Stay On Trak

Stuart Pritchard February 24, 2016

Martin Leemingcrop

 

With consumer buying patterns changing dramatically when it comes to food, we hear from to Trakrap CEO, MARTIN LEEMING, on how to keep up with the curve…

The reality currently facing the UK food retail sector is that, whilst the number of large out-of-town supermarkets is rapidly increasing, consumers are choosing to buy their food in convenience stores, online or with discounters such as Aldi and Lidl. As a result, sales are falling and a number of the big players in grocery retail have re-focused recent investment to convenience stores, changing the retail landscape.

The number of consumers who do a traditional weekly ‘big shop’ is diminishing and shoppers are instead making regular, sometimes daily, visits to smaller convenience stores to meet the demands of increasingly busy modern lifestyles, which having an impact all the way down the supply chain – changing pack sizes, driving up packaging costs and increasing merchandising costs. And all the indications are that these changes are set to continue with predictions that convenience stores will grow 22% to £20.2bn by 2020. Similarly, ‘meal for tonight’ purchases will increase by 50% to 2.7 billion and purchases of often-warm ‘food to go’ is expected to rise by 60% to £8.3 billion. Figures show that the number of convenience stores run by the big four has now outstripped the number of traditional supermarkets – 3500 convenience stores versus 2500 traditional supermarkets.

READY OR NOT?

Superior secondary packaging courtesy of Trakrap

Superior secondary packaging courtesy of Trakrap

However, further down the chain, this move has had a significant impact, creating an unprecedented explosion in formats and choice, forcing cost into the supply chain while the discounters continue to peg any potential for price increases by focusing on a limited product range – less than 1500 skus at very low prices – underpinned by an astonishingly low-cost to sell. The reality is that convenience stores are expensive shops to run. Deliveries cost more, rent bills are often higher and they do not benefit from economies of scale because of their smaller size.

The result? Changes must be made to secondary packaging formats and design. Retail ready packaging for convenience stores creates a very specific set of challenges. For instance, space, both on shelf and in the back-ups, is at even more of a premium so delivering ‘one-way stock’ and minimising replenishment time becomes much more critical. It’s unlikely that a pack size that is right for a big store is going to be right for a convenience store. Too big a pack size in fresh food will lead to higher food waste, multiple handling and space pressure in the back-up areas, whereas smaller pack sizes lead to increased packaging cost, increased packaging waste and more packs to handle in the supply chain. Retail ready packaging needs to be ready to offer solutions to these challenges, whilst simultaneously meeting the demands of large supermarkets, hitting sustainability targets and reducing fresh food waste.

It is imperative that food producers take these new challenges into account when planning their packaging requirements. The industry is crying out for new innovations that can deliver smaller packs that are lower-cost, consume fewer resources, are quicker and easier to prepare for unpacking and maximise brand impact. One of the barriers is the polarisation of packaging materials supply chains, whether it be corrugate, RPET, cartonboard or film. Individually, each of these pack types have come a long way in reducing the amount of material and therefore cost.

SECONDARY SCHOOLING

Make the machines do all the work

Make the machines do all the work

However, the pace of improvement is now slowing and new approaches are required. A suitable analogy would be the motor industry, which found itself faced with the challenge of reducing emissions and increasing fuel consumption. Would it be the electric motor, with its emissions benefits but poor travelling performance, or would it be the good old internal combustion engine with the opposite traits? The answer, of course was neither. Manufacturers realised they both complement each other, so the hybrid was born. The same is proving to be true in the secondary packaging sector, with hybrid packs comprising of corrugate and RPET and thin film or a combination of all three, proving to be both effective and energy efficient.

With much of the focus on primary packaging, secondary, RRP or transit packaging – the basic building block of the supermarket supply chain – is often seen as an afterthought. However, there should be two clear objectives for secondary packaging: sell more and lower the cost of sale. Applying the same packaging formats used in large supermarkets to the smaller convenience store simply will not work. Reduced space, high relative operating costs and a broader variety of packaging formats means that much more will be demanded of this type of packaging, and as such, the challenges faced by the sector are greater than any other.

www.trakrap.com