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SHELF READY PACKAGING (SRPSHELF READY PACKAGING (SRP)) ––THE FUTURE OF RUSSIAN RETAILTHE FUTURE OF RUSSIAN RETAIL
Galant AlexanderMerchandising head of discounter format
Lapenok SergeyLapenok SergeyMarketing managerSCA Packaging
p. 1
SRP. WHAT IS IT?
Transport package that
1.Meets ergonomic requirements of the retailer;
2 E t2.Easy to open;3.Customer friendly design;4.Easy to ID;4.Easy to ID;5.Easy to dispose;
p. 2
p. 3SCA Packaging St. Petersburg3
p. 4SCA Packaging St. Petersburg4
p. 5SCA Packaging St. Petersburg5
EVOLUTION IN SHELF READY PACKAGING
Non SRPCases (0201)
1st gen. SRPCases with
2nd gen. SRPTwo piece
Dynamic SRPProduct in frontCases (0201)
Wraps (0406)
Cases with perforationWraps with perforation
Two piece boxesTray & lid
Product in frontGravityAlways visible
perforation No re-work
p. 6
SRP DEVELOPMENT IN FMCG SECTOR IN EUROPE
2005 2010% annual growth
l 2 % l 2 %mln, m2 % mln, m2 %
SRP 7 064 40 5 9 670 47 6 6 2SRP 7 064 40,5 9 670 47,6 6,2
Conventional packaging 10 379 59,5 10 645 52,4 0,2packaging
Total 17 443 100 20 315 100 2,9
p. 7
RETAIL COSTS
Stock keeping15%
Receiving15%
Shelf service30%
Service5%
Cashier25%
OH 10%
p. 8
Replenishing shelves is often close to 20% of total cost
THE TARGET
OUR TARGETOUR TARGETOPEX reduction in terms of payrollp y
Out of stock reduction
Feeling of wide choice despite limitedFeeling of wide choice despite limited assortment
p. 9
MODERN GROCERY DISTRIBUTION
The discount channel to benefit from the focus on value/price
The discount channel is set for the strongest growth.
Global: Store Number Growth by Channel, 2009-2011
2009 saw strong discount store growth in the key markets of Europe and North America.
Hypermarkets will see relatively low growthHypermarkets will see relatively low growth due to saturated markets, the high cost of investment per store and growing pressure on non-food sales.
p. 10
EUROPEAN DISCOUNTERS PRACTICE
80% SKU in SRP→
F li f id h i d i• Feeling of wide choice despite limited assortment (1,5-2 th. SKU);
• Store looks colorful
• Minimal staff needed for shelving
p. 11
TOP10 RETAIL CHAINS IN RUSSIA
NameSales
mln. RUR Growth 09 / 08,
%Market share,
%Stores
quantity
X5 366,777 +21.6 5.0 1,923
Magnit 165,999 +24.5 2.3 3,197
Auchan 109,573 +25.1 1.5 64
Kopeyka 65,762 +25.8 0.9 659
Dixy 60,685 +27.1 0.8 638
Lenta 55,600 +9.4 0.8 35
Vi t i 50 111 22 1 0 7 254Victoriya 50,111 +22.1 0.7 254
7 Kontinent 40,281 +20.9 0.5 143
Okey 40 171 +37 0 0 5 47Okey 40,171 +37.0 0.5 47
Real (Metro Group) 15,036 -2.6 0.2 15
Joint projects with SCA Packaging Russia
p. 12
MANUFACTURER VS. RETAILER. PROBLEMS
LACK OF INTERACTION BETWEEN MANUFACTURERS AND RETAILERS IN TERMS OF TRANSPORT PACKAGING
Large one-off investments needed to implement SRP
Not all manufacturers realize d t f SRP
Lack of SRP manufacturers on the market
advantages of SRP
Lack of experience
Retailers are not consolidated
p. 13
MANUFACTURER VS. RETAILER. PROBLEMS
What are the Key Barriers in Adopting RRP Across the Industry?
67,4%
62,5%
63,8%
64,8%
Supply chain costs(including production)
Lack of commonstandards
58,3%
48,6%
45,7%
46,7%
Different shelf sizez
Implementation costs
29,2%
52,1%
25,7%
36,2%
Packaging redesign
Equipment costs
7,6%
20,1%
12,4%
20,0%
Shopper disapproval
Reluctance to particpate
14,6%15,2%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Other20072006
p. 14
PACKAGING PROBLEMS IN RETAIL
SRP imitated by merchandisers
Other supplier's/producer’s packaging is used
Product damage when opening package
p. 15
PACKAGE COMPARISON
RUSSIAN MADE -
• Упаковка бурая, безликая. Hard to find the product in DC;ур p• No design, no colour;• Упаковка хрупкая, мятая;• Hard to open;• Doesn’t fit the shelf;
p. 16
PACKAGING PROBLEMS IN RETAIL
SRP imitated by merchandisers
Other supplier's/producer’s packaging is used
Product damage when opening package
p. 17
RETAILERS ADVANTAGES
OOS andOOS and OOD reductionOOD reductionOPEX REDUCTIONOPEX REDUCTION
Easy to IDEasy to IDEasy shelvingEasy shelving
Feeling of Feeling of
p. 18
E i d i iE i d i i t kt k
RETAILERS ADVANTAGES. MIX BOX
Wider assortment on the same Wider assortment on the same spacespace
Easier goods receivingEasier goods receiving, , stock stock takingtaking, , product IDproduct ID
All tastes are All tastes are blocked togetherblocked together
p. 19
MANUFACTURER’S ADVANTAGE
Guaranteed facingGuaranteed facing BrandBrand--block creationblock creation
Brand promotionBrand promotion Face to customersFace to customers
p. 20
MANUFACTURER’S ADVANTAGE
Advertising space ~18 м2 Advertising space ~0 5 м2Advertising space 18 м2~30 000 RUR/ monthTotal: ~ 1670 RUR/m2
Advertising space 0,5 м2~134 RUR/monthTotal: ~268 RUR/m2
p. 21
MANUFACTURER’S ADVANTAGE
Merchandisers costs reductionMerchandisers costs reduction
dOOS reduction
Easy to ID
Shrinkage reduction
Easy to make a display
p. 22
PRIVATE LABEL
PRIVATE LABEL –h b l f lis the best example of SRP implementation
SRP usage achieves 80 100% for goods under PL among WestSRP usage achieves 80-100% for goods under PL among West European retailers (Carrefour, TESCO, Aldi and others).
p. 23
PRIVATE LABEL
• X5: Plans to increase PL share up to 30-50% in the medium term.
• METRO GROUP: Plans to increase PL share from 8% up to 10-11% by 2012 year.
• MAGNIT: Plans to increase PL share up to 20% by 2015 year.
p. 24
SHELF READY PACKAGING
SCA Packaging together with retailers and suppliers pplaunched a project to implement SRP
ConsumerProducer Retailer
p. 25
SHELF READY PACKAGING
RETAILER
PROBLEM SOLVINGPROBLEM SOLVINGSUPPLIER SUPPLIER
SCA PACKAGING
p. 26
PROJECT TEAM
Sales manager
Designer
Merchandising managerMerchandising manager
Category managerRetailer
Key account manager
Logistics manager and/or purchasingSupplier Logistics manager and/or purchasing manager
Brand manager
p. 27
PARTICIPANTS AND THEIR INPUT TO PROCESS
Retailer Producer SCA
SRP proven designsing
CostsResponsibility for implementation
Customized shapes and graphicsm s
olvi
Quantity of products in a box
Productinformation
Customized shapes and graphics
oble
m
SCA tools
Pro
p. 28
TOOLSОптимальное размещениепродукции
• Cape
Дизайнерские программы
• Artios CAD
Ad b CS
Программа расчета прочности коробки
SAM• Adobe CS • SAM
Во время проведения совместных с клиентамиклиентами семинаров мы используем логистический
Библиотека готовых решений
• Midas
3-D визуализация
• ImagineПлоттерлогистическийподход и собственные средства
• Midas
проектирования
p. 29
STREAMLINING THE DECISION PROCESS
MANUFACTURERRETAILER
SPEEDSPEEDSHOPPER
SPEEDSPEED
p. 30
Costs afterCosts beforeCosts after…Costs before…
12000
14000
12000
14000
8000
10000
8000
10000
6000
8000
6000
8000
2000
4000
2000
4000
0Price per
secondaryPackagingprocess at
Primarydistribution
Storage andhandling at DC
RetailerDistribution
Store logistics Total cost0
Price persecondary
Packagingprocess at
Primarydistribution
Storage andhandling at DC
RetailerDistribution
Store logistics Total cost
p. 31SCA Packaging St. Petersburg31
pack customer sitepack customer site
SRP IMPLEMENTATION
Before… …after
While cost for packaging increased by 76 000 RUR, return losses decreased by 1 500 000 RUR per month.
p. 32
y p
FIRST RESULTS
p. 33
SUMMARY
1. Mutual advantages for retailers and manufacturers. SRP provides instant result;
2. SRP projects with category leaders, holders of world’s best
provides instant result;
p j g y ,practice-
3. Package requirements are listed in PL tendering terms and conditions
p. 34
LET’S DO IT!LET S DO IT!Our ergonomic requirements
DEPTH max 40 CM
WIDTH max 30 CM
HEIGHT max 30 CM
THANK YOU!THANK YOU!
p. 35