Interesting things about the packaging industry, retailing dynamics, consumer trends and NOA’s insight.

All change in retail – and consumers are dictating the terms

Jan 17, 2018 | Carton Packaging, Consumer, Corrugated Packaging, Industry Associations & Partners, Packaging, Packaging Research and Analysis, Paper Mills

It probably hasn’t escaped your notice that Christmas was not a happy time on the High Street for many retailers.

The department stores in particular seem to have taken a battering. Sales fell by 2.6% at Debenhams, leading it to issue a profits warning. House of Fraser has contacted landlords asking for rent cuts.

According to figures from the British Retail Consortium (BRC), non-food sales in the UK in the three months leading up to Christmas dropped by 3.7%.

So the evidence is there to see. Consumers are still spending, but they’re not spending in shops and this news should really come as no surprise to High Street department stores and other retailers.

Research the team here at NOA conducted in the United States for the International Corrugated Case Association (ICCA) talked about “ghost malls” – and who was it who said if America sneezes, the rest of the world catches a cold?

In the world of retail, consumers are the Gods. What they do and what they demand has to dictate what retailers must do and must change, and by the same token must also dictate the direction that new packaging formats must take. It’s a simple equation: satisfying changing consumer demands = more sales = more packaging sales (and profits).

Where have all the consumers gone?

It would be all too easy to answer that question with one word: online. Yes, online sales are increasing; indeed, in the UK in December online spending on non-food products grew by 7.6%, and the overall online penetration rate increased from 23% in December 2016 to 24.1% in December 2017.

But that simply isn’t the whole picture – there’s more to the story …

Ever find yourself scrolling through the digital channels looking for something other than re-runs of old films and BBC dramas? Do you perhaps pause to browse the shopping channels?

Jewellery, fitness equipment, clothing, homeware – it’s all there. In fact, the products pretty much mirror the goods you’d get in the average department store.

Except, instead of driving into town, paying to park and hunting through numerous in-store concession stands looking for that perfect something, you have a nice presenter – sometimes a celebrity – demonstrating lots of fantastic goods, and you’ve not even left your armchair.

While the likes of QVC aren’t quite breathing down the necks of the big boys like Amazon, shopping channels are becoming increasingly popular. It’s fair to say consumers love them.

We’ve researched shopping channels and have direct experience of QVC – more of this in a future article. QVC started in America in 1983, and in 1993 arrived in the UK where, by 2014, its turnover reached £450m. Globally, it is watched by 14 million people, in nine countries, across 13 ‘channels’ … the impressive stats go on and on.

Incidentally, QVC stands for quality, value, convenience. This surely was once the mantra of high street department stores, but they lose out now to the shopping channels and online retailers in all three areas.

What is happening now in retail is unprecedented. It’s a profound change which is taking place at an extraordinary rate.

It may be the case that one day, shopping channels are also has-beens and there is another new kid on the block that consumers flock to.

The key to finding out is research, research, research. Work out what the next big thing for consumers will be and you should be able to ride that wave.

At NOA we specialise in researching markets, particularly in relation to the paper packaging industry. If you’d like to chat about how we can help you predict the future for your sector and put business plans in place, please get in touch.