The average retail store these days can sometimes feel like a jungle. Multiple types of packaging, different weights and volumes means comparing similar products on price can be a minefield. Unit pricing is one way that consumers can wade through the jungle by displaying the price of the product as a standard unit of measurement. A 250 ml carton of milk sold for USD 1, therefore, would be equivalent to a 1 l carton sold for USD 4. But unit pricing is not widespread, and where it exists, it is not always visible or consistent in terms of quantities used, making it ineffective.
The answer lies in harmonization. A new ISO project committee – ISO/PC 294 – has just been formed to develop a standard for unit pricing that will establish guidelines and principles of unit pricing, to make it accessible and useful for both retailers and consumers. We sit down with John Furbank, Chair of ISO/PC 294, Guidance on unit pricing, to discuss the status of unit pricing as it stands and how a new ISO standard can help.
ISOfocus: Unit pricing is already used quite widely and, in some countries, it is even a legal or regulatory requirement. Why, then, was it decided to develop an ISO project committee in this area?
John Furbank: We know now that the sale of pre-packed items is increasing throughout the world. At the same time, many retail chains operate across national boundaries and use the same system for marking prices in all their stores. It was therefore agreed that an International Standard could result in displays that are consistent in a locality and provide guidance to governments or businesses wishing to introduce unit pricing regimes.
Currently, unit pricing is quite ad hoc, varying from legislative requirements to voluntary codes. In some countries, it is rarely present, while in others, such as Canada and the US, it is legislated in some states but not all. Where it does exist, activity can be uncoordinated or difficult for consumers to use, because, for example, the unit price is not adjacent to the sale price or the layout of information is not consistent throughout the store, making it difficult to read.
Unit pricing, then, will assist consumers in deciding which item is the best value for money, something that is difficult to do when, for example, tins of tuna are offered for sale at USD 1.99 for 95 g, USD 2.75 for 145 g or USD 3.69 for 185 g.
The value of an International Standard is that it can bring best practice guidance to the various codes and regulations and may be used by industry to develop better and more user-friendly unit pricing systems.
Unit pricing will assist consumers in making informed purchasing decisions and thus potentially save money by comparing the actual price per unit quantity of products that are of the same nature or between different brands. It is also suggested that consumers may, by saving on basic items, purchase more items knowing that they are still within budget.
In countries that have unit price legislation already, such as EU countries, the US and Australia, an International Standard will be beneficial because parts of the standard could be voluntarily adopted by retailers to enhance the quality of their unit pricing, thus acting as a catalyst for improving existing legislation/guidelines.
Last but not least, the standard could help educate consumers on how to use unit pricing effectively, which is currently lacking.
How will standardization of unit pricing help consumers? Will they risk a rise in prices as retailers see the adjustment of units being measured?
The objective of the standard is to establish best practice by defining principles for:
- Displaying and disclosing the unit price of products
- Designing labels and information material displayed by written, printed or electronic means
- Educating consumers in the use of unit pricing
The cost of incorporating unit pricing into existing pricing display systems in supermarkets, hardware stores or pharmacies would be marginal because the unit pricing module may be added to existing software and incorporated in shelf labels printed on a normal commercial office printer.
Evidence suggests that consumers can save money over time, and I feel certain that there will at least be a reduction in price for basic commodities such as cereals, flour and sugar when consumers can clearly see which store or brand is the cheapest. Of course, some customers may still choose to buy the more expensive item if it is from their preferred manufacturer or supplier, but the important thing is that they will be presented with information that enables them to make an informed choice. A large pack of washing powder that will last two weeks, for example, may be a more economical option than buying a smaller pack each week, but this would be difficult to establish without unit pricing.
How will this impact retailers? And what trickle-down effects will consumers see?
The aim of the International Standard is to encourage retailers to use best practice when developing and maintaining a unit pricing scheme. I believe that providing better unit pricing gives retailers a competitive edge by encouraging consumers to have more trust in the store that shows it has their best interest at heart. This, in turn, helps boost customer satisfaction and improves the store’s reputation as being customer-focused and providing better value for money.
Moreover, retailers will be able to reduce design and research costs by developing a system using the standard’s guidance on positioning, visibility and configuration of labels. Displaying the unit price in a user-friendly manner may also promote the appeal of private store brands.
How do you see the future standard being received by retailers, regulators and consumers?
Consumer groups, locally and internationally, are very supportive of the standardʼs development (Consumers International is a liaison member of ISO/PC 294). I am confident that regulators and retailers will see the value of this standard if it provides, as intended, a practical method of encouraging good trading practices and, for retailers, a platform for consumer engagement.
What are your long-term expectations of the standard? What changes will it bring about in the industry, if any?
Many retail chains operate across national boundaries and use the same system for marking prices in all their stores wherever they are situated. The standard will encourage tailor-made systems for particular countries or areas so that consumers may easily compare the unit price of items in different, but adjacent, stores. This, in turn, could increase competition between stores.
Evidence suggests that consumers can save money over time.
It is my belief that the International Standard will promote the development of future regulatory requirements for unit pricing, which will be of benefit to both consumers and suppliers. In some countries, such as Australia, which have unit pricing regulations in place, the standard will help identify weaknesses and improve the layout, prominence and visibility of labels. What’s more, it will establish a pathway for educating consumers on how to use this information.
Conversely, in countries where unit pricing does not currently exist, the standard will provide a guide on what principles need to be applied to make any proposed unit pricing scheme useful for consumers and practical for retailers.