Stora Enso, the global rethinker of the paper, biomaterials, wood products and packaging industry, has released its third Viewpoint, “Retail Packaging 2016 and beyond”.
Yes, it purports to be global. No, Australia is not mentioned by name. But in business these days, the borders are coming down. What is happening in Aldi in the UK, is happening here. And what Mondelez and P&G are doing in Europe, they are either extending – or planning to extend – worldwide. You will identify with the issues in this report, recognise the trends and - most likely - find the conclusions extremely useful.
The report cites case studies, for example, with findings showing how retailers can reduce costs between 50 and 70% by using smart packaging solutions. It also covers the key factors for standout in a market where private-label goods penetration is expected to reach 50% within ten years.
“When 70% of consumers’ grocery retail purchase decisions are made at the point of sale, and the retail market is in strong competition, we know that packaging plays a significant role contributing to increased sales and reduced cost throughout the value-chain,” stated Hannu Alalauri, packaging solutions senior vice president at Stora Enso.
“The purpose of retail packaging is expanding. From the original purposes of containment and protection, retailers and brand owners began to see the significant potential for packaging as a platform for communicating with all, if packaging can lift sales by just 1%, it has a much larger impact on the bottom line than any cost optimisation can deliver. Second, a retailer tends to consider indirect costs of packaging handling. For example, shelf-ready packaging can reduce replenishment costs by 1 to 2% - a significant number considering most retailers earn low single-digit margins. Sustainability aspects are usually considered at the same time as they relate to some indirect cost such as disposal and recycling. The sticker price of the packaging is generally not one of the most important considerations for buyers.”
The report covers five themes influencing future grocery retail packaging. The extracts below will give you an idea of the opportunities contained within them.
1. The success of discount retailers
“…With its continuous focus on cost, discount has become one of the greatest adopters of innovative packaging. Perhaps the most important example is shelf-ready packaging, which can reduce replenishment costs by up to 50% compared to traditional shelf placement…
“…Discounters are also trying to reduce the direct cost of packaging by using less material. For instance, brand owners Mondelez and Procter & Gamble are pushing bundled packaging, where related products such as toothpaste and toothbrushes are sold in the same packaging.”
2. Increased private label penetration
“Retailers are effectively becoming brand owners themselves, and this means they are becoming more involved in packaging in general, especially in countries with high private-label penetration. Packaging is seen as every bit as important as the characteristics of the products themselves, and some retailers even employ in-house competence in packaging development and design. Also, some retailers are involved in packaging sourcing, typically bundling packaging volumes for several low volume, private label suppliers…”
3. Intelligence in packaging solutions
“… Applications can now take corrugated packaging from its traditional passive role of containment and protection to more active and intelligent roles using surface treatments, tracking technologies, and advanced sensors and indicators…
“…Surface coatings can be applied to corrugated packaging to improve its performance in a variety of ways. Some can prolong the shelf life of fresh food products, for example absorbing unwanted oxygen and ethylene. MeadWestvaco estimates that using active coatings to remove ethylene could extend shelf life by 10% and also help reduce waste.”
4. The shift of retail to online channels
“As the channel has matured, more consumers are expecting to be compensated for the retail experience they lose by going online. Online retailers are therefore experimenting with how they can make their brown boxes more attractive. For example, European online fashion retailer Mr. Porter is using boxes made of high quality materials with attractive printing on the outside and personal notes to customers on the inside…
“…The inability to try products before purchase has led to as much as 30 to 40% of items purchased online being returned. Therefore, packaging needs to be easy to open and reseal for convenient returns and reduced waste. Amazon has already developed corrugated board packaging that works like a big envelope, making it ideal for returns.”
5. A greater focus on sustainability
“In DuPont’s global survey of more than 500 packaging professionals, sustainability was named the toughest challenge in packaging. Some are pushing recyclability, renewability, reusability, and other aspects of sustainability because of corporate sustainability goals, in part driven by customer requirements, whereas others are doing it primarily for cost reasons.”
Curious? Read the full report here: Stora Enso: Retail Packaging 2016 and Beyond
