Spend category highlight: Retail packaging
Did you know that retail packaging as a spend category can cover a wide range of products and services? Examples include store bags, gift boxes, ecommerce boxes and bags, receipt wallets, labels and invoicing.
Packaging spend often falls under the ‘consumables’ umbrella – there is often overlap with other spend categories like marketing, stationery and print. Ideally, taking a strategic approach, packaging should be considered holistically across the whole consumables spend category, with input from key stakeholders in marketing and operations.
Packaging is a marketing tool for retailers. Luxury retailers want consumers to reuse their bag, turning it into a walking advertisement for their brand. Bags can vary in quality from a basic brown paper bag to a luxury spec foiled gift bag with ribbon handles. It’s important that the packaging used is right for the brand and for the brand’s ethos.
Many retailers use multiple suppliers for consumables spend. However, if fewer suppliers are used, there are many benefits:
- Putting a higher volume through a small number of suppliers results in better rates, reducing costs
- The process is simplified through having fewer points of contact
- Time is saved as there are fewer orders
- Fewer orders mean fewer deliveries to store, reducing the carbon footprint
It’s worth noting that many retailers have a dual sourcing strategy in order to spread their risk, which ensures that if there are supply or quality issues stock availability won’t be affected.
See how we helped one client save seven-figures on their packaging spend here.
Retail packaging is in the spotlight due to consumer focus on sustainability and environmental impact. From a procurement perspective, it’s important to understand what the client wants to prioritise before deciding which avenue to go down. Do they want to reduce their carbon footprint, use recycled/recyclable material, or make sure that their packaging is biodegradable?
It’s easy for consumers to denounce plastic bags as being bad for the environment, yet when the alternative is paper the question of which is more sustainable isn’t easily answered. Did you know that paper needs to be reused three times to be considered ethically sourced? Paper bags contribute to deforestation, are heavier to ship, and as a result have a worse carbon footprint when compared to plastic bags. However, paper is more widely recyclable whereas plastic bags can take between 400 and 1000 years to decompose.
There are other ways that retailers can improve customer perception of their packaging. For example, a retailer could install a poly bag recycling bin in-store, encouraging consumers to recycle their packaging next time they visit.
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