... and the effects on the Packaging Supply Chain Partners
Packaging, and in particular the carton play an important role in the revolution of the trade channels. All speakers at the ECMA Pro Carton Congress agreed in unison: every partner in the Packaging Supply Chain needs to work together quickly and intensively to jointly drive this development.
“The market share of online shopping is still very small”, said Marco Atzberger of the EHI Retail Institute. “But if we see what is happening out there, throughout Europe people are jumping on the bandwagon. Now is the time to prepare for the tsunami ahead.” Now, those who were born with Google 18 years ago have reached an age with fully developed purchasing power. He presented a study on the potential of packaging in Multichannel Retailing which the EHI Retail Institute had conducted on behalf of Pro Carton. Brochures, reports and further information will follow shortly.
Design
David Hughes, Professor for Food Marketing in London, monitors the food market which is presently undergoing huge changes. "Multichannel retailing brings huge complexities both in packaging and in supply chain management. Today, Walmart is the biggest grocery retailer worldwide with a turnover of 470 billion dollars, the second largest is Carrefour at approximately one quarter the size. In 2020, Walmart might still be the leader, but it could also be Amazon who are just beginning to sell foods. Amazons growth is outpacing the rest of the market, by 2017 Amazon will have a much bigger turnover than Carrefour. Suddenly you can buy groceries everywhere!”
“Big stores are doing badly, right across Europe convenience stores are doing particularly well – and of course online retailing is doing well. In my market I’ll be really surprised if 10 percent of all grocery isn’t done through online. Multichannel retailing is going to be effective. The winning retailer is the retailer that is good online, does a big box store well, has convenient stores, metro stores and manages the complexity of supply management. There are packaging implications here too, because the sort of packaging that goes well in a convenient store is quite different from the packaging that would do well in say a big box store.”
Another trend is also being pushed via the Internet: “We don’t just buy ingredients, we buy elements of a meal for a cheap price and we bolt it together. This is tearing the guts out of the restaurant trade and it will continue. Wherever you go, groceries are seeking a bigger bite of the restaurant sales with new fresh food offerings. This also has huge implications for packaging.”
Lisa Byfield-Green, Senior Analyst at IGD, underlines another aspect: “Design is very important when you got a package on the shelf in the store, even more important when you’ve got a product that is only seen on the screen. When customers are shopping online it is really difficult to understand how many products you are going to get in a packet when you just see this little square on the screen. Just by taking one bottle out and placing it next to the pack so that people could see the proportions, Sainsburys managed to grow sales by 33 percent – just for one product, by changing the image on the website.”
Logistics
Logistics will also change considerably as the shipping units will no longer be used solely for filling the shelves. Possibly the packaging units for automatic processing in fully automated shipping warehouses will look totally different than from today. One thing is sure, the carton has fantastic opportunities here. Atzberger: "Carton is a very good packaging material because the products come in boxes that can be handled automatically. The demand for packaging that can be handled efficiently and in an automatic way will rise, with standardized formats so that boxes and crates can be filled in a cost efficient manner.”
Online considerably increases the choices for consumers. Online orders are usually bigger stocking up orders, requiring new pack sizes and volumes. Byfield-Green: "Stocking up on big bulky items is something that we tend to do when we are shopping online. This gives more opportunities for bigger pack sizes and tailored ranges. If the packages are handled in a dark store, how will the packaging cope with that? That’s an innovation that is worth thinking about when designing packaging, making it really easy for the retailers to work with the packaging that they get.”
Sustainability
The young generation has grown up with environmental thinking and places value on sustainabilty. Excess packaging is becoming increasingly taboo - a major task for brand communications and logistics. Philipp Riederle, an expert on the young Internet Generation, to which he belongs: “For my generation it is self-evident that we order everything online because we never have known any different way. We don’t need much packaging, for us it has to be functional, less is more. The 19, 20 year olds spend a lot of money on really good products, and there are products where we love the packaging. When we are investing our money in luxury goods, for us the packaging is important. On E-Bay you can even buy Apple-packages without content for a lot of money just because they are so nice.”
David Hughes underlines this from a market research angle. Bein gable to compare products via the Internet we have seen a change in attitude among consumers: “Shoppers want to know much more about where their food and packaging comes from, and they will expect that the industry knows. The risk management in the food industry is just making sure that we are lily-white with regard to packaging integrity.”
Growth
“If you look at the channels that will be growing the fastest we’ve got the discounters, the convenience stores and online right at the top”, said Byfield-Green. “It is a small part of the business now but its growing the fastest, anyone who really wants to get ahead in the market is starting to focus their efforts on where the growth is.”
Anyone standing in the wings and waiting to see what will happen, will reach the Point of Sale too late. The Swedish scientist, Micael Dahlen, said it clearest at the congress: “No matter, what you do, you can never really prepare for the future, you can never beat the future. So don’t bother so much about what you do, think more about, when you do it, how you do it and why you do it: do it for the right reason in your very own unique way as fast, as soon as you can.”
Risk researcher and poker ace Caspar Berry thinks alike: “We are making decisions in our lives in a world of uncertainty and we don’t know exactly what the future holds. And very often that can stop us from taking the opportunity, from making the right decisions, from taking good, positive, calculated risks.”
Decisive for success is early collaboration in the Supply Chain. Byfield-Green: “What is it that suppliers can do to really maximize growth in online? It's all about structure and people, its all about customer management, working in conjunction with the people you are supplying, whoever that may be. And managing finances to track the online channel, to track every channel and understand how its performing. Some of the companies now are starting to give dedicated resource to manage online customers.”
“Thinking about the different ways a product will be handled or sold and innovating is absolutely going to make sense for everybody in the business. Tailored product solutions for the online channel: it doesn’t look like that we’re quite there yet, but certainly this is a future opportunity.”
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