By Gerry Mulvaney, European Sales Manager, Landa Digital Printing
UK grocery brands face a challenging environment according to a report issued by the Institute of Grocery Distribution (IGD). This 105 year old organisation is a research and training charity for the consumer industry and claims to be a leading source of information for the consumer goods industry worldwide. The IGD report outlines changes they foresee in the distribution of grocery products in the five years to 2020.
The good news is that they forecast a growth in the UK grocery market of 13% making it worth £200+ billion by 2020 – an increase of some £23 billion from today. The main reason IGD give for the increase is the reduction in food deflation which has eroded the consumer pricing in recent years. This, coupled with an increase in the UK population of some 2.2 million consumers by 2020.
The not so good news for the brands is that the distribution channels they are currently using will see some continuing and significant changes in the same period. The biggest losers will be the large supermarket stores operating from out of town superstore sites. A change in the shopping habits of the consumer, based on what has happened in the last few years, means that more people are using local convenience stores, shopping online or increasingly turning to the discount chains, who have thrown off the stigma of cheapness to attract more of the middle class moneyed shoppers.
Convenience stores are now seeing an average of 12 visits a month from shoppers and being located in the local community can provide a product range tailored to local demand. Online shopping is growing as consumers become more digitally savvy and, being time poor, opt for this method of engaging with retailers. “Click and Collect” is a rapidly growing phenomenon according to IGD and retail outlets are reacting by providing facilities for collection not only in their own stores, but also in railway stations and other high footfall locations. Asda* plans to have over 1,000 of these collection points by 2018.
Discounters like Aldi and Lidl are significantly disrupting the grocery market
The discounters have had a very disruptive effect on the market and have seen their market share grow rapidly. Whether it is the Pound Shops where everything is priced at £1, or the German retailers Aldi and Lidl with a reduced range but much lower prices, the impact they have had is significant.
Digital Printing Provides Ways for the Packaging Printing Industry to Respond to Changing Markets
To help the retailers adjust to the trends identified by IGD, brands will need to be much more flexible with pack sizes, quantities, just-in-time deliveries and reduced steps in the supply chain.
Packaging suppliers turning to digital production will be able to respond more quickly to these changing demands. Digital presses like the Landa S10 can produce very short runs of large format cartons very cost effectively. So versioning products for community convenience stores, small quantities of varied pack sizes for discounters and packaging suitable for “click and collect” will be offered to the brands. IGD have forecast the changes but the packaging industry can help to deliver the solutions.
• Lobby image: http://www.thetimes.co.uk/tto/multimedia/archive/00387/116988403_387138c.jpg
• Main page image: http://www.thenosh.co.uk/wp-content/uploads/2015/06/Aldi-and-Lidl-620_1661181a.jpg
• *UK’s second-largest chain by market share, a division of Walmart (https://en.wikipedia.org/wiki/Asda)