Sergey lapenok (sca). alexandr galant (x5)

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  • 1. SHELF READY PACKAGING (SRP) – (SRP) THE FUTURE OF RUSSIAN RETAIL Galant Alexander Merchandising head of discounter format Lapenok Sergey Marketing manager SCA Packaging p. 1
  • 2. SRP. WHAT IS IT? Transport package that 1.Meets ergonomic requirements of the retailer; 2.Easy t open; 2E to 3.Customer friendly design; 4.Easy to ID; 5.Easy to dispose; p. 2
  • 3. 3 SCA Packaging St. Petersburg p. 3
  • 4. 4 SCA Packaging St. Petersburg p. 4
  • 5. 5 SCA Packaging St. Petersburg p. 5
  • 6. EVOLUTION IN SHELF READY PACKAGING Non SRP 1st gen. SRP 2nd gen. SRP Dynamic SRP Cases (0201) Cases with Two piece Product in front Wraps (0406) perforation boxes Gravity Wraps with Tray & lid Always visible perforation No re-work p. 6
  • 7. SRP DEVELOPMENT IN FMCG SECTOR IN EUROPE 2005 2010 % annual growth mln, m2 l 2 % mln, m2 l 2 % SRP 7 064 40,5 40 5 9 670 47,6 47 6 6,2 62 Conventional 10 379 59,5 10 645 52,4 0,2 packaging Total 17 443 100 20 315 100 2,9 p. 7
  • 8. RETAIL COSTS Stock keeping Receiving Shelf service Service Cashier 15% 15% 30% 5% 25% OH 10% Replenishing shelves is often close to 20% of total cost p. 8
  • 9. THE TARGET OUR TARGET OPEX reduction in terms of payroll p y Out of stock reduction Feeling of wide choice despite limited assortment p. 9
  • 10. MODERN GROCERY DISTRIBUTION The discount channel to benefit from the focus on value/price The discount channel is set for the strongest Global: Store Number Growth by Channel, 2009-2011 growth. 2009 saw strong discount store growth in the key markets of Europe and North America. Hypermarkets 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
  • 11. EUROPEAN DISCOUNTERS PRACTICE 80% SKU in SRP → • F li of wide choice d i Feeling f id h i despite limited assortment (1,5-2 th. SKU); • Store looks colorful • Minimal staff needed for shelving p. 11
  • 12. TOP10 RETAIL CHAINS IN RUSSIA Sales Growth 09 / 08, Market share, Stores Name mln. RUR % % 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 Victoriya Vi t i 50,111 50 111 +22.1 22 1 0.7 07 254 7 Kontinent 40,281 +20.9 0.5 143 Okey 40,171 40 171 +37.0 +37 0 0.5 05 47 Real (Metro Group) 15,036 -2.6 0.2 15 Joint projects with SCA Packaging Russia p. 12
  • 13. 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 advantages of SRP d t f Lack of SRP manufacturers on the market Lack of experience Retailers are not consolidated p. 13
  • 14. MANUFACTURER VS. RETAILER. PROBLEMS What are the Key Barriers in Adopting RRP Across the Industry? Lack of common 64,8% standards 62,5% Supply chain costs 63,8% (including production) 67,4% 46,7% Implementation costs 48,6% 45,7% Different shelf sizez 58,3% 36,2% Equipment costs 52,1% 25,7% Packaging redesign 29,2% 20,0% Reluctance to particpate 20,1% 12,4% Shopper disapproval 7,6% 2007 Other 15,2% 14,6% 2006 0% 10% 20% 30% 40% 50% 60% 70% 80% p. 14
  • 15. PACKAGING PROBLEMS IN RETAIL SRP imitated by Other supplier's/producer’s Product damage when merchandisers packaging is used opening package p. 15
  • 16. 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
  • 17. PACKAGING PROBLEMS IN RETAIL SRP imitated by Other supplier's/producer’s Product damage when merchandisers packaging is used opening package p. 17
  • 18. RETAILERS ADVANTAGES OOS and OOD reduction OPEX REDUCTION Easy shelving Easy to ID Feeling of p. 18
  • 19. RETAILERS ADVANTAGES. MIX BOX Easier E i goods receiving, stock d receiving, t k i i Wider assortment on the same taking, taking, product ID space All tastes are blocked together p. 19
  • 20. MANUFACTURER’S ADVANTAGE Guaranteed facing Brand- Brand-block creation Brand promotion Face to customers p. 20
  • 21. MANUFACTURER’S ADVANTAGE Advertising space ~18 м2 18 Advertising space ~0 5 м2 0,5 ~30 000 RUR/ month ~134 RUR/month Total: ~ 1670 RUR/m2 Total: ~268 RUR/m2 p. 21
  • 22. MANUFACTURER’S ADVANTAGE Merchandisers costs reduction OOS reduction d Easy to ID Shrinkage reduction Easy to make a display p. 22
  • 23. PRIVATE LABEL PRIVATE LABEL – is the b example of SRP implementation h best l f l SRP usage achieves 80-100% for goods under PL among West 80 100% European retailers (Carrefour, TESCO, Aldi and others). p. 23
  • 24. 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
  • 25. SHELF READY PACKAGING SCA Packaging together with retailers and suppliers pp launched a project to implement SRP Producer Retailer Consumer p. 25
  • 26. SHELF READY PACKAGING RETAILER SUPPLIER PROBLEM SOLVING SUPPLIER SCA PACKAGING p. 26
  • 27. PROJECT TEAM Sales manager Designer Merchandising manager Retailer Category manager Key account manager Logistics manager and/or purchasing Supplier manager Brand manager p. 27
  • 28. PARTICIPANTS AND THEIR INPUT TO PROCESS Retailer Producer SCA ing SRP proven designs Pro m solvi Responsibility Costs for implementation Customized shapes and graphics oblem Quantity of Product products in a box information SCA tools p. 28
  • 29. TOOLS Оптимальное размещение Дизайнерские продукции программы Программа расчета прочности • Cape • Artios CAD коробки • Ad b CS Adobe • SAM Во время проведения совместных с клиентами 3-D визуализация семинаров мы Библиотека готовых решений Плоттер • Imagine используем • Midas логистический подход и собственные средства проектирования p. 29
  • 30. STREAMLINING THE DECISION PROCESS RETAILER MANUFACTURER SPEED SHOPPER p. 30
  • 31. Costs after after… Costs before… before 14000 12000 10000 8000 6000 4000 2000 0 Price per Packaging Primary Storage and Retailer Store logistics Total cost secondary process at distribution handling at DC Distribution pack customer site 31 SCA Packaging St. Petersburg p. 31
  • 32. SRP IMPLEMENTATION Before… …after While cost for packaging increased by 76 000 RUR, return losses decreased by 1 500 000 RUR per month. y p p. 32
  • 33. FIRST RESULTS p. 33
  • 34. SUMMARY 1. Mutual advantages for retailers and manufacturers. SRP provides instant result; 2. SRP projects with category leaders, holders of world’s best p j g y , practice- 3. Package requirements are listed in PL tendering terms and conditions p. 34
  • 35. LET S LET’S DO IT! Our ergonomic requirements DEPTH max 40 CM WIDTH max 30 CM HEIGHT max 30 CM THANK YOU! p. 35