- Contract Packaging
- Leaders in Packaging
Article | September 1, 2011
Retail Ready Packaging: The North American Perspective
IGD is a UK-based consultancy that provides insight and best practice information to the food and grocery industry worldwide.
Recognizing that a number of RRP initiatives were underway in North America, IGD this year undertook an industry survey, with over 110 suppliers in North America responding, supported by a series of executive interviews, to understand what progress had been made over the last 12 months, how suppliers are adapting to requests for RRP, and what their experiences have been to date.
• Retail Ready Packaging (RRP) continues to gain traction in North America as a greater number of retailers start to consider implementation, and others broaden the scope of existing initiatives into additional categories.
• Suppliers in North America are more engaged on RRP than they were 12 months ago.
This has been driven by a range of factors including:
–Improved understanding of RRP as misconceptions are being broken down
Related Sponsored Content
–Ability to implement some quick wins
–Increased penetration of RRP across categories
–Appreciation of the strategic benefits of compliance
However, the costs associated with implementation remain a major barrier to development for many suppliers.
• The proportion of suppliers forecasting that RRP could drive a sales improvement has more than trebled over the last 12 months. 28% of suppliers, compared to 6% in 2010, forecast that RRP can drive a sales uplift of between 3% and 10%.
• For the majority of suppliers, costs remain a significant barrier, although in 2011, almost half of all suppliers (48%) in North America stated that the lack of common standards is a major issue.
• However, the scale of the cost impact may be lower. Whereas 65% of suppliers were forecasting cost increases in excess of 6% in 2010, this has fallen to 43% in 2011.
• Over a fifth of suppliers (22%), compared to just 15% last year, believe that RRP could drive improved business results despite the potential for additional costs. A similar proportion of suppliers continue to describe themselves as highly engaged with the initiative.
• 57% of suppliers in North America stated that they had experienced an increased number of requests for RRP over the last 12 months from their retail customers.
• This included existing retailers adopting a broader approach with new categories being added to existing programs, including health and beauty, non-food and chilled products.
• Almost a third of suppliers (32%) stated that they are now more enthusiastic with regards to requests for RRP. This has been driven by a range of factors including improved knowledge and experience, gains made from quick wins and the improved economics of conversion as the level of requests increases.
• In terms of actual benefits, almost two-thirds of suppliers (63%) in North America have not achieved any to date. This is down significantly from last year (83%), but the high proportion is unsurprising given that many suppliers are only now starting to see their RRP solutions land in store.
Almost half (49%) of all suppliers forecast an availability improvement of at least 1% (compared to 40% in 2010).
• Although almost two-thirds of suppliers (63%) state that their retail customers are pushing ahead with RRP regardless of the challenges which they face. There has also been a significant increase in the proportion of suppliers which are acknowledging a more collaborative approach from their retail customers (from 5% to 24%).
• Suppliers remain cost focused, with three out of five suppliers having assessed the impact of RRP on their costs base, but no more than a third having assessed the impact on sales availability or the shopper.
• RRP is also providing many with the opportunity to optimise brand visibility at the shelf edge as traditional marketing channels are becoming more fragmented.
• Improved execution at store level is one of the key asks that suppliers have of retailers, along with a desire for longer lead times to implement and the acceptance of progress versus perfection.
E-BOOK SPECIAL REPORT
44 Best Package Designs: 2015
Sign up to receive timely updates from our editors and download this e-book of our editors’ selections for most innovative package designs of the past year.