The quick answer to this question is, “very.” Through the years, packaging has always been critical, but in today’s market—with e-commerce, private label, and retailers trying more new product categories than ever before—suppliers must do everything in their power to improve the graphics on packaging and any packaging innovations out in the marketplace today.
What becomes tricky, however, is deciding what is good packaging and what is not good packaging. And the answer will vary based on who you talk to, especially sales people and marketing people.
Several marketing people I’ve worked with over the years seem to think that if they develop a packaging design that wins 10 awards, that means they know everything there is to know about packaging. This isn’t necessarily true for all classes of trade.
Packaging that fits the retailer
For example, most big box stores and super stores in general prefer packaging that fits their retail outlets, and it’s also true that the same package style that fits a big retailer won’t appeal to many customers in smaller retailers. This means that sales people must be far more interested in how the packaging appeals to customers than design experts.
One of the first things we did at Club Marketing when a vendor brings a product in was to review the packaging and make sure it was right before we would ever carry this item to see the buyers. Most of our suppliers knew that we dealt with these buyers on a daily basis and knew what was expected from our supplier. The buyers knew that we knew what was expected, and they held us to a higher standard, which was OK with us.
Club packaging vs retail packaging
Product labels and display boxes in the club arena, are even more critical than those in regular retail. Clubs have a reduced number of SKU’s from a regular retailer or the big box retailers. Clubs would normally run about 4,500 SKU’s where big box retailers would run 125,000 SKU’s.
Also, retailers use a company’s products and form on-shelf block areas that featured several of the suppliers’ products. Customers could spot the items immediately because of the block merchandising. In the clubs, each item was considered a stand-alone item and had to perform to certain levels to maintain the space in the club set. Retailers have standards for their items too, but it is considerably less than the clubs per item.
Sam Walton had a rule in his stores (club and retail) called the “10 foot, 3 second rule.” His thinking was that a supplier had three seconds once they were 10 feet away to announce to the customer what the product was and to pull them over to the display for closer inspection. On the other hand, because the clubs do little or no advertising, it is more critical on the club side to have packaging that screams at the club member to “come look at me!”
Battle against private label
As the market itself is shrinking for national and regional brands, because they are losing business to more and more private label, the call for the best packaging becomes even more critical.
As a rule, the retailers pick the strongest product in any category to go private label and if the retailers are successful in converting the customer to their products, the national and regional brand packaging must be the best. If the trend continues, the national and regional brands will be fighting to keep their numbers up, especially if the retailer have cherry picked the best-selling items.
The risk to suppliers is if they change the package the customer has been buying into something the customer will not recognize, the customer might pass core items looking for the old package colors and packaging look. The magic is taking the most recognizable part of the packaging and incorporate that into the new packaging, satisfying both the consumer and the retailers.
In the end, it is all about sales. If your packaging is holding your growth back, you may want to consider making changes that will grow the business.