Package Design | packagedesignmag.com

(May 2008) posted on Mon Sep 28, 2009

By Randy Ludacer

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When I was a kid, if I ever thought about products and how they came to be for sale in my neighborhood stores, I would have imagined that the way it worked for companies that made products was something like this: 1) make the product; 2) make the package; 3) put the product in the package; and 4) set a price and offer it to retailers.
Now that I'm all grown up (and design packages for a living) I know how far off I was. If there was ever a day when making and selling products was so straight forward, that day has passed.

The real deal

The success of the "big box" stores like Wal-Mart, Costco, and Target has led to today's consolidation of retailers that results in fewer smaller stores. This, in turn, has led to increased competition among suppliers—competition not for consumer sales, but just to win a place for their product on the shelves of those big box stores. And the competition is not just between suppliers. The retailers themselves now compete with their suppliers by offering their own store brand, private label items. According to one of our clients in the home storage industry:

"The amount of retailers is shrinking, which gives the retailers that are left more power. They charge suppliers back for all returns, damages, and any markdowns that the store may take on your product. They also charge for ads that they place for your or anyone's products and sometimes even request guaranteed sales. Many retailers are also buying items direct or, if they are not going direct, they are squeezing on price by claiming they can go direct. The only reason that suppliers are still around is because they have brands that the retailers can't get or don't want to take the risk on. And good suppliers have an outside view of style, which the retailers sometimes do not, since they are in their insulated world. "