By David (Rudyard Kipling) Callif, President BCM Inks
If PAPER is the largest cost associated with the production of a corrugated package and we could reduce this cost…
If LABOR is the retailers’ number one cost and we could reduce this cost…
If the U.S. CORRUGATED INDUSTRY could produce a corrugated package that’s easy to open, stock, dispose, and market…
Then WHY is Retail Ready Packaging (RRP) having such a difficult time gaining acceptance in the United States?
The reasons are varied. We’ll attempt to address them and present some solutions.
BACKGROUND
Retail Ready Packaging (RRP) got its start in Europe.
Retailers such as Aldi and Tesco helped spur RRP’s growth. Both retailers saw a need for lighter weight corrugated shippers which could lower transportation costs, still protect the product, be handled easily and safely throughout the distribution chain, and offered marketing opportunities (i.e. graphic print and sustainable message).
Tesco conducted research after they instituted RRP.
Tesco found significant benefits.
They are as follows:
1. Speed to shelf advantage.
2. Reduction in injury risk from box cutters.
3. Elimination/minimization of product damage through the usage reduction of box cutters.
4. Reduction in the total package price even though the package itself may cost more.
Tesco used Retail Ready Packaging when they expanded into the USA with their first West Coast Fresh & Easy market in 2009. Aldi has done the same.
US retailers such as Walmart, Costco, Kroger, etc. have noticed. They have been testing various RRP concepts for the past several years. Some of these concepts according to Drew Gilchrist, President of Gilchrist Packaging, are as follows: Shelf Ready Packaging, Display Ready Packaging,Replenishment Ready Packaging, and Infrastructure Ready Packaging. According to Drew, over 50% of suppliers have received requests for Retail Ready Packaging.
ISSUES
USA retailers appear to have many more issues/objections to RRP than their European counterparts. One of the biggest issues is the lack of agreement amongst retailers on a common RRP footprint or size. Stephen Sibert, the Grocery Manufacturers Association Senior VP, said in a Supermarket News interview March, 2010 that:
“The industry is looking for a common approach. We want to define a system across retail.”
Another hurdle is the supply chain cost. This involves the actual cost of a RRP versus a standard package. The third issue is the availability of lightweight paper. In the USA, it’s the old chicken and the egg story. Paper companies are not going to make the major investment in converting to lightweight paperproduction without a commitment from their customers. Currently, according to Sarilee Norton of Norton Associates, “There simply is not enough lightweight available for the big guys”. (Source: Corrugated Today-November/December 2011).
SOLUTIONS
In my opinion, Retail Ready Packaging offers too many benefits for it to languish in the USA. Our country prides itself on innovation. Therefore, I believe we can overcome the objections. My proposal is to have the key executives of Walmart, Costco, Kroger, and the Grocery Manufacturers Association along with Procter & Gamble, General Mills, Unilever, and IP, RockTenn, FBA, and AICC meet to develop specific initiatives.
I’d like to hear from you. What ideas do you have to move RRP forward?
Regards,
David Callif
Ph: 513-469-0400
E-mail: dave@bcminks.com
“Where Green is More Than a Color
Hall of Fame
CONGRATULATIONS to our Sr. Technical Specialist, Natan Nasilevich for being the first BCM Associate inducted into the BCM Hall of Fame. The Hall of Fame recognizes his 20 years of outstanding service to BCM Inks and the industry. We are so grateful to have his expertise and commitment !
Elected Chairman
David Callif was elected Chairman of the AICC Associates Board at the October AICC Fall Annual Meeting held in Salt Lake City. Contact me at dave@bcminks.com with any suggestions or ideas for the organization.
Sustainability is Recognized
David Callif spoke about Sustainable Inks and Business Practices at the Toronto, Canada Kemi Seminar and AICC Region 7 meeting.
As we begin the Holiday Season, all of us at BCM Inks are grateful for the partnerships and friendships that we have made. We are thankful to you our loyal customers for helping make 2011 another successful year. May you and yours have a Happy, Healthy, and Prosperous Holiday