Packaging for an Omni Channel World

Size: px

Start display at page:

Download "Packaging for an Omni Channel World"

Leonard Hopkins
10 years ago
Views:

1 Packaging for an Omni Channel World

2 Kay Hedges Packaging Development Manager Kingfisher plc

3 Who are Kingfisher? Europe s largest home improvement retailer No 3 in the world behind Lowes and Home Depot Operating in 8 countries with over 1000 stores and 80,000 employees Reach 500 million households Better known in the UK as B&Q and Screwfix!

5 Product Sourcing Hong Kong 316 vendors 472 factories in 25 countries

6 Product Sourcing Shanghai 250 vendors 420 factories

7 Own Brands Kingfisher Strategy is to grow our own brand portfolio Relatively few recognised global brands within home improvement market Able to harness economies of buying scale across the Kingfisher Group of companies Two years ago a review of own brands showed we had over 150 across all our operating companies Distilled this down to just nine own brands Common products common brands Glued together with common packaging

companies Two years ago a review of own brands showed we had over 150 across all our operating companies

8 Kingfisher Own Brands

9 Net Positive At the start of 2012 Kingfisher announced a new sustainability plan Becoming Net Postive The aim is to give more back than we take Zero isn t enough, neutral isn t enough Better means doing more good not just less bad This is a long journey up until 2050 with many milestones to achieve.

we take Zero isn t enough, neutral isn t enough Better means doing more

10 Traditional Routes to Market

11 The new reality we want it now! What do we mean by omni channel as against multi-channel Omni Channel is where full use of digital media and physical consumer experience work together Products available when you want them, easily ordered and paid for, delivered to where you want them in a matter of hours Smart phones, pcs, tablets, TVs all interacting to deliver an enhanced consumer experience The UK in particular has embraced e-commerce and now even more m-commerce As a retailer we have to keep up or fall by the wayside So how does packaging play its part?

work together Products available when you want them, easily ordered and paid for, delivered to where you want them in a matter of hours

12 Packaging for online delivery The phrase packaging reduction was replaced by optimisation Packaging s primary role is to preserve and protect Secondary role to sell and inform Do customers really care about packaging? How much does packaging now influence purchasing decision?

protect Secondary role to sell and inform Do customers really care

13 Case study lighting pack Chinese packaging line

14 Bulk fill in container to UK

15 Arrival at DC!

16 What happens next? In cage to store for ranged product For home delivery, transfer to another DC Further opportunity for damage Will need to be overpackaged for home delivery Where is the best place to add additional packaging? Cheapest in the Chinese factory however then shipping additional cube How much do you overpack? All of it or just the percentage which might sell online?

opportunity for damage Will need to be overpackaged for home delivery Where is the best place

17 Typical Ceiling Light Packaging B Flute litho printed outer BC flute inner die cut fitments

18 After redesign and optimisation E flute board cut in single piece No gluing just folding 16% material reduction 17% weight reduction

19 Assembly video

21 Benefits Packaging which is more robust Interior components held more firmly reducing damages during delivery Outer strength for home delivery More aesthetically pleasing for the customer opening the pack Elimination of voids Cube and material reduction in cost reduction both for pack, freight and handling costs

22 Visual appearance of packaging for online? Do customers need a fully artworked carton to shop a light fitting?? Visual displays in store, brochures, online displays and customer reviews to help make the purchasing decision Investing the money saved from full colour printing into more robust packs should pay dividends in reduced damages Marketeers however, will need convincing to move away from highly visual packs as might the packaging companies who make them! As consumers become more used to online shopping and receiving brown box deliveries then their perception of packaging may also change

23 New Pack Proposals Mortice Door Knob H 120x W170 x D 120 mm Cube Total Pack Cost $0.77 Window Box H160 x W104 x D80 Cube Total Pack Cost $0.21 Closed Box H65 x W258 x D63 Cube Total Pack Cost $0.14 Based on annual volumes of 4500 and factoring in savings in freight and handling costs at DC the annual cost savings would be:- $ $ $0.50 per pack $0.63 per pack

24 New Pack Proposals Savings Summary for B&Q Based on annual volumes of 864,952 Total Existing Cube m³ Window Box Cube m³ 38.88% saving Freight savings 46,178 DC Handling savings 79,753 Total Cost savings 297,078 Closed Box Cube m³ 60.65% saving Freight savings 72,046 DC Handling savings 124,623 Total cost savings 493,799

25 And when home delivery goes wrong? Getting home delivery right is only half the story Many items which are delivered are destined to be returned by the customer Multiple ordering to achieve correct fit etc Is the delivery packaging suitable to be reused for returns? Retailers living with high levels of trapped stock and damages

26 Take the lighting pack again Already fragile in the distribution centre this is now perhaps overwrapped with a bag or some bubble wrap for home delivery Customer takes delivery but it is not what they expected so want to return it Route 1 return to store if this is a store stocked product they might be able to put it back on the shelf If it is special order item then there is no space for it in store it becomes trapped stock unless store arranges to backhaul to DC Route 2 the customer attempts to post it back by this time without the bubble wrap gets back to DC with damaged product and packaging written off

27 What is the real cost? Customer not satisfied Product and packaging damaged, possibly written off or at least marked down in price High admin costs of returning products Poor brand perception

28 What is the real cost Net Positive The amount of energy and carbon taken to manufacture the light, deliver it, take it back, dispose of it is many, many times that used in the packaging Opinion is mixed about the environmental impact of omni channel retail Some studies show that provided several items are ordered at once then online has less of a carbon impact Others show that online shopping particularly of things which could easily be bought locally and as part of a wider shopping trip are carbon negative

29 Could there be a better way? As retailers we are struggling to get to grips with these dilemmas We all want the same result satisfied customers, low damages, speed of delivery, less packaging, lower costs There are multiple avenues for delivery, parcelforce, one man, two man delivery routes Each has their own rules of carriage but speed is essential to keep costs low competition is fierce Is this at the expense of the greater good? Can we take a lesson from two examples from other logistic models?

30 Containers and Pool Pallets Containerisation revolutionised global shipping and is still the preferred model for moving good around the globe Pool pallets similarly have proved efficient at moving goods within defined borders Is there not a need now to develop a delivery system which utilises common reusable delivery containers Rather than deliver to customer homes, deliver to local hubs/post offices Returns via similar route again to regional return hubs Product is better protected from damages, returns are easier and efficient Customers have a common method which they can apply to most products, rather than the current myriad of returns options

31 Thank you for listening Your thoughts will be appreciated!

CHAIRMAN S STATEMENT. William Fung Group Chairman

CHAIRMAN S STATEMENT. William Fung Group Chairman CHAIRMAN S STATEMENT William Fung Group Chairman The year 213 is the final year of our Three-Year Plan that covered the period 211 to 213. This Three-Year Plan has also been one of the most challenging