by Sarah Schmidt
March 14, 2019
Demand for retail-ready packaging in the US is forecast to reach $7.9 billion in 2023. As brick-and-mortar stores increasingly look to cut costs to be more competitive with online retailers, they are expected to use more retail-ready packaging, which helps to reduce stocking times and transportation costs.
Historically, retail-ready packaging has been most widely used in warehouse clubs and discount grocers such as Costco and ALDI, where low operational costs are key to ensuring the low prices their customers count on. Largely limited to these types of “no frills” stores, retail-ready packaging – particularly corrugated boxes – has been slow to penetrate more upscale establishments, where superior aesthetics are paramount, and retail-ready packaging’s traditionally drab appearance may be off-brand.
However, this perception is changing – fast – as printing and design capabilities improve. High-quality graphics are making it easier than ever for stores of all stripes to benefit from the cost savings of retail-ready packaging while also conveying a premium image to customers.
Additionally, stores focused on low prices rather than premium aesthetics – historically, the primary outlets for retail-ready packaging – have seen increases in foot traffic since the Great Recession, during which many consumers were forced to cut household budgets. While these stores have struggled to make a favorable impression on consumers in the past, their expanding focus on providing superb customer service and high-quality products is changing that.
For instance, Newsweek America’s Best Customer Service 2019 list put Costco in first place for customer service in the warehouse club and superstore segment, which includes other retailers such as Meijer, Target, and Walmart. In one survey, Costco even dethroned Amazon in terms of customer satisfaction amongst internet retailers. The chain’s private label products – such as those under the Kirkland Signature brand – have received many awards and frequently do well in taste tests against brand name products, despite costing much less. Costco also offers discounts on brand name products by selling them in bulk, which justifies the cost of a membership for many consumers. Because Costco offers such value to its members, retail-ready packaging is widely accepted by customers in its stores.
Similarly, ALDI – the most popular discount grocer in the US – was named the “2018 Retailer of the Year” by Supermarket News based on the store’s outstanding selection of high-quality, low-cost private label products. The Germany-based grocer’s small-store, limited-assortment format has caught on with US customers in recent years, especially as its private label offerings began to focus on conveying premium quality and reflecting diet trends such as gluten-free (liveGfree), organic/natural (Simply Nature), and gourmet (Specially Selected).
Among the first retailers in the US to utilize retail-ready packaging, ALDI has initiated a five-year expansion plan to enlarge its store base by nearly 50% while also upgrading and remodeling many existing stores.
Largely propelled by growing penetration in store formats that have not traditionally used it, US demand for retail-ready packaging will continue to rise through 2023. For more information, check out The Freedonia Group’s industry study Retail-Ready Packaging, which offers:
Cara Brosius holds a B.A. in economics. She is an industry analyst at The Freedonia Group, where she writes industry studies on US consumer & commercial goods.
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