Revolution in the retail trade

Purchasing and information behaviour in E-Commerce compared to the stationary trade

"Last year every second person ordered something at least once via the Internet. Some product areas are affected massively, and there are still some product areas hardly affected yet, I underline: yet!"

"The book trade is certainly affected most by the Internet. It is relatively easy to ship a book. Half the people purchasing books buy on the Internet these days, definitely a large number. This business sector is struggling hard with the change, but it also shows what could happen in other sectors if the Internet trade gains in importance."

"It is a tremendous challenge for the trade that people visiting their stores often know more than their sales personnel. And the core problem is, that buyers usually come armed with a price gleaned from the Internet. The retail trade is attacked from two sides, on the one hand stationary trade is losing business to the Internet, on the other people visit stores well informed."

" E-Commerce will increase. First of all, new platforms join the Internet every day, making the product offerings broader, and existing platforms are expanding their ranges. And acceptance among buyers is also increasing."

"Why do people buy via the Internet? Many believe that price ist he dominating factor, but that is not true. The buzz word is convenience. Price is also important, but convenience tops the list. There are no specific hours of business at home on the couch, you can buy at all times and have the largest selection of products worldwide. Things can't be any simpler for the consumer, this is convenience all the way."

"What are the implications for the packaging industry? Mainly questions: "Is packaging suitable for shipping? Volume, strength, handling, labelling, suitability for returns – what happens when the customer rips open the packaging at home and then just stuffs the product back inside? Is packaging destroyed during opening or can it be used to return the goods? Can packaging create a buying experience at home when the goods are delivered?

Willy Zwerger
Shopping everywhere and at any time. Something the trade needs to address

"There are uncounted perfect examples. Take for instance sports items, shoes and lingerie where showrooms are in, where consumers can view the goods, but order the right size via a console or tablet on site. This saves the retailer having to stock all sizes and variants of all products."

"The British retail chain Tesco successfully launched a revolutionary idea some two years ago. Using South Korea as a test market, photos of shelves with products with codes for photographing were installed at the tube stations in Seoul. The logistics were organised such that the ordered goods would arrive at the same time as the purchaser arrived home. A 30 per cent increase in turnover has encouraged Tesco to extend their virtual shopping programme and they have now integrated bus and railway stations. Other cities are waiting in the wings."

"A few weeks ago REWE presented a similar model in Austria. As part of the Billa Online Shop and the implementation of the Billa App for mobile shopping in comfort, billboards and CityLights displayed products which could also be scanned and ordered. The average online purchase at Billa amounts to over EUR 80, whereas the average purchase in the Billa stores only amounts to EUR 13. However, the current ratio of goods purchased online is less than one per cent of total turnover. So there is plenty of room to manoeuvre, especially when considering that similar business models in Scandinavia or the Netherlands generate close to 20 per cent."

"In view of the fact that sales space in the retail trade has shrunk for the first time, and not only the number of outlets, it is time for multi-channelling to become a major topic everywhere. Success also means incorporating E-Commerce in businesses, not only in terms of structures, but mainly in the minds. One should finally dispense with the notion that E-Commerce is the enemy of the stationary trade and is only successful due to pricing issues."

In Europe, the Scandinavians head the list, closely followed by the British. The reasons are obvious: the Scandinavians have always been the test market for telecommunication providers, and the UK is an early adopter and started far earlier to put their ideas into practice."

"In ten years there will be fewer outlets than today. These will be more like "sample" outlets where one can view the various models, shapes and colours and then order them online from the outlet. Many will provide a home delivery service which reduces shopping in its classical form to products which require a greater deal of explanation or foods, especially fresh foods."

"What does that mean for the packaging industry? The most important questions for the Packaging Supply Chain: how to solve the problem of the different temperature ranges for foods and how can one create returnable systems to keep the ecological footprint as low as possible? And, closely related, which vehicles will be used for delivery in the future: delivery bicycles, mini electric cars, delivery trams, fleets of taxis that also offer home deliveries, or mobile vendors with temporary delivery sites?"

"The packaging industry should certainly seek talks with the retail trade, which after all dictates the type of distribution and has no doubt already been in contact with the industry as to the feasibility of options."

Discussion: action required by the Supply Chain

In the following, Dr. Andreas Blaschke (President ECMA) and Roland Rex (President Pro Carton) discussed the effects of the changes for the packaging industry together with the speakers and the audience with Franz Rappold (Pro Carton) as moderator.

The discussion clearly showed that the Supply Chain is presently in a crucial phase. Consumer behaviour is changing dramatically and the retail trade is first in line when it comes to being confronted with new needs and requirements. All partners in the Supply Chain should grasp the opportunity of discussing existing and new options.

For example, deliveries from central logistic centres in place of deliveries from the dealers could create a demand, especially for new, brand-adequate packaging:

1. a) Designs according to the specifications of the brand owners and trading companies
2. b) Development of multi-channel solutions
3. c) Complying with temperature specifications when delivering fresh goods.

The discussion also highlighted that the packaging industry has many excellent solutions available which are not yet top of mind in the retail trade or the branded goods industry. The packaging industry is challenged to communicate their expertise even wider.

In view of the rapid development there is a dire need for discussions to pursue current developments and to work jointly on future-oriented solutions.

Pro Carton
Suzanne E. McEwen
mcewen@procarton.com
www.procarton.com
www.ppv.at