Guest blog: Why effective unit pricing for food products can be a guiding light for consumers during COVID-19
Ian Jarratt, Consumers Federation of Australia and Queensland Consumers Assocation
Ian Jarratt, is an experienced consumer advocate working at Consumers Federation of Australia and Queensland Consumers Association. He has studied, and advocated for, unit pricing for many years. He represented Consumers International on the ISO Working Party that developed ISO 21041:2018 Guidance on unit pricing.
With consumers worldwide suffering from the economic implications of the COVID-19 pandemic, consumer advocacy has a vital role to play in guiding, advising and informing consumers to ensure they can access a fair and affordable market for essential products and services.
In this commentary, Ian outlines why consumers can save significant amounts of money when retailers provide the unit price of pre-packaged products, and argues that consumer organisations everywhere should be advocating for retailers to provide consumers with effective unit pricing, especially for pre-packaged food and grocery items.
Unit pricing – a global picture
The unit price of a product is the price per unit of measure. It allows consumers to easily and quickly compare values. For pre-packaged products, it is provided in addition to the selling price. For example, for a 725g package of breakfast cereal costing $4 it is shown as $5.52 per kg. However, in many countries retailers do not voluntarily, and are not required to, provide unit pricing for pre-packaged products. And, when the information is provided often it is not easy for consumers to notice, read, understand, and use.
The main provision problems are usually: small print size; inadequate prominence; use of inconsistent/ inappropriate units of measure; inconsistent provision; and non-provision for e-commerce sites. These problems greatly reduce consumer use of unit pricing and the benefits it can bring.
For products sold loose, the unit price is the selling price, for example $2 per kg for bananas. Its provision, and the units of measure to be used, are regulated in many countries. These unit prices are much used by consumers everywhere.
Why is unit pricing an essential tool for consumers?
Providing effective unit pricing for pre-packaged, as well as loose, products allows consumers to easily compare the value of both types and so is a very valuable and simple tool for consumers struggling to cope with the adverse economic effects of the COVID-19 pandemic.
Unit prices often vary greatly. By comparing unit prices, consumers can substantially reduce how much they spend on products or get much more and/or better quality for the same amount of money.
Another benefit comes when food providers reduce the size of packages without informing consumers, something that is common in some markets. With unit prices, consumers can get clarity on when they are paying more for less and look for alternative products.
The savings possible from comparing unit prices will vary greatly between countries and consumers. But when buying food and groceries, consumers could generally achieve very significant savings by taking account of unit prices rather than relying on less accurate and reliable practices or assumptions about value.
Unit prices can be used to make many types of value comparisons, including between:
- package sizes
- prepackaged and unpackaged products
- types of packaging
- fresh, frozen, canned and dried products
- special offers and regular prices
- substitute/alternative products
Economic crises have been known to catalyse unit pricing progress
Significantly, and very relevant to the current economic crisis, previous economic crises have resulted in food and grocery retailers in some countries being required to provide unit pricing for pre-packaged items.
For example, in the early 1970s the oil price shock economic crisis was the catalyst for some US states and Japan mandating the provision of unit pricing.
And, the early 1990s recession influenced the decision of the European Community (now the European Union) to require member countries to require certain retailers to provide unit prices for certain pre-packaged food products sold instore or online, something that was part of a 1998 EU Directive. Member countries are also allowed to require provision of the unit price for other types of pre-packaged products.
Also, Australia’s 2009 decision to require major food retailers, and online sellers, to provide the unit price of pre-packaged food and grocery products was influenced by the consumer impacts of the 2007-08 global financial crisis.
Unit pricing is mandatory in some other countries such as Argentina and Chile (since 2002) and Colombia (2017).
Three actions for globally harmonised consumer guidance
The need for consumers around the world to get value for money has never been greater than now. Industry and governments must take action to ensure consumers are given the information they need to access the most affordable and best-value food products.
Consumers, and consumer advocacy groups (including where unit pricing is currently provided for pre-packaged products) should also be advocating strongly for changes that will greatly increase consumer access to effective unit pricing, especially for pre-packaged food and grocery items.
The actions needed by consumer organisations to achieve this goal include:
1. Publicising to governments and retailers the benefits of providing consumers with effective unit pricing of pre-packaged products, particularly for food and grocery items, and guide consumers on how to use unit-pricing information
2. Advocating for:
- any existing unit pricing of pre-packaged products to be easy for consumers to notice, read, understand and use and for provision on e-commerce sites as well as in stores,
- non-providing retailers to be required to provide effective unit pricing in store and online for pre-packaged products,
- publicity and education to increase consumer awareness of unit pricing and the benefits of using it.
3. Using and publicising the existence and benefits of the International Standards Organisation’s standard on unit pricing (ISO 21041:2018 Guidance on unit pricing), which contains principles for, and practical guidance on, the provision of best practice unit pricing.