Major changes in the UK food retail sector caused by a seismic shift in consumer buying behaviours, have resulted in rapidly growing numbers of convenience stores. Martin Leeming looks at the challenges facing the secondary packaging sector because of the accelerated growth of this expanding channel
The reality facing the UK sector at the moment is that despite the proliferation of large out-of-town supermarkets, consumers are instead choosing to buy their food in convenience stores, online or with discounters such as Aldi and Lidl. As a result of falling sales, a number of the big names in grocery retail have focused recent investment on convenience stores.
For many, this has been a necessary move in light of shoppers’ growing preference for convenience stores. Evidence shows that reliance on the traditional weekly ‘big shop’ is diminishing and shoppers are instead making regular, often daily, visits to smaller convenience stores to meet the demands of increasingly busy lifestyles. It is estimated that as consumers continue to be time poor, changes to the way they choose to shop will see convenience stores grow 22 per cent to £20.2bn by 2020. Similarly, ‘meal for tonight’ purchases will increase by 50 per cent to 2.7bn and purchases of often-warm ‘food to go’ is expected to rise by 60 per cent to £8.3bn.
Figures from the commercial real estate company CBRE show that the big four grocery retailers now run almost 3500 convenience or small stores, such as Tesco Express, Tesco Metro, Sainsbury’s Local and M Local. This compares with 2500 traditional supermarkets. Everyone has talked about online as the big disruptor in grocery shopping, but the growth of convenience stores has arguably had a much greater impact. It has encouraged a change in shopping habits. It is enormous. It has encouraged people to fragment their shopping.
The challenge is posed by the fact this explosion in formats and choice forces 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 essential that food producers factor in these new challenges 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 shelf and maximise brand impact on shelf. One of the barriers is the polarisation of packaging materials supply chains, whether it is corrugate, RPET, cartonboard or film. On their own, each of these pack types have come a long way in reducing the amount of material and therefore cost. However, the pace of improvement is now slowing and new approaches are required. An appropriate 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.
Design innovation is too often focused on primary packaging but secondary packaging has to be clever too if it is to show the primary pack in order to maximise its sales potential. If the product is hidden or there are ripped edges on show, the consumer will not get the best first impression of the product or brand.
With the smaller nature of convenience stores, having the right pack size to drive one-way stock and speed of opening is crucial. Similarly, making sure the pack size isn’t too big will protect against food waste. The answers lie in refocusing on secondary packaging and creating efficient, often hybrid, solutions that consume fewer resources and use fewer materials, to offset the impact of smaller pack sizes.
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 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
Martin Leeming is CEO of TrakRap, an innovative secondary packaging company. Its TrakRap system is established as an alternative to shrink wrapping. The system uses bespoke 100 per cent recyclable polymer film to wrap products and bond the pack together. Removing the requirement for heat tunnels, the system uses 90 per cent less energy than traditional shrink wrapping – which also makes it more suitable for ambient, chilled, frozen or volatile products. Innovative TrakRap trays, developed with TrakRap’s own approved corrugate suppliers, work with the film and allow for up to 40 per cent less cartonboard to be used, resulting in lighter weight, 100 per cent recyclable retail ready packaging (RRP) for retailers.