Shelf-Ready Packaging, or SRP is set to become a permanent feature of the retail sector, as retailers seek to streamline their operations, maximise space productivity and pass cost back up the pipeline.

In an increasingly consolidated and competitive trading environment, retailers are stepping up efficiency programmes to reduce costs and maximise profit. In doing so it is essential to optimise not only shelf space, but also labour productivity. SRP items are transported in multiple quantity packaging which both protects the product in transit and displays the brand image to best advantage, optimising shelf space at point of sale by removing unnecessary waste produced by item level stacking.

Shelf Ready specifications insist packaging is strong enough to support the individual packs once the wrapping is removed, but the wrapping itself should be easily removable so as not to make it a time consuming process and make the entire operation redundant. Individual pockets can be included to keep pots, pies, etc. tidy as the case is emptied on the shelf by customers.

But aside from efficiency savings, SRP also promises the potential for greater brand communication by tailoring packaging according to specific market needs. As research from POPAI suggests that 75% of shoppers’ purchasing decisions are influenced in-store, brand communication at the point of sale is essential. Benefits of SRP over individual item level packaging include, serving each customer with their own, individual case style, production of the optimum case style for any specific points of sale, automated manufacturing of promotion packs and special case styles for promotion purposes.

Indeed, the benefits of SRP over item level packaging are becoming increasingly apparent to retailers, particularly the multiples. Tesco have begun rolling-out SRP across its food and drink and chilled lines, with consideration given to extending it across their entire range, even into the frozen aisles. Liz Hulbert, SRP Project Leader at Tesco, speaking at the recent IGD Conference on SRP informed the audience that 10,000 products would be included in Tesco’s SRP initiative for 2005/06. Hulbert outlined Tesco’s SRP toolkit, whereby suppliers are asked to consider products as “Easy to Recognise”, “Easy to Open” and for “One Touch Shelf Replenishment”, and shared Tesco’s view that SRP will improve product quality, availability, brand visibility and reduce aisle congestion, thereby making the store easier to shop.

Sally Holdstock, Trade Projects Manager for Sainsbury’s, also speaking at the IGD Conference shared her experience of implementing Merchandising Units for 11 high volume SKUs across 265 stores in the 12-week period up to Christmas. The challenges included shelf size constraints, data integrity issues, the setting-up of a stand-alone hub to manage the MUs and the reverse logistics capabilities to get the MUs back from store and cleaned.

However, the benefits have included not only an increase in sales participation, but also a pence-per-case saving for both Retail and Supply Chain. Sainsbury’s also plan to introduce more products onto MUs throughout 2005.

However, while retailers are keen to explore the benefits provided by SRP, some suppliers and manufacturers, particularly smaller players have complained that they are picking up the cost. In an article published on the Food Manufacture website Tim Knowles, Director of supply chain consultants ProActive said, “For some, big manufacturers, shelf-ready packaging is already in place. For many smaller firms this is not so and there will be pressure to convert old lines to shelf-ready as well as a ban on any new line not designed with ‘smart’ shelf-filling in mind…Will Tesco pay for the specific costs of change? Need you ask?”

As supermarkets put increasing pressure on their suppliers for efficiency all the way down the supply chain, expect provision of SRP to become a requirement for suppliers if they are to keep business with the multiples. SRP is undeniably set to change the in-store shopping experience, but at what cost to suppliers? In order to establish a realistic basis for negotiation, it is crucial that suppliers establish all of the costs of compliance, benchmark against the competition, and ideally negotiate some return for the investment…

Steve Ivie, Assistant-Editor NAMNEWS Ltd.
sivie@namnews.com

Date article published: 08/04/2005

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Steve Ivie, Assistant-Editor NAMNEWS Ltd. sivie@namnews.com

Steve Ivie, Assistant-Editor NAMNEWS Ltd.
sivie@namnews.com