Sign up for the Packaging Digest News & Insights newsletter.
Posted by Linda Casey
January 29, 2014
5 Min Read
Driven primarily by retailers' bottom-line targets, steady growth in the market for retail-ready packs (RRPs) to 2016 will provide new opportunities for suppliers. According to new Pira Intl. research, demand for RRPs will reach 27 million metric tonnes by 2016, up from a 19 million tonne 2010 base.
Retail-ready packaging refers to packaging systems typically made from corrugated board, solid fibreboard or rigid plastic. Designed to alleviate the process of in-store stock replenishment, whilst at the same time enhancing the shopping experience for the consumer, it provides benefits to the total supply chain. RRP includes systems referred to as shelf-ready, display-ready or shopper-ready. Retail-ready packaging is a high-growth niche in the overall packaging market.
New primary research from Pira International assesses the key drivers influencing this market and analyses trends to 2016. The Future of Retail-Ready Packaging to 2016 quantifies and segments the market according to pack type, country and end use for the period from 2001 to 2016, across 14 countries and 22 end-use sectors.
Over time, and under pressure from retailers seeking to improve in-store efficiencies, RRP has emerged as a system designed to reduce the amount of handling required to place products on the retail shelf whilst providing the consumer with easy access to products.
Numerous benefits have been identified for these RRP systems, including:
•both consumers and store employees indicating better product recognition
•‘one-touch' shelf replenishment
•less product damage and more attractive, neater shelf appearance
Developed regions are relatively mature markets for RRP, though some opportunities still remain, but high-growth can be found in the emerging economies of Latin America and Asia-Pacific. China is the fastest-growing market and Pira expects it to increase its share of RRPs from 15 percent in 2010 to almost 18 percent by 2016. Key drivers of RRP consumption range from macroeconomic factors such as population growth, down to microeconomic influences such as printing technology developments and the use of white-top liners.
By far the majority of RRPs are used in food merchandising, making up nearly 78 percent of the total. Beverages contribute a further 16 percent and non-foods make up less than 6 percent in 2010. Pira expects this to change over the medium term as non-foods increase their share of RRPs to 7 percent , beverages grow to over 18 percent and foods reduce to three-quarters of the 2016 market.
Consumption of food and beverages in the countries covered by the study exceeded 6.2 billion tonnes in 2010 and this is expected to grow to nearly 9 billion tonnes by 2016. Food products accounted for 63 percent of the primary packs used in the distribution of these products. Liquid beverages made up a quarter of that and the balance was in non-food sectors. Pira expects food products will increase their market share to two-thirds of the 2016 total. Secondary packaging is also used mainly in food distribution, accounting for 66 percent of the 2010 market this is expected to grow to 68 percent by 2016.
Despite the adverse effects on traditional grocers and corner shops, consumer demands have led to an ongoing increase in the number of supermarkets and hypermarkets. The top ten retailers operate almost 60,000 outlets between them. Developing countries offer considerable opportunities for retailers and suppliers of packaging, including retail-ready packaging which is still in its infancy in some of these regions. Most if not all of the major retailers globally have adopted or are in the process of adopting some form of RRP. A number of major chains are working closely with suppliers of products and packaging systems, as well as distributors, to improve the efficiencies of their in-store operations and enhance shopping experiences for consumers. This has led to a number of innovative developments.
Cost control is one of the prime movers in the development of RRP systems. Retailers are under constant pressure to reduce cost and improve margins whilst still providing a pleasant shopping experience to consumers. RRPs enable retailers to achieve significant cost savings by reducing labor costs, improving productivity and reducing out-of-stock situations, etc. A significant proportion of distribution costs are incurred in the final 50 meters of the journey from the distribution centre, between the store back door and the retail shelf. Streamlining this operation, for example by introducing one-touch display systems, can have a marked effect on profitability for the retailer.
RRP can be of great benefit to brand owners in enhancing their identity in retail environments. Advances in printing technologies, such as flexographic post-print, facilitate the printing of high-quality graphics on corrugated cases. This enables converters to produce RRP units that enhance brand identity and allow consumers to recognize the product at the decision-making moment while still at some distance from the retail shelf.
Pira Key Drivers for Retail-ready Packaging RRP
Accounting for almost 75 percent of consumption, corrugated RRPs dominate and technology is enabling improved graphics and performance but the material is expected to lose 0.5 percent market share between 2010 and 2016. Pira expects plastic RRPs to show the most significant gains and account for almost a quarter of demand in 2016. This will be followed closely by die cut display containers and modified cases, all gaining at the expense of shrink-wrapped trays and other materials.
The growing demand for RRPs has increased the need for innovative pack design, especially in corrugated RRPs. Plain brown boxes now need to be far more complex in both appearance and performance with a need in some cases for intricate diecut patterns. This trend can be seen in the growing demand for diecut boxes in Europe, which is set to increase from about 38 percent of total shipments in 2001 to nearly 45 percent by 2016.
Pira Future of Retail-ready Packaging
SOURCE: PIRA Intl.
You May Also Like
Coffee's Still Hot in America, Especially When It’s ColdFeb 20, 2024|6 Min Read
What Does the EU MDR Extension Mean for Packaging?Feb 16, 2024|3 Min Read
Is Chlorine Dioxide the Answer to the 'EtO Problem'?Feb 15, 2024|4 Min Read
Best in New Food and Beverage PackagingFeb 15, 2024|2 Min Read