Thursday, April 03, 2008

Eliminating pre-pricing

Increases in commodity and shipping costs are causing more retailers to be resistant to goods with prices printed on the packaging.

Kraft, for instance, removed the $1.99 suggested retail price from 12 Planters SKUs, ranging from 3 to 7.5 ozs., that are hitting stores now. "Doing so allows retailers more flexibility and [retailers] like the control they have over pricing," said a Kraft rep.

Kellogg salespeople have told convenience store buyers and wholesalers that it too will phase out pre-priced single-serve packs, at least for Cheese-It snacks and Famous Amos cookies, by year's end.

One distributor related that a Kellogg rep explained to him that not only are retailers resisting, but maintaining the 99-cent price point will be difficult for Kellogg too if costs continue to climb. Kellogg did not comment.

Under antitrust laws manufacturers cannot enforce MSRP in most cases, but few retailers are going to want to put a sticker on a product that is higher than the printed price.

I believe the original rationale behind pre-pricing was simply as a convenience for retailers -- saving them the trouble of putting price stickers on multitudes of high-volume / low-price items. If the practice doesn't please the retailers, why do it?

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