing – for example when we are tired after a day at work or when shopping with children. However, unit pricing can be an important tool for shoppers to ensure they get the best deal when comparing products and our analysis has shown some of the ways it can be most helpful.  This is particularly important at a time when shoppers are looking for the most competitive prices.

We are publishing a short guide for shoppers to raise awareness of the value of unit pricing. This shows some of the rules of thumb that shoppers use to assess best value do not hold true and encourages shoppers to use unit pricing more often as a reliable alternative to rules of thumb when shopping for groceries.

Retailers can help shoppers by improving consistency and comparability of the unit prices they display and by equipping shoppers with the information they need to make simple and meaningful comparisons between different products, irrespective of brand, size, and any ongoing promotional activity.

We welcome the Government’s proposals to update the law to help shoppers access information that is easier to compare and is more meaningful when shopping for groceries. We are sharing the findings from our latest work with DBT to help inform the further technical work they are doing on the reforms to the PMO.

Recognising that it may take some time to reform unit pricing legislation, we reiterate the recommendation that we made to retailers in July to do all they can to help shoppers meaningfully compare the unit prices of products before any reforms are introduced.  For example, by providing the promotional unit price for products on promotion, wherever feasible.

We encourage consumer groups, other enforcers of consumer law, grocery retailers and government to read our analysis and the consumer research.

We are also calling on retailers to do more to help raise awareness amongst their customers of the usefulness of unit pricing and on consumer representative organisations to help educate consumers about the benefits of unit pricing. For example, by helping to disseminate the CMA’s short guide on their websites and in their publications.

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1. CMA response to price transparency consultation ↩

2. Unit pricing case page ↩

3. Smarter regulation: improving price transparency and product information for consumers ↩

4. Consumer research ↩

5. Unit Pricing Analysis ↩

6. Short guide to unit pricing ↩

7. Competition, choice and rising prices in groceries ↩

8. Price inflation and competition in food and grocery manufacturing and supply ↩

9. Loyalty pricing in the groceries sector ↩

10. 48% of adults in Great Britain in November 2023 reported that they were shopping around more. Public opinions and social trends, Great Britain - Office for National Statistics ↩

11. The CMA’s commissioned qualitative research engaged 50 members of the public in a 3-stage process to observe their grocery shopping behaviour and understand the factors affecting their use of unit pricing. ↩

12. We previously recommended to UK Government that the legibility and proximity requirements in Article 7 of the PMO are revised. Paragraphs 70 – 91, CMA Groceries unit pricing review, July 2023. ↩

13. Paragraphs 53 – 69, CMA Groceries unit pricing review, July 2023. ↩

14. Paragraph 3.39, CMA Unit Pricing Analysis report, January 2024. ↩

15. Paragraph 86, CMA Groceries unit pricing review, July 2023. ↩

16. The unit pricing analysis is based on a snapshot of data from 9 May 2023. ↩

17. Savings per unit varied between own brand and branded products. ↩