Retailers want it. Consumers need it. We’ve previously looked at creating shelf-ready packaging retailers and consumers will love. Here we’ll look at why more manufacturers aren’t choosing shelf-ready packaging for their products?
Shelf-ready packaging (SRP), also known as retail-ready packaging (RRP), offers excellent benefits for retailers. There are the time and labour saved in stocking shelves, the lower costs of warehousing goods, and the potential for neater, more attractive displays to draw consumers’ attention to products and increase sales.
It should come as no surprise then, that recent research indicates SRP continues to be a high-growth niche in the packaging market, with global shelf-ready packaging approximated to reach $72.4 billion and 37.1 million tonnes by 2022. And the fastest growing region in the global SRP market? Right here in the Asia-Pacific.
While China is expected to make the biggest contribution to the market’s growth in the Asia-Pacific region, Australian retailers have long been adjusting their packaging requirements to favour SRP. Coles first introduced the concept of shelf-ready packaging to its stores in 2009, and has since seen a 27% increase in sales density and increase in the number of customers from 9 million to 16 million per year. The only way to manage this growth is by improving store efficiency — which is where SRP comes in.
However, when we look closer, the actual uptake of shelf-ready packaging by manufacturers globally is slower than expected. A recent study by the PMMI (The Association for Packaging and Processing Technologies) revealed that, while consumer packaged-goods producers in the United States are investing in new capital equipment to meet increased demands for SRP, they are doing so comparatively slowly. Nearly 80% said they were “likely to” buy new equipment to meet increased SRP demands; yet less than half (42%) had done so.
What’s holding them back?
A key driver of SRP is to “improve in-store efficiency through increased speed of replenishment leading to better on-shelf availability and increased sales”, according to the Trading Partner Forum. (See end.)
However, the advantages of shelf-ready packaging for manufacturers and brand owners are less obvious than those for the retailer. Rather, SRP comes with its fair share of challenges for suppliers — some of which are viewed as insurmountable.
Here are some of the biggest perceived challenges:
- Slowing down line speed: Shelf-ready packaging equipment cannot cope with high line speeds, meaning the manufacturer needs to sacrifice output, and potentially profits.
- Reduced area for coding and labelling: One of the main types of SRP is a two-piece tray and hood. To create this according to industry standards, suppliers need a new piece of equipment, which has a bigger footprint and requires more space on the factory floor.
- Lack of flexibility: Unlike Europe and the USA, Australian suppliers don’t have the sheer volume of consumers to produce millions of one product type. As a result, they need equipment with the flexibility to run multiple-size cartons down the line. In the past, it’s been challenging to get packaging equipment that’s as flexible as possible in these areas, which means manufacturers have needed to opt for custom-built equipment at significant cost.
- Limitations of existing equipment: In a bid to meet retailer requirements, some manufacturers are using existing equipment to create the standard wrap-around, or regular slotted carton (RSC), with perforations. The idea is the retailer’s shelf stocker simply tears off part of the box to reveal the products without having to physically remove them. In theory, this is great, but in reality, it results in an unclean tear and messy on-shelf appearance, which is unacceptable to retailers. One solution is to use higher grades of cardboard, which are both stable in transport and tear cleanly. This looks better than lower-grade counterparts; however, it will cost more and won’t be recyclable.
Dispelling the myths
The great thing about the manufacturing industry is that it evolves at a rapid pace. In 2016, the fact is that some of these challenges are no longer valid, or they aren’t as insurmountable as the manufacturers may think.
For example, there are now end-of-line solutions for shelf-ready cartons that meet retailers’ demands, while also being more compact with integrated functions in one machine. These machines, like the Walls Machinery’ Adaptapack Ulysses Shelf Ready Case Packer, are specially designed for the Australian market and can contribute to the long-term quality and cost efficiency of production. (Walls won a commendation for this equipment in the 2015 APPMA Industry Excellence Awards at Auspack 2015. You can read our interview with them here.)
It’s advances like these that are letting manufacturers realise the benefits of shelf-ready packaging in their business. And that is imperative when Australia’s leading retailers are already accelerating rapidly along the SRP road.
Here are three ways that shelf-ready packaging can improve a supplier’s bottom line:
- Improve sales
At the top of the list of the advantages is cold, hard profits. Quality SRP makes it easier for consumers to spot and select products from the shelves. And if they aren’t already a regular consumer, shelf-ready packaging can help increase awareness of your brand. Especially when today’s printers can print high-quality graphics onto corrugated packaging.
- Gain the competitive edge
Major retailers such as Coles and Woolworths are driving steady growth in the SRP market, because of the profits it delivers. This opens the door for suppliers to get the edge on their competitors. If you are addressing and overcoming the challenges of SRP you’re making it easier for retailers to choose your products over your competition and showing that you’re a supplier worth keeping.
- Smaller environmental footprint
When it comes to the environment, shelf-ready packaging benefits the whole supply chain. SRP means less material is used in packaging products. In fact, it can eliminate the entire secondary packaging, provided you use structurally sound cardboard. (You may find the “How can you go green’ with packaging?” section interesting in this ultimate checklist to optimise your packaging & supply chain.)
Time for a change?
The retailers are still the ones that are reaping the most rewards from shelf-ready packaging, but more collaboration between trading partners will solve that.
You may find this blog on working out best board grades for shelf-friendly packaging informative.
We also look at SRP and its impact on manufacturers in an article from our Thought Leader series.
Don’t forget, Matthews has a full range of whitepapers, case studies, articles and brochures to help answer your technical questions. They’re all free to download. And if it’s inspection technologies you’re looking for — such as check-weigh, metal detection, x-ray and vision inspection — you’ll find a host of information here.
The Trading Partner Forum was previously called ECRA, or Efficient Consumer Response Australasia. The Forum is a “meeting place” for FMCG suppliers and retailers/wholesalers focusing on delivering end-to-end value chain efficiency for the industry across Australia and New Zealand. You can check it out here.
Image credit / imaginima