If you’ve walked through the aisles of almost any brick and mortar retailer, you may have noticed an increasing amount of retail ready packaging (RRP). RRP refers to secondary packaging, often made of paperboard, that serves as both a shipping container and a way to display items on shelf. As more club and deep discount stores begin to materialize, RRP will continue to be a growing segment of the packaging market. In fact, the executive summary of Retail Ready Packaging, the 2016 report from The Freedonia Group, forecasts that RRP will “increase 5.2% annually to $6.2 billion in 2020, outpacing the overall packaging market average,” making RRP a necessary consideration for converters looking to expand business and initiate steady growth. Although research shows that RRP is a growing segment of the market, it’s not always obvious how the benefits are driving the trend.
What’s Driving the RRP Demand
Not only is RRP an attractive option for brand marketers to ensure their products are easily identified and provide an organized display, it provides a cost-saving option for retailers.
According to Charles Pavia, director of marketing at Proactive Packaging & Display, a corrugated converter based in Ontario, Calif., labor is one of the most expensive aspects of the profit and loss statement of a traditional store trying to compete with a club, drug or deep discount store.
Looking at it from a labor perspective, Esther Palevsky, senior packaging analyst for The Freedonia Group, explains that RRP helps stores save on labor and stock handling costs because of the time it takes to get products on the shelf. For example, Aldi, a deep-discount grocery store, bases its business model on a small staff and operational efficiency. Providing RRP allows the staff to quickly and efficiently load products onto the shelf in an organized manner with minimal handling. Aldi is a rapidly growing chain, as the budget-conscious shopper looks for alternative options to traditional and high-end grocery stores.
Another large retailer that is increasingly buying into RRP is Walmart. The corporate giant is using the packaging to display everything from food and beverage to school supplies, cosmetics, skin care and seasonal products, Palevsky says. Though they’re very different stores, Walmart’s intent is similar to Aldi’s: getting product on the shelf quicker, more efficiently and with less handling.
Pavia explains that in addition to efficiency, RRP allows a brand to creatively utilize packaging to entice the consumer.
“The packaging is the most important real estate a brand marketer owns,” he says.
Another reason RRP is attractive to both the retailer and brand marketer is that it can assist smaller items and pouches in standing out on the shelf. Palevsky points to noodle and rice mixes and seasonings as good examples of products that typically come in pouches and benefit from some structure on shelf. In these cases, a lighter-weight or heavy-duty folding carton, or mini-flute corrugated could be used to add structure, rather than traditional corrugated.
When a product isn’t available in RRP, sometimes the retailer will attempt to create a sort of “DIY” display box by using tools to remove the top of the case that the products shipped in. However, Palevsky explains this could put the products inside the box at risk if a retail associate takes a box cutter to the package. RRP eliminates the possibility of damage since it’s designed with lids, perforation or pull tabs for easy removal.
RRP also gives retailers the opportunity to display packaging in places other than on shelf. Pavia says that this type of packaging is ideal for a promotion or sale, where the boxes could be arranged in a stack at the end of an aisle, or on an end cap for optimal visibility. At the end of the promotion, the remaining packaging could be easily moved back to the shelf at full price.
Another interesting factor that Pavia brings up is that for the retailer, RRP gives the appearance that the store has more product in stock. When a store is low on a particular item, the RRP remains, reducing the appearance of gaps on the shelf. Aesthetically, this is more appealing to the consumer and gives the retailer more time to replenish missing items.
RRP gives the marketer a chance to present the product in a powerful way to consumers. When the packaging is repeated on shelves, it can be an identification tool for consumers.
The 25-, 10-, 2-Foot Rule
Because RRP provides additional opportunities for consumers to identify the brand and product, Pavia explains it should adhere to the “25-,10-, 2-foot rule.” At 25 feet, vibrant colors and sharp graphics should be used so the product is a “beacon or lighthouse” for consumers. At 10 feet, the company’s logo and tagline should be easily visible to ensure that shoppers will identify the brand. At 2 feet, when the consumer is almost in direct contact with the packaging, then the brand story and copy points need to be visible.
In a store, a brand marketer only has a few seconds to entice a consumer to make a purchasing decision. As the shopper moves down the aisle with his or her cart, the brand needs to stand out, and RRP provides an opportunity to convey important aspects of the brand directly onto the sides of the box.
“Most packaging, unfortunately, is designed against a timeline versus the brand strategy,” Pavia says. “It’s ‘Oh, we need the packaging, let’s get it done,’ versus saying ‘the packaging is the most important real estate the brand marketer owns.’ How does the packaging communicate the brand to the customer?”
One of the biggest challenges in RRP however, is that the graphics have to be kept simple to communicate the brand message. There is limited real estate on each RRP so not only does the branding have to match the branding of the packaging inside — think color and design — it has to stand out to customers as they pass through the store.
Growth Equals Opportunity
While more traditional food and beverage stores are beginning to adopt RRP on shelf, they’re not going to abandon their traditional shelf display models any time soon, Palevsky says. This is because the brand manufacturer is responsible for the cost of the packaging, meaning the brand has to develop the additional packaging style. A wider range of packaging typically requires more machinery and design changes, increasing the price of packaging production. Brand owners are sometimes pressured by retailers to provide RRP options according to their guidelines or requirements, but if the option is cost-prohibitive for the brand owner/manufacturer, it may not amount to RRP.
Because of this, it’s possible that brands that have the capabilities to provide RRP for products might consider doing so. RRP makes organizing shelf space easier for the retailer and if the product sells well, it will end up being a top of mind product for the retailer, Pavia points out.
“For a retailer, you’re either a profit maker or a place taker,” he says. “If you’re a place taker, you’re not going to be on the shelf very long.”
First, Pavia suggests that converters speak to their customers about RRP to see if they’ve noticed a demand from retailers. Then, if the demand is there, converters can offer the service the customer.
According to Freedonia, most of the opportunity in RRP is in the food market. The 2016 report from The Freedonia Group reveals that almost 3/4 of the demand for RRP in 2015 was from food. It goes on to point out that the “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.”
While RRP has been growing at a rapid clip in the United States in recent years, including a 6.2% increase from 2010 to 2015, as reported by The Freedonia Group, Pavia explains that RRP has been popular in Europe for quite some time. The reason? Stores are generally smaller and the display boxes provide uniformity and faster time to shelf.
As the traditional store vies to compete with club, drug and deep discount stores, retail ready packaging will continue to grow, providing the opportunity for converters to offer expanded packaging for the retail space. Successful packaging will be easily identifiable, provide speed to shelf, ensure organized placement on shelf and be an added means of marketing for the brand.