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THE HIGH STREET REVOLUTION AND THE CHANGING PACKAGING INDUSTRY

Wednesday, 07 October 2015 | By Gerry Mulvaney

 

By Gerry Mulvaney, European Sales Manager, Landa Digital Printing

In a move that has caused some shock waves in the UK retail industry, John Lewis the eponymous retailer beloved by the UK’s middle classes has announced a £2 charge for any orders under £30 placed online for “click and collect” at their stores.

The expectation was that Internet shopping was going to be a much cheaper option for all involved. So a statement by Andy Street, John Lewis’ Managing Director, that the model was “unsustainable” and bonkers”, came as a wake-up call to those championing online shopping.

John Lewis online order checkout page

John Lewis’ “Click & Collect” charge for online orders under £30

The reasons that John Lewis are using for making the charge, are the costs involved in setting up the computer systems. Also, rather interestingly, the costs of returning the items that the consumers decide they don’t want.

It seems that rather than using the shop or supermarket to make the purchase decision, today’s tech-savvy consumers purchasing on their smartphones, are waiting until their goods are delivered. Or, they take their items home before deciding whether they will keep them. According to Andy Street, the charge of £2 was not going to cover the cost of their online orders and returns service, but they wanted to make the customer aware of the extra costs involved.

Indeed a whole new industry has sprung up to deal with the business of returning goods that consumers decide not to keep after they have purchased on the Internet. We are used to vast Amazon warehouses storing goods for sale. But now the same size operations are springing up to handle the returns process.

Amazon UK’s fulfillment centre

Amazon’s Online Orders Fulfilment Centre

John Lewis reckon that online ordering makes up 37% of their retail sales. Many online purchases, particularly of fashion items, involve consumers ordering several styles or sizes of the same items. Once the final decision is made, the extra items require returning. So the logistics behind the returns process is as complex and expensive as the sales process.

Online Ordering Presents Challenges and New Opportunities for the Packaging Industry

Part of the increased cost for retailers is the need for extra packaging. If you are going to deliver to the customer’s home or have the goods secure enough for “click and collect”, then the packaging has to be substantial enough for the journey. If customers are returning items without paying for them, the packaging has to be supplied fit for purpose in order to get the goods back in a re-saleable condition.

Packaging design has got to represent the brand for the whole of the process and it has got to cope with the 24/7 nature of Internet retailing. If the packaging is sub-standard, the goods will be damaged and if the branding is not up to scratch, all the hard work done in winning the customer will be lost.

Not everyone will follow the John Lewis lead and introduce charges for online shopping. But as the industry continues to embrace the Internet and consumers find more ways to purchase on tablets and smartphones, packaging suppliers are going to see new challenges and with them, the chance to turn these into opportunities to profit from the revolution that is occurring in the High Street.


Sources

  • Lobby image: http://ichef.bbci.co.uk/news/660/media/images/71086000/jpg/_71086146_lewis1.jpg
  • Main page image:
    - https://www.johnlewis.com/checkout/delivery-details
    - http://www.gettyimages.com.au/detail/news-photo/an-employee-selects-goods-from-storage-units-ahead-of-news-photo/157458277
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