Retail-ready revolution

According to UK grocery sector body the Institute of Grocery Distribution, which in tandem with the ECR UK (Efficient Consumer Response UK) movement and leading FMCG suppliers and retailers has produced its own “Blue Book” on the subject, the essential criteria for retail-ready packaging are that it should offer “improved identification, recognition and direct case-to-shelf replenishment.” The same publication, which offers comprehensive guidelines on best practice, says, equally unambiguously, that one-touch replenishment “represents the aspiration of getting the right product to the right place for immediate case-to-shelf replenishment in one smooth movement rather than decanting single units”. Basic stuff, but well put.

Most will, of course, be familiar with the truism that the last 50 yards of the supply chain are where the greatest costs lie. Two key contributory factors, which the ECR guide says good retail-ready packaging can do much to overcome, are store staff struggling to identify cases at back-of-store and difficulties in opening packaging. Conversely, by ensuring packed products are easy to identify and require minimal human intervention between backroom and shelf, retailers can, the ECR guide says, both dramatically improve workforce productivity and achieve faster shelf replenishment, consequently reducing out-of-stocks. The ensuing benefits should include improved customer loyalty and increased sales – a benefit not just for retailers but also for their FMCG suppliers.

Ben Blydenstein, head of marketing UK & Ireland at SCA Packaging, a major supplier of retail-ready packaging, says this now widely used dual purpose packaging format has been in evidence since the late 1980s, but is now increasingly prevalent as more retailers insist goods are delivered in a retail-ready format. He says: “One of the things we’ve seen, however, is that there’s a lot of knee-jerk reaction; suppliers are increasingly being instructed to implement shelf-ready, What’s not being done is sufficient standing back and deciding the best way of doing things in a proactive sense.”

Blydenstein says SCA considers it fundamental when initiating shelf-ready pack projects to help its customer first clearly establish the business case from both a retailer and a supplier standpoint. He says: “Many manufacturers, particularly, aren’t taking into account the full impacts of retail-ready packaging throughout the supply chain. Are they, for example, considering all the different cost implications; positive and negative? For example while a supplier might have to consider buying a new packaging line, a switch could bring a big boost in sales through increased availability and enhanced visual impact on shelf. The key is not simply to think solely in terms of unit costs.”

“Most of the available research” suggests out-of-stocks are significantly reduced via a switch to retail-ready packaging, argues Blydenstein. “This is simply because if something’s easier to merchandise it’s more likely to be merchandised,” he explains. “There’s a finite resource in store, and if something requires less work it’s likely to be seized upon.”

So there can be benefits all round – not just to the retailer in terms of labour savings, enhanced efficiency and the ability to deploy staff who had previously spent long periods decanting product to other key customer service tasks, but equally to the supplier. Blydenstein says: “Switching to retail-ready gives suppliers the chance to re-package in a format that is easier to spot in the aisle thanks to enhanced graphics and shelf facing.”

SCA believes fundamental to successful retail-ready packaging deployment, however, is good supplier / retailer collaboration – an approach advocated by ECR – and a careful analysis of what benefits and changes a switch will bring. Blydenstein says: “Retailer, supplier and converter need to communicate with each other better to maximise the benefits to all parties.”

On the business case front, he adds: “What’s needed is a process which gives full visibility of the impact of a switch throughout the supply chain, something the IGD strongly advocates and which we support.”

To this end SCA has developed its own process to help retailers and FMCG suppliers “understand the value chain all the way through”. “We use this from an early stage when initiating shelf-ready projects, in conjunction with workshops where different solutions are looked at, played with and we can them produce them then and there and evaluate them before going to full-scale production,” Blydenstein explains.

Having discussed the initial brief, SCA will typically undertake supply chain audits on the product to identify where the key bottlenecks and obstacles are that result in excess costs and unnecessary labour. “This often involves getting video footage and even suppliers can be surprised at what emerges,” says Blydenstein. “Also, you have to consider factors such as a pack that’s very easy to open and put away on shelf may not be sufficiently robust to transport the goods. And at some retailer regional distribution centres you may have roll cages with different products being loaded; if your product is at the bottom will the pack be strong enough to support the weight above it?”

Wherever possible SCA adopts a “hands-on” approach when helping customers decide on the potential benefits of a switch. Among the key attributes of good shelf-ready packs in the company’s view are ease of opening and identification, whether or not the pack is collapsible and recyclable, how strong it is, how much effort is involved in opening any perforations and removing lids, how easy to read and simple to follow any instructions are, and how easy it is to dispose of after use.

A key consideration when SCA designs shelf-ready packs is, of course, the best pack size for the application. Blydenstein says: “Transit or display packs could well get smaller in future; it means there’s more flexibility for different store sizes and formats. A double-faced product might be good for large supermarkets. Certain brands might be able to justify buying double or more facings in a supermarket environment, but at convenience store level that might not be the case at all. Single facing is the most flexible solution. We think the trend is generally towards smaller pack sizes, so we have developed the production capability to produce these efficiently. In particular we’ve invested in a new generation of casemakers which enable you to make with one pass a folded die-cut and printed small case size.”

Perhaps most importantly of all, to ensure the customer ends up with “the right solution”, SCA uses its OneTouch process – a series of clearly defined steps beginning with project definition (selection, together with the customer, of the product and understanding of the customer’s consumer, retailer and distribution objectives) and culminating in delivery to market, with the attendant steps of performance tracking / review, continuous improvements, benefit analysis and business case development. In between are the supply chain audit – where SCA specialists follow goods through the packing line, logistics and retail store to consumer to identify opportunities and bottlenecks; “design solutions” – involving customer workshops with multi-function teams to confirm bottlenecks and opportunities and “brainstorm solutions for packs and machinery”, and a formal testing stage, which includes SCA transit testing and retailer feedback, consumer market research and cost evaluation.

“These five steps to reach the right solution are absolutely fundamental to our shelf-ready packaging strategy,” says Blydenstein. “They form the basis of our entire shelf-ready strategy and are in line with the IGD’s own recommendations in the ECR’s Blue Book, a comprehensive and detailed look at everything from how retail-ready packaging can improve in-store efficiency to the typical supply chain dilemma of benefits versus cost.”