Global Trendsetters: United Kingdom

‘One-Stop-Shopping’ Drives Package Design Strategies in U.K.’s Big Supermarket Chains

By Rob Coles

Microwave steaming of sealed, self-venting packages is a well-established technology in the U.K., and is spreading to the rest of Europe.

Shifts in the retailing business and consumer habits in the United Kingdom are changing designers’ approaches to packaging in the U.K., as are new legislations adopted by the European Union. Over the last 20 years, supermarkets have increasingly grown more powerful. The leading U.K. supermarkets have added many non-food product lines to their long-standing food categories. Market share has been snatched from the traditional High Street specialty retailers, including electrical goods, clothes, stationery, music, and even wines and spirits.

Modified atmosphere packaging (MAP) is popular in the U.K. for premium quality fresh and cooked food products that are kept refrigerated, but rarely frozen.

U.K. brand manufacturers now design and produce to supermarkets’ demands. Even drugs and medicines are in packaging designed to attract consumers and thus help products to sell well from a supermarket shelf. There is also another factor unseen by most—streamlined changes in distribution. The U.K. is a geographically small country, but competition has caused package redesigns that reduce shipping costs to their absolute minimum.

The top U.K. supermarkets, increasingly dominated by Tesco, are among the most profitable in the world. Tesco has almost 30% of the U.K.’s supermarket sector and 12.5% of the total retail market. Premium quality private label foods and highly efficient logistics, each innovative in its own right, have helped generate high profits.

In the meantime, strong customer loyalty has steadily grown. This has helped supermarkets move into a range of other activities, such as fast food and financial services (banking, insurance, money loans, and credit cards).

Competition heats up

Takeovers have led to intense price competition. Six years ago, Wal-Mart bought the Asda supermarket chain. However, Wal-Mart’s presumed economies of scale and purchasing power have not had the predicted dominating effect in the U.K. that exists today in the U.S. Asda has only barely overtaken Sainsbury as the second largest supermarket group, but today remains a near-constant 13% behind Tesco (15.7% vs. 28.7%).

Good management and innovative ideas are not the only reasons for the success of U.K. supermarkets. Their sustained profitability is also derived from factors such as premium pricing, tight logistics, and competition for space.

Responding to EU regulations, the Panadol blister pack was repackaged in an information-heavy, wallet-sized “Compack.”

Grocery shoppers in the U.K. are relatively insensitive to price compared to elsewhere in Europe. In Germany, for example, rock-bottom pricing is commonplace and attractive to consumers even at the expense of quality. In contrast, U.K. shoppers do not often look for rock-bottom prices as a matter of course.

In addition, the U.K. has limited land resources. Tight local planning regulations dictate the number of sites available for large, new supermarkets or other retail stores. This drives up local land prices where such a large store could be built. Big retail groups have an immediate advantage. They can afford such high land prices and handle the complexities of planning application processes.

Thus, there is limited competition between the leading six retailers. The same goods are stocked at the same or very similar prices. Competition for the customers’ cash takes place around the store perimeters. Here the big stores try to outdo each other by offering attractive, higher margin fresh food at bakery, fish, meat, and delicatessen counters. In this vein, Tesco has just opened a range of self-service coffee bars in most of its stores.

Goodbye to greengrocers

The way the British shop for food has changed. High Street butchers and greengrocers have virtually disappeared. Shoppers can now buy all of their food in a single supermarket visit. Because so much is fresh, these visits are relatively frequent.

In contrast, throughout Continental Europe food retailing is much more fragmented. There, retail culture has evolved differently. With France the exception to the rule, there are no, or relatively few, ultra-large supermarkets. Shoppers still buy fresh food from independent, specialized retailers.

For basic foods, the likely choice is a visit to one of three pan-European discount chains—Aldi and Lidl from Germany or Netto from Denmark. Each of these sells a limited range of mainly low-cost private-label products and very few branded products. These stores have not really made inroads in the U.K.

Although prices in these discount stores are low, so too are product quality and service compared to those of the major U.K. supermarkets. The limited choice also means that shoppers have to go elsewhere for other items. U.K. food retailing competes by offering a wide range of products, providing good service, and securing convenient locations. Price is a factor, but hardly the dominant one.

Key retail trends in the U.K.

It is safe to say that new retail concepts and future consumer demands in the U.K. will increasingly influence fast-moving consumer goods packaging. Here are a few examples of such influences.

One-Stop Shopping. As discussed, large retailers are trying to offer an ever-widening range of products. Hence, package sizes will have to be rethought from three perspectives—the consumer, the retail shelf, and the distribution shipper.

Shelf Presence. In-store product availability is crucial both for attracting new customers and for increasing the amounts purchased by existing customers. New packaging solutions will be needed to meet these challenges.

Convenience. Ever-increasing demands for consumer convenience will drive innovation in packages that save time, are easy to handle/open/use, and have readily understandable information.

Supply Chain. Packaging solutions that help the efficient flow of goods will become more and more important as competition rises in the production and distribution sectors.

Marketing. Packaging that can act as “sales support” in addition to being a “silent salesman” will be in demand. Products must be easily recognized and distinguished by packages that emphasize added value and convenience.

The impact of EU legislation

Designers in the U.K. are using sleek designs and printed APET cartons to give toothpaste squeeze tubes a look closer to cosmetics.

The European Union’s “Packaging and Packaging Waste Directive 94/62 EC” requires companies in all Member States to recover or re-use packaging waste. A tax is imposed on packaging. However, the U.K. has a more complex interpretation of this directive than elsewhere in the EU. Retailers and packer/fillers share the major costs.

A so-called “shared responsibility” system puts a varied percentage throughout the packaging chain: raw material suppliers 6%, converters 11%, packer/filler 36% and retailers/distributors 47%. Converters with a turnover below $1 million (£2 million) are exempt from the scheme.

U.K. demographic trends suggest that within a decade, more than one in three households will be “single person.” It is predicted that manufacturers will respond with smaller packages and single-portion food and drink containers. Such smaller packs obviously have a less efficient packaging/product ratio. However, food wastage is reduced. Although the amount of packaging will rise, it is justifiable on environmental grounds. One hopes that legislators will realize that any legislation to reduce the total amount of packaging would be unjustified.

Healthcare packages are often small, but EU legislation demands that more and more information is printed on a package. Sometimes, the only current way to provide it is by placing the primary consumer package in a secondary package such as a carton or blister pack. One suggested forward-looking alternative is to print the package with “home computer readable” microdots that would provide all the requisite information.

Innovations already on the shelves

Brushfoil Adds Touch of Class for Gordon Ramsay’s ‘Just Desserts’ The United Kingdom’s Ashbury Confectionery wanted to manufacture a product of exceptional quality for their Gordon Ramsay’s Just Desserts Chocolates—top to bottom. Ashbury immediately enlisted the expertise of Alexir Packaging, who in turn contacted the Henry & Leigh Slater Ltd. design firm. Alexir Packaging and Henry & Leigh Slater suggested a material to Ashbury that would focus on exceptional quality while also portraying a clean minimalist image. Gordon Ramsay and Ashbury were immediately taken by the Brushfoil’s brushed aluminum foil laminated to a 450-micron white backed folding boxboard. A technically demanding material to print and convert with six colors, embossing, and a high gloss UV varnish, the final result is nothing short of stunning. This is a new product arena for Brushfoil, and initial sales have proved impressive. Ashbury Confectionery managing director David Zulman commented: “For a number of years Ashbury have held an enviable reputation for quality within the trade. It is great to see this quality translated into package design in this way, and it has proved a very important innovation for the company.”

Distances from manufacturer to retailer are relatively short compared to those in the U.S. Package technology and product preservation are, thus, somewhat different in Europe to that in the US, mostly because of geography and climate. This is especially true for food. Almost all premium quality packaged “fresh” food products in the U.K. are likely to be refrigerated, never frozen. To maintain quality, modified atmosphere packaging (MAP) is widely used. MAP indicates that the food product is packed in a controlled mixture of gasses (CO2, O2, N2, etc.) to maintain the best quality and taste for fresh or cooked foods. MAP is widely used for fresh and cooked meats, fish, cheese, vegetables, fruit, baked goods, etc., and the presentation has become quite sophisticated.

Microwave steaming packages are common in the U.K. Microwave steaming is steam cooking of sealed, self-venting packages, in a microwave oven. This same technology is beginning to appear also in Belgium, Holland, and Germany. These packages are film-lidded trays or sealed pouches. As the food heats, the food cooks in this steam atmosphere, and excess pressure and moisture escapes as steam. Salt contents for steaming are said to be some three times less than if the food had been boiled or grilled. Likewise, higher vitamin levels remain after steaming in this sealed atmosphere. As the steam pressure rises, it forces a vent in the film to open.

The most dramatic consumer-visible changes have occurred with over-the-counter healthcare products and tablet medicines. The humble toothpaste squeeze tube and carton increasingly are adopting a cosmetics product appearance. The initiator of this trend was the Maclean’s toothpaste line—tubes with pearlized exterior, wide-mouth cap, and up-market carton print design.

For toothpaste, the changes were cosmetic, yet mirrored actual cosmetic product packages. In contrast, the change to the packaging of the Panadol paracetamol tablets was absolutely exceptional. Until 2003, Panadol was sold as blister-packed strips in a carton, as also were its competitors.

A revamped, plastic wallet-style, package with integral inner blister-packed sheets of tablets was introduced. This “Compack” case is easy to open, easy to use, and keeps its shape in one’s pocket or handbag. The inner blister-packed tablets are well protected against physical damage—definitely more so than with cartons. Externally, a metallized film laminate cover provides visibly added on-shelf attraction. This package is likely to win many package design awards.

Rob Coles is a packaging journalist with special interest in cosmetics and a consultant for European and Japanese markets. Rob lives in Royal Leamington Spa, England, and can be contacted at colespcjpuk@btinternet.com.