Among the many significant shifts in CPG buyer behaviors over the years is the increased expectation of sustainability and eco-friendliness. While it’s most often associated with the rise of the millennial consumer, sustainability has been a growing concern and prominent issue among all generations in the last several years.
Recently, Loop introduced the concept of transforming the packaging of everyday essentials from single-use disposable to durable, reusable designs, akin to the milkman service of The Golden Age. The new, modernized business model blends old-school home delivery with today’s popular subscription-based businesses. With Loop, rather than getting a new stocked box every month, the company automatically replenishes customers’ favorite products send, in what the company bills as “the first subscription model that manages itself.”
Loop’s concept for getting the CPG products consumers demand eliminates the hassle of repeated trips to the store by allowing consumers to order their desired products and simply drop the used empties back into the Loop Tote and scheduling a free pick-up from their home.
It’s a sharp move from a business perspective — giving the people what they want is almost always a good bet for boosting revenue and profit — and it’s an important development in the collective fight against ever-increasing material waste that plagues every town, city, and region around the world.
But what does the emergence of recyclable packaging (and home delivery) mean for the future of the CPG industry as a whole….and will it be successful? Here’s a look at some potential risks and solutions as we usher in the next evolution of consumer packaged goods.
Home delivery and recyclable packaging isn’t a brand new concept. Generations of consumers enjoyed home delivery of milk, eggs, and other perishables before the CPG boom made it easier and more convenient to get foodstuffs at the local store.
The return of home delivery through services like Loop will extend far beyond milk and other perishables. Inspired by Amazon’s direct-to-consumer model and the explosive popularity of meal-kit services, CPG companies and their retail partners are increasingly interested in their own home delivery services in an effort to capitalize on changing buyer expectations and in an effort to present themselves as more eco-friendly and socially responsible.
On the surface, this represents a win for consumers. They get the products they want dropped on their doorstep, whether they’re home or not. And when they finish the product — be it a case of soda, a pound of meat, or other consumable — the delivery company comes by to collect the empty container and the process begins anew.
But leaving products, whatever they may be, at the doorstep unattended is equally risky. Recent surveys show that as many as 33% of consumers have reported their packages being stolen from their front porch, costing them (and by extension, vendors with a theft reimbursement policy) an average of $140 per order.
In addition to the cost and inconvenience of product theft, one of the greater concerns industry-wide is the impact recyclable packing will have on the traditional in-store shopping experience.
While home delivery for products like textiles and other non-perishable goods have flourished in recent years, consumers by and large still go to a physical supermarket or convenience store an average of 1.6 times per week for perishable or otherwise one-time consumption goods. They scour the shelves for their preferred brands and fill their carts with products stored in a bevy of plastic containers, glass bottles, aluminum cans, and other conventional packing materials.
The advent of reusable packaging — not merely recyclable, as many cans, bottles, and boxes are already — would significantly disrupt the in-store shopping experience most consumers are accustomed to. The single-use bottles, cans, boxes, and packaging that have resided on shelves for eons would suddenly be replaced by multi-use packaging that would fundamentally alter both how retailers arrange shelf space and how CPG companies manage and merchandise their inventory.
For CPG sales and merchandising teams, the immediate concern might be around job security because less shelf stocking means less need for their particular skills or roles. But the real issue will be finding ways to accurately project order volumes, coordinate product deliveries, and re-engineer their merchandising strategies without the benefit of conventional sales and inventory metrics such as unit sales, stock levels, and others.
Given the emphasis, publicity, and consumer hunger for sustainability, any CPG not already consider or planning more eco-friendly and sustainable packaging is putting itself at a significant disadvantage. And as consumers increasingly pressure CPGs to push the envelope on sustainability, it’s entirely expected that more suppliers of reusable packaging and home delivery services will emerge.
Fortunately, CPG companies can stave off all-out chaos and manage the evolving business landscape with technology. They can leverage cloud-based retail execution technologies that help create a 360-degree perspective of their in-store business activities and close the visibility gaps home delivery and reusable packaging may create.
For example, in the absence of traditional SKU or per-unit transactions, CPG producers can still tap into sales data from retail partners’ POS systems to understand overall sales volumes and the number of initial purchases of multi-use packaging. They can apply AI- and machine learning-powered predictive analytics to project the quantities of new refillable packages they’ll need to produce, along with the specific volume of each product and timeframes they’ll need to deliver to meet consumer demand as they return to refill their containers.
They can leverage rich data to project or even recommend sales orders to retail partners and take advantage of powerful cloud computing to completely re-imagine and optimize their in-store merchandising strategies for maximum sell through. Retail execution software can provide valuable insights that will help CPGs adapt their pricing strategies to account for influencing factors like seasonality, special events, or other non-standard considerations that will help them compete with home delivery services.
The advanced data analytics also makes it possible to employ social listening and an end-user feedback loop to understand market influences and devise special promotions that boost sales, encourage recycling or other sustainable practices, and greatly improve brand loyalty through discount and other rewards programs.
Today’s consumers demand more from the manufacturers of their favorite products than at any time in history. As they put increasing emphasis on product quality, sustainability, and corporate social responsibility, a new breed of producer like Loop has stepped in with alternative zero-waste packaging and delivery solutions that threaten to disrupt the CPG industry at large.
But while reusable packaging and home delivery has promise, the model isn’t without its faults and is still years away from being perfected. Enterprising CPG companies can use the intervening time to continue advancing their own eco-friendly packaging and home delivery solutions, while maintaining — even strengthening — relationships with retail partners to tackle the evolving industry landscape together.
Reusable packaging has a lot of promise and a bright future in CPG, but it’ll have to wait just a little longer for its time to shine.
Learn more about how SpringGlobal’s Retail Execution Solutions can help your company keep up with and stay ahead of changing industry trends.