As consumers make in-store purchasing decisions faster than ever before, the brand battle for shopper attention and market share in today’s highly competitive retail environment intensifies. Arco Berkenbosch, Senior Vice President Innovation Smurfit Kappa, explains how shelf-ready packaging offers an effective way for FMCG marketers and retailers to influence decisions at the point-of-purchase
The future of shopper marketing was the key theme addressed at our annual flagship Innovation Event held in the Netherlands in April. This year we invited some 450 visitors, including more than 200 customers from leading FMCG companies across Europe and the Americas, to join us to debate retail industry issues and trends, while we showcased our latest data-driven innovations designed to help the sector optimise path to purchase in-store.
As ever, there was much discussion around the increasingly fragmented nature of the global retail marketplace. It presents more diverse and challenging opportunities to engage the shopper and, at the same time, multi-channel retailing and the emphasis consumers now place on convenience have fundamentally changed the way people shop and the path to purchase.
Shoppers are increasingly difficult to reach, overloaded with information and have far greater opportunities to switch buying habits and loyalties, whether between products, brands, channels or retailers. Meanwhile, visits to stores have become more frequent but shorter, shrinking the window of influence on purchasing decisions.
Alongside these dynamics is greater competition for the shopper wallet: new types of retailers are expanding into new markets, in particular the discount supermarkets, and there has been significant growth in retailers’ own-brands, competing at the value end of the market but also producing dedicated quality or product-specific ranges. As they seek to retain market share, this has resulted in larger chains increasingly adopting ‘clean store’ policies – reducing the number of branded displays – in order to better support their own brands.
The combination of retailers focusing on own-brand products and brands competing with one another in this complex, highly competitive landscape means there is a constant struggle for position and space in-store. It’s a challenging picture; one that requires brand marketers and retailers to use every tool available to them to win that all-important ‘first moment of truth’ – where shoppers choose one product over another.
Smarter marketing on the shelf
But it’s not all bad news. Despite shoppers having more channels to choose from, data from POPAI (Point of Purchase Advertising International) shows the final purchasing decision increasingly continues to be made when a product is actually seen in-store, on the shelf. POPAI’s analysis reveals the in-store decision rate has climbed from 65% back in 1977, to 70% in 1995,to 76% in 2012 and in its most recent reportto 82% in 2014.
The more challenging aspect is that, with the average shopping trip now more about ‘top-up’ than ‘stock-up’, people are taking as little as 12 seconds to search and select purchases.
Brands therefore have a powerful marketing opportunity to influence shoppers directly at the shelf, as part of overall shopper-marketing strategies. But it must be done in an impactful way to make a difference to rapid purchasing decisions.
Yet, while in-store communications are growing in importance, this key shelf area where brand choices are being made has traditionally been one of the most overlooked areas of marketing. Huge amounts of time and energy are spent, quite rightly, by brand marketers on the actual packaging of products – the so-called primary pack – but in a busy store environmentwe estimate that it can account for as little as 60% of what a shopper sees. So what is the answer?
There is a growing trend towards Shelf-Ready Packaging (SRP) – products delivered to a retailer in a ready-to-sell, merchandised unit – as a measurable way to grab shoppers’ attention and influence buying decisions. Its origins were in saving in-store logistics costs, as a way of getting products from delivery to shelf as efficiently as possibleand it first gained popularity with discount supermarkets. Using the right skills, processes and technology, however, more marketers can now take advantage of the fact that, in tests, such packaging is noticed by up to 76% more shoppers.
This secondary packaging is a valuable marketing channel that too often falls outside the radar of brand teams. And yet, compared to other advertising media, the in-store commercial opportunity it offers is significant and one which can be quickly adapted to sit alongside the latest marketing campaigns.
Our own analysis found that in Europe, for example, there is approximately 125 square metres for brands to market to shoppers at the point of purchase via SRP in a typical European supermarket. If compared to the cost of a typical six-sheet poster site, in advertising terms that would be the equivalent of €424,320 of additional marketing per store every year. It represents a sizeable opportunity. In reality it’s one of the last areas in-store that can be squeezed to offer new marketing opportunities at the point-of-purchase.
Making it right before making it real
Overlaps between consumer and trade marketing as well as logistics concerns have traditionally meant that brands can struggle to keep control of engagement with the shopper at the shelf level; communications can be diluted and opportunities missed to reinforce brand messages, announce latest promotions and disrupt normal shopping patterns.
To ensure on-shelf marketingdelivers on its potential promise, it should be completely integrated into wider marketing activities, with a clear brief based on an integrated, well-defined shopper-marketing strategy. Far from being a logistics- or trade-led decision, ownership and responsibility should be held at a brand marketing level and it should be factored in at the very outset of the brand journey.
Approached in the right way, better on-shelf marketingcould deliver three clear benefits. Firstly, it could help to deliver consistent, genuinely holistic brand messaging, with a clear call to action to the shopper which reinforces brand awareness at the point-of-purchase. Secondly, given its greater flexibility to be adapted at speed, it could be used to add important messages to the primary pack, which often requires long lead times to change. And thirdly, it presents new opportunities to deepen engagement between shoppers and brands, using technology to deliver secondary messaging in innovative, more immersive ways.
And while, until recently, there hasn’t been the ability for marketers to test the potential impact of a more branded shelf-presence easily and cost-effectively, there now is. Powerful innovations such as 3D visualisation and eye-tracking technologies– like the tool we at Smurfit Kappa have developed in partnership with EyeSee – provide the opportunity to evaluate, measure and validate packaging designs and on-shelf shopper marketing strategies in risk-free,virtual conditions with real shoppers, ahead of putting even test products in store.
In fact, we’ve wrapped thesetools into a market-first service called Shelf Smart. Merging our packaging expertise, deep shopper insights, technology,effective designs and collaborative partnership approach, it’s the latest example of our commitment to unlocking new opportunities and driving measurable business success for customers through packaging innovation.And we’re bringing it all into action at our network of regional experience centres, including our recently launched Global Experience Centre in Amsterdam’s Schiphol Airport, which are equipped with state-of-the-art facilities such as Virtual Stores, Shelf Viewers and Retail Insight Centres.
In effect, we’re enabling marketers to get hands on and make it right before making it real, delivering truly optimised SRP marketing that is guaranteed to disrupt and engage shoppers, and deliver real returns. And with the whole process from problem definition to proven solution possible within as little as four to eight weeks, the only question left is: why wouldn’t you?
Smurfit Kappa is one of the leading providers of paper-based packaging solutions in the world. To find out how Smurfit Kappa is ‘opening the future to shopper marketing’to help retail sector customers drive measurable business success, download a copy of the white-paper report ‘Marketing on the shelf – how in control are you?’.
(A Retail Times’ sponsored article)