Unit pricing: a guide for grocery retailers

Australian Competition and Consumer Commission 23 Marcus Clarke Street, Canberra, Australian Capital Territory, 2601

First published by the ACCC 2010

10 9 8 7 6 5 4 3 2 1

© Commonwealth of Australia 2010

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced without prior written permission from the Commonwealth available through the Australian Competition and Consumer Commission. Requests and inquiries concerning reproduction and rights should be addressed to the Director Publishing, Australian Competition and Consumer Commission, GPO Box 3131, Canberra ACT 2601 or by email to [email protected].

Important Notice

This publication has been updated to refer to the Competition and Consumer Act 2010 which replaces the Trade Practices Act 1974 on 1 January 2011. For more information on the Australian Consumer Law changes see www.consumerlaw.gov.au

This publication gives you basic information. It does not cover the whole of the Australian Consumer Law (ACL) and is not a substitute for professional advice.

Because it avoids legal language where possible, there may be some generalisations about the application of the ACL. Some of the provisions referred to have exceptions or important qualifications. In most cases the particular circumstances of the conduct need to be taken into account when determining the application of the ACL.

ISBN 978 1 921887 02 4

ACCC 12/16_182

www.accc.gov.au

www.consumerlaw.gov.au

Unit pricing: a guide for grocery retailers 1

Contents

Unit pricing—what you need to know at a glance 3

Introduction—what is unit pricing? 5

Do the unit pricing rules affect me? 7

What unit pricing information must I display? 9

What things do not have to be unit priced? 13

How should unit pricing information be displayed? 16

Do I need to display unit pricing in my advertising? 18

What if I don’t display unit pricing information? 19

Appendix 20

Contacting the ACCC 22

2 Unit pricing: a guide for grocery retailers

Unit pricing—what you need to know at a glanceWHAT is unit pricing?Unit pricing means displaying the price of a grocery item as a standard unit of measurement alongside its selling price. Different types of grocery items use different measurements. For example, the label for a 500 millilitre bottle of milk would show the unit price per litre, in addition to the selling price.

Unit pricing allows consumers to quickly compare the value of products of varying size and brands.

The unit pricing requirements are set out in the Trade Practices (Industry Codes—Unit Pricing) Regulations 2009 (the code), which came into effect in July 2009. The Trade Practices Act 1974 under which the code was introduced via regulation has been renamed the Competition and Consumer Act 2010 (the Act).

The code affects businesses (‘retailers’) that sell food-based groceries to consumers. Any business that displays unit pricing must do so in accordance with the code.

WHO has to display unit pricing?Unit pricing is mandatory for:

1. Retailers:

o whose retail premises are used primarily for the sale of food-based grocery items, and

o have floor space greater than 1000 square metres dedicated to the display of grocery items, and

o sell the minimum range of food-based grocery items.

2. Online retailers that sell the minimum range of food-based grocery items.

Under the code these retailers are called prescribed grocery retailers.

WHO can display unit pricing if they want to?Retailers that sell the minimum range of food-based groceries, but have a floor space of 1000 square metres or less can opt in to unit pricing in accordance with the code.

Retailers opt in to the code if they introduce in-store unit pricing for one or more types of non-exempt grocery items.

Under the code, retailers that opt in are participating grocery retailers and must comply with all the code’s requirements.

IIIIIIII II IIIIII

MILK 500 mL

$2.00 per L$1.00 ea


Unit pricing—what you need to know at a glanceWHAT grocery items do I have to show unit pricing for?All grocery items, including some non-food items, must be unit priced except for those that are:

o on the list of exempt items

o sold at a reduced price due to damage or their perishable nature

o offered for sale as a bundle of different types of items for a single price; the items don’t have to be packaged together

o discontinued items.

WHERE do I have to display unit pricing?Unit pricing must be displayed:

o where a selling price is displayed for a grocery item—this includes labels and promotional signs

o in print advertisements where a selling price is listed

o in online store price lists.

Unit pricing doesn’t apply to non-print advertising, such as television, radio or online audio or video advertising.

HOW must unit pricing information look?Unit pricing information must be:

o prominent—it must stand out so that it is easily seen

o proximate—it must be positioned close to the selling price for the grocery item

o legible—it must not be difficult to read

o unambiguous—the information must be accurate and its meaning clear.


Introduction—what is unit pricing?Unit pricing means displaying the price of grocery items for a certain unit of measurement in addition to the item’s selling price.

These regulations are contained in the Trade Practices (Industry Codes—Unit Pricing) Regulations 2009.

The code sets out how items must be unit priced.

Displaying information in this way (for instance, displaying an item’s price per 100 grams of weight) makes it easy for consumers to compare the price and value of similar types of products.

For example, with unit pricing a consumer does not have to make complicated calculations to work out which is better value: a 2.5 litre container of laundry detergent costing $7.62 or a 1.5 litre container costing $5.74.

LAUNDRY DETERGENT

$3.83 per 1 L

$5.741.5 L

Unit price

LAUNDRY DETERGENT

$3.05 per 1 L

$7.622.5 L

Unit price

This is because they can easily see that the unit price of the first container is $3.05 per litre and $3.83 per litre for the second. The information will be displayed with the item’s selling price on the shop label.

Not all businesses are required to display unit pricing. Whether your business must display unit pricing depends on the size and type of your shop and the types of grocery items that you sell.

If you do not sell the minimum range of groceries or don’t primarily sell food-based groceries, you do not have to display unit pricing for grocery items.


Some categories of grocery retailers can opt in to the scheme. If they do, they must comply with all of the code’s requirements—that is, they must display unit pricing strictly in accordance with the code.

Also, some kinds of grocery items are exempt from unit pricing.

This guide aims to help your business understand unit pricing and what you will need to do to comply with the code. It offers detailed guidance on:

o whether your business will need to display unit pricing

o how you should display unit pricing, including in advertising and product labelling

o items that are exempt from unit pricing

o unit measurements used for different types of goods.


Do the unit pricing rules affect me?The code covers certain businesses (retailers) that sell food-based grocery items to consumers.

Who must display unit pricing?Unit pricing is mandatory for:

1. Retailers:

o whose retail premises are used primarily for the sale of food-based grocery items, and

o have floor space greater than 1000 square metres dedicated to the display of grocery items, and

o sell the minimum range of food-based grocery items.

2. Online retailers that sell a minimum range of food-based groceries.

These retailers are called prescribed grocery retailers under the code. It is mandatory for businesses in either of these groups to display unit prices for items wherever they display a selling price.

If you belong to one of these groups, you must display unit prices.

Other retailers that can choose to display unit pricingGrocery retailers that sell the minimum range of food-based grocery items but have a floor space of 1000 square metres or less can choose to either opt in to the code, or not participate at all.

If you opt in, you become a participating grocery retailer under the code and you must comply with all of the requirements in the code.

How do I opt in to the code?

You opt in to the code if you introduce unit pricing in store for more than one type of non-exempt grocery items.


You have not opted in if:

o you display unit prices to comply with other mandatory legislation (such as trade measurement legislation)

o you only display unit pricing in advertising (but not in your shop or on your website)

o you do not sell the minimum range of food-based grocery items.

What happens if I opt in but later decide I want to stop displaying unit prices?

The code will no longer apply to you if, at any time, you stop displaying unit pricing for all grocery items covered by the code (except for those grocery items which are required to be unit priced under other mandatory legislation).

What is the minimum range of food-based groceries?Under the code, you sell the minimum range of food-based grocery items if you sell all the following types of groceries:

o bread

o breakfast cereal

o butter

o eggs

o flour

o fresh fruit and vegetables

o fresh milk

o meat

o rice

o sugar

o packaged food that is not otherwise on this list.

If you don’t sell all of these food types, the code does not apply to you.

Floor spaceUnder the code, floor space means the continuous, internal floor area of your premises.

Floor space does not include areas for consuming food or drinks (such as cafe areas).


What unit pricing information must I display? To ensure that consumers can easily find and understand the unit price of different groceries, the code has rules about the kind of information that must be displayed and how it must be displayed.

Measurement unitsThe code sets out the unit measurements that must be used for each kind of grocery item.

Some specific categories of grocery items use non-standard measurement units, but most use standard measurement units.

Tables 1 and 2 show the measurement units to be used for unit pricing different kinds of grocery items.

Table 1: Non-standard measurement units for specific grocery types

Grocery category Unit of measurement

fruit and vegetables (including mushrooms) This category includes any fruit, vegetable or mushroom that is fresh, frozen, dried, canned or pre-packaged

(a) per item included, or

(b) if supplied by weight—per kilogram

meat (including poultry, seafood and smallgoods) This category includes any meat that is fresh, frozen, dried, canned or otherwise pre-packaged.


(b) if supplied by weight—per kilogram

beverages (including beverage concentrates)

per litre


Grocery category Unit of measurement

cheese per kilogram

packaged eggs per 100 grams

flour per kilogram

herbs per 10 grams

powdered sauce and stock per 10 grams

spices per 10 grams

ice per kilogram

flavouring essences per 10 millilitres

food colouring per 10 millilitres

make-up


(b) if sold by weight—per 10 grams, or

(c) if sold by volume—per 10 millilitres

products supplied on a roll (including toilet paper)

(a) if supplied by continuous length—per metre, or

(b) if there are 40 or fewer items (including sheets) on the roll—per item included, or

(c) if there are 41 or more items (including sheets) on the roll—per 100 items

air fresheners (a) per item included, or

(b) if supplied by volume—per 10 millilitres

products supplied by number in packages of 41 or more items

per 100 items

laundry supplies (including washing powders and liquids, fabric softeners and fabric bleach)


(b) if supplied by weight—per kilogram, or

(c) if supplied by volume—per litre

pet products (other than pet food)


(b) if supplied by weight—per kilogram, or

(c) if supplied by volume—per litre

Groceries not listed above must use the most relevant of the following standard units.

If there is a unit of measurement displayed on the packaging for a grocery item, that unit is the most relevant and should be used in the unit price.


Table 2: Standard unit pricing measurements

grocery items supplied by volume per 100 millilitres

grocery items supplied by weight per 100 grams

grocery items supplied by length per metre

grocery items supplied by area per square metre

grocery items supplied by numberper item

(a) where the unit price per item must be displayed, the kind of grocery item may be referred to in the unit price—for example, $1.52 per nappy

(b) grocery items usually supplied as a pair—for example rubber gloves—are considered one item for the purposes of the code

Products supplied by two different measurements—for example, by number and weightIf packaging for a grocery item has more than one unit of measurement, use the unit the product is most often supplied by.

For example, a brand may sell taco shells both by number supplied in a pack (a box of 10 shells) or by weight (200 grams). If taco shells are most often supplied by the number of shells, they should be unit priced per shell.

Items that are the same, offered together for a single price (including ‘two for one’ offers)Where two or more of the same items from a particular product range are offered together at a discount, the unit price must be displayed wherever the selling price is stated.

For example, a supermarket promotes an offer where consumers can buy ‘five 400 g cans of X Brand tomato soup for $8.00’. The unit price of $0.40 per 100 g must be displayed in any catalogue or in-store signage where the selling price is stated.

Unit pricing must be displayed where two or more of the same grocery items are offered for a

single price

2 L orange juice

$4.57Buy two for the price of one!

$1.14 per L


Unit pricing must be displayed where two or more of the same grocery items are offered at a single price.

Consistency with other pricing practicesIf you sell two or more of the grocery categories in Table 1 that are supplied by number (or on a roll), you may use the unit of measurement that you are most often required to use when unit pricing these goods.

For example, a retailer mainly sells nappies in quantities greater than 50 but also sells a few in smaller packs of 20 nappies. Normally, the 20-packs would have to be unit priced per nappy. However, because this retailer is most often required to display the unit price per 100 nappies (for the larger packs), the retailer can choose to display the per 100 nappies unit price on the smaller pack.

Buy 4 tins for

$3.50$7.00 per kg

125 g sardines in oil


o books, magazines and stationery

o optical discs and magnetic storage devices used for computing, sound reproduction or video, whether or not they are pre-loaded with content

o photography items and equipment

o electrical items (other than batteries and light bulbs)

o garden tools and items for garden or pool maintenance or decoration

o flowers, including fresh, dried and imitation flowers

o furniture

o hardware items

o manchester

o computer equipment

o audio-visual equipment

o telecommunications items or equipment

o items for motor vehicle maintenance or repair

o sports and camping equipment

o toys

o household appliances and kitchen and bathroom utensils

o clothing, jewellery and other fashion items (other than make-up)

o services, and goods supplied as part of providing a service, including mobile phone recharges

o goods for hire

o cigarettes and other tobacco products, including nicotine replacement products

o alcoholic beverages

o haberdashery

o items sold from vending machines

o meals prepared at the retail premises for immediate consumption.

What things do not have to be unit priced?Certain categories of goods, as well as goods that are part of certain promotional offers, are exempt from the requirements of the code. You do not have to display unit prices for them.

List of exempt grocery categories


Bundled products

Bundled grocery packs

Groups of different grocery items that are sold together (or ‘bundled’) for a single price do not have to be unit priced.

The items do not have to be packaged together for this exemption to apply.

For example, an offer where you can buy a packet of frozen potato chips and a separate packet of frozen fish fillets together for a single price would constitute a bundled grocery pack so you don’t need to display a unit price where the representation about the bundle’s price is made.

* Dental floss 45 m * Toothpaste 110 g * Mouthwash 500 mL

Bundles of different kinds of grocery items do not require unit pricing

All 3 items for

$8.49Save $3.50

Promotions where different items are offered at the same price

In an offer where a consumer can buy one of a range of different items for a single price, you are not required to display unit pricing if the price remains constant.

For example, in an offer where a consumer can buy any one of a range of chocolate bars of different kinds and weights for $1.50, you are not required to display a unit price, only the selling price.

All lipsticks

$5.50eaWide range

o Dental Floss

Unit pricing is not required where similar items of different sizes and weights are sold at a single price.


Marked down products

Perishables

Items such as meat and dairy products that are marked down from their usual price because they are getting close to their use-by date don’t need to be unit priced.

Damaged goods

Items that are damaged or have their packaging damaged and are marked down from their usual price do not need to be unit priced.

Discontinued items

Items that are sold at a discount because they have been discontinued are exempt from the code, and do not have to be unit priced.


How should unit pricing information be displayed?The code contains general rules to ensure that unit pricing is accurate, clear, easy to locate and easy to understand. It also contains some specific rules about how prices must be displayed.

General rulesThere are four main rules that apply to every situation where unit pricing information is displayed.

The unit price for a grocery item must be:

o prominent—it must stand out so that it is easily seen

o proximate—it must be close to the selling price for the grocery item

o legible—it must not be difficult to read

o unambiguous—the information must be accurate and its meaning must be clear.

Where the unit price is $1.00 or more

If a unit price is $1.00 or more, the unit price must be displayed in dollars and whole cents.

For example, the unit price for a kilogram of oranges is $3.00 per kilo. This must be displayed as:

IIIIIIII II IIIIII

ORANGES2 kg bag

$3.00 per kg

$6.00ea


Where the unit price is less than $1.00

If a unit price is less than $1.00, the unit price must either be:

In dollars and whole cents. For example:

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YOGHURT1 kg

$0.44 per 100 g

$4.40ea

OR

In whole cents:

IIIIIIII II IIIIII

YOGHURT1 kg

44c per 100 g

$4.40ea

Where the selling price is the same as the unit price

In this case, the unit price should still be displayed in the same way as in the examples above.

Rounding unit prices

Unit prices must be worked out to the nearest 1 cent. Any part cents of 0.5c or greater should be rounded up to the nearest 1 cent.

For example, if you calculate the unit price for a can of soup at $0.515 per 100 g (without rounding), the unit price must be displayed as $0.52 per 100 g.

If the unit price was $0.514 per 100g without rounding, it must be displayed as $0.51 per 100 g.


Do I need to display unit pricing in my advertising?

Print advertisingIf you are required to display unit pricing in your shop (or on your website) you must also display it in any print advertising—for example, in catalogues and newspaper advertisements.

The code’s rules about what information must be displayed and how it must be displayed (covered on pp. 16–17) also apply to print advertisements.

Television, radio and other electronic media (apart from websites)You are not required to display or state unit pricing for grocery items in television, radio or other electronic advertising (apart from websites).

Website and online advertisingIf you are required to display unit pricing for products in your shop, you must also display a unit price for these products in online advertisements, including websites, where a selling price is listed.

The exception is video files that are similar to television advertisements or audio files that are similar to radio advertisements. These do not require unit pricing.


What if I don’t display unit pricing information?The code is a legally binding set of regulations. This means that if you don’t comply with the rules in the code, you will breach the Act and you may face serious consequences.

Legal action by the ACCC or other affected parties The ACCC, or any other affected parties, can institute legal proceedings against you if you breach the code.

The Act provides for a number of sanctions and orders including:

o injunctions to stop the conduct

o compensation and damages

o setting aside or varying relevant contracts

o orders for corrective advertising

o for conduct that also breaches any of the criminal provisions of the Act, fines of up to $1.1 million for companies and $220 000 for individuals.

The Act also provides for the ACCC to accept court-enforceable undertakings in appropriate circumstances.

What should I do if I believe I am not complying with the unit pricing code?If you believe you may be in breach of the code, you should:

o seek professional advice on whether you are in breach of the Act

o take steps to comply with the code

o review how the breach came about

o put in place an effective compliance program to avoid future recurrences.


AppendixWho must display unit pricing information?

Store-based retailers

Online retailers

The code does not apply to you. You are not required to display unit prices for any items (except those where unit

pricing is required under other mandatory legislation).

Do you sell all these types of groceries?

• bread• flour• rice• breakfast

cereal• fresh fruit and

vegetables• sugar

• eggs• meat• butter• fresh milk• packaged

food that is not otherwise on this list

Do you sell all these types of groceries?

• bread• flour• rice• breakfast

cereal• fresh fruit and

vegetables• sugar

• eggs• meat• butter• fresh milk• packaged food that

is not otherwise on this list

Yes

No

No

Do you primarily sell food-based groceries?

No


Unit pricing in accordance with the code is mandatory for your business.

You can choose to opt in to the code, or nor participate at all.

You opt in by displaying in-store unit pricing information for any non-exempt grocery items.

Retailers that opt in must comply with all the code’s mandatory requirements.

Does your store have greater than

1000 m2 floor space dedicated to the display of

groceries?

Unit pricing in accordance with the code is mandatory for your business.Yes Yes

No

Yes


Contacting the ACCC

Infocentre: 1300 302 502

Callers who are deaf or have a hearing or speech impairment can contact the ACCC through the National Relay Service (NRS): www.relayservice.com.au

Voice-only (speak and listen) user, call: 1300 555 727 and ask for 1300 302 502

For information in languages other than English, call: 131 450 and ask for 1300 302 502

Indigenous infoline: 1300 303 143

Small business helpline: 1300 302 021

For other business information go to: www.business.gov.au

Website: www.accc.gov.au

Infocentre 1300 302 502

www.accc.gov.au

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