This document discusses shelf ready packaging (SRP) and its benefits for retailers and manufacturers in Russia. SRP refers to transport packaging that meets ergonomic requirements for retailers by being easy to open, identify, and dispose of. SRP allows retailers to feel they offer a wide selection despite limited inventory space. It can reduce retailers' operating expenses and out-of-stock situations. SRP adoption in Europe has grown significantly in recent years. Russian discount retailers are well-positioned for growth and could benefit from SRP by reducing labor costs and ensuring full, colorful shelves. However, there is currently a lack of interaction between manufacturers and retailers regarding transport packaging in Russia.

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