Mar 28, 2017

Why Now is the Time for a Retail Ready Packaging Strategy

Retail ready packaging (RRP) is more than a trend. It’s quickly becoming a standard in retail, and CPGs are discovering the advantages of adopting this sort of strategy in order improve speed to market and boost sales.
RRP can include shelf-ready, display-ready, and pallet-ready packaging. It encompasses types of secondary packaging that arrives at the retail store ready to be placed directly on shelf or on the sales floor. This reduces the need to unpack individual items, consequently reducing labor.
However, that’s just the beginning of the potential benefits for retailers, consumers, and CPGs. Here’s a look at some of the most significant reasons for brands to start implementing an RRP strategy.

Demand from Leading Retailers

The rise of RRP can be contributed to the fact that some of the most influential players in retail are encouraging suppliers to use this type of packaging. RRP helps reduce retail operations costs by cutting back on labor and increasing efficiency. It is designed to be simple and intuitive for the employee stocking shelves or setting up displays.
The most notable leader in the rise of retail ready packaging is Walmart. The world’s largest retailer has its own guidelines for using RRP. Walmart was an early proponent of these kinds of packaging innovations, including what it calls PDQ (pretty darn quick) packaging.
For example, a representative from Walmart told Food Online in 2015 how the retailer switched from shredded cheese packaging that hung on pegs to standup pouches in shelf-ready packaging. The change allowed Walmart employees to stock cheese with one swift motion, rather than tediously hanging individual bags one at a time.
Corrugated cartons were developed to do “double duty,” action as both a shipping case and the shelf display case.
Walmart acknowledges that the change required an investment from cheese suppliers, and says brands and retailers should work together to make sure all parties see a return on such investments. Of course, for many CPGs, continuing to work with Walmart may be motivation enough.
Now other retailers are following Walmart’s lead. That includes the grocery giant Kroger, which operates many supermarket chains such as Ralph’s, Pick ‘n Save, and Harris Teeter. There’s also discount grocery chain Aldi, which uses corrugated, shelf-ready packaging to help keep its prices low.
In order to get your products into stores like these, choosing a packaging strategy that includes RRP is becoming more and more important.

The Popularity of Small-Format Packages and Smaller Stores

A retail ready packaging strategy can complement the current shift towards small pack sizes as well as the growth of small retail operations such as drug stores, dollar stores, and convenience stores. Big box retailers are also opening smaller locations, which may serve a rural community or fit into an urban environment.
As the Freedonia Group notes in its 2016 Retail Ready Packaging Study …
Increased openings of smaller-format locations by mass retailers will also promote gains for RRP, as these stores carry a more limited product selection than their traditional counterparts and have fewer employees. These stores can benefit from RRP’s ability to speed stocking of shelves and increase shelf space efficiency.
RRP lends itself well towards the trend of the smaller pack size and individual-sized portions, which is being driven by consumer lifestyles. Research shows the average size of a family unit is shrinking, and more people (Millennials in particular) are staying single longer.
Another consumer trend that is connected to smaller packages and benefits from an RRP strategy is online shopping. Just as physical stores can use retail ready secondary packaging to easily identify products in the backroom, the right design strategy can make it simple for employees to find, pick, and pack products in the warehouse to fulfill an online order.

The Sales Advantage

The returns of RRP may seem to benefit retailers and consumers most directly, while CPGs are left to take on the costs of implementing new types of packaging. However, there are certainly advantages for brands, with the most important being an increase in sales.
The concepts behind RRP are intended to get products on shelf and on the floor faster because the merchandise is easier to identify, stock, and restock when needed, so retailers may place a priority on those products. Plus, RRP also makes items easier for shoppers to identify in the store while potentially providing additional branding opportunities on things like corrugated shelf-ready boxes.
Will CPG brands see a return on an investment in RRP? One of the largest CPG companies in the world recently told us that with some of its existing shelf-ready packaging applications there has been a double digit increase in sales since converting.
There’s a rule of thumb in retail ready packaging suggesting that a 2 percent increase in sales will cover a 10 percent increase in cost. From that perspective, RRP could be a very profitable investment.

Does Your Brand Need an RRP Strategy?

Before jumping into retail ready packaging, make sure you work with the right partners to develop an effective plan.
There are a lot of ways to implement RRP, but your brand needs to choose the right tactics for the types of stores the products will be sold in and the types of consumers you want to reach.
“Don’t treat RRP as a one-off,” warns Menasha Corporation Director of Retail, Kerry Bailey. “Formulating a strategy is important, otherwise you end up with too many iterations.”
Menasha is uniquely qualified to assist CPGs in developing an RRP strategy that works. Our relationships with key players in retail give us valuable insights and drive our ability to help brands maximize the potential to boost sales.
Menasha specializes in packaging designs like mixed media shelf-ready packaging, which involves combining perforated corrugate over the top of paperboard – an ideal format for lightweight small packs that lowers costs and takes up less shelf space.
Contact Menasha today to find out more about how we can customize a plan for your brand.