Facing the packaging challenge for global retail

The UK’s retail sector has never before been so turbulent.   Faced by restricted consumer spending, within the home retail marketplace and significant growth in burgeoning global economies, not surprisingly, UK retailers are now rapidly expanding their horizons and looking to new international markets as a necessity for growth.

Global sports action brand Adidas in its ‘Integrated Distribution Roadmap’ is openly targeting North America, China and Russia to provide over 50% of its growth for 2015.  Deputy Chief Executive of children’s retailer Mamas and Papas, Tim Maule told Retail Week recently that “he expects its international business to outgrow its UK operation in the next five to ten years.” The retailer already sells in 16 countries worldwide including the

US, Spain, France and Greece. Designer women’s retailer Karen Millen also made its plans for international growth clear back in March last year, by recruiting its first Global Retail Director taking on Sian Hession to head up its expansion programme. The company is already operating in 44 countries worldwide. According to sources, only five years ago just 5% of its sales came from overseas, the figure has now topped 10%. It’s a trend that’s set to continue the world over, with 40% of new openings now occurring outside the retailer’s home region.

So what are the main challenges likely to be, and how, as a supplier within this increasingly international arena, can we respond to this changing retail landscape? Helen Cockerham, Managing Director of Keenpac Europe & Asia, explains;

“When you are in a very fast-moving business environment like retail, you have to be prepared to adapt your own business model to suit the changing needs of the market. Although more retailers are expanding abroad, we already have a number of our retail clients who have a global presence, and we’ve created the infrastructure and resources over time, to help us handle their specific needs.

We’ve developed trading centres in those countries close to where our retailers are based, which means we have a local team on the ground, who have an understanding of the local economy, culture and most importantly, know how things operate. We foster close working relationships amongst individual country teams, so that they work together to make a complex international distribution project work. Where we don’t have a presence directly, we use partnerships to ensure our distribution channels are effective.”

Her thinking chimes with that of many retailers who have chosen to create franchises within selected international markets as the safest option, working with local business partners in order to benefit from their local market knowledge.

Having a thorough understanding of local markets and being flexible enough to adapt to their needs is key. Where logistics are concerned, Keenpac has adapted its working methodologies to flex with those of the global retailer. The needs of the international supply chain, especially where franchises are involved, can be incredibly complex, requiring a thorough knowledge of import and export taxation, customs regulations, as well as the various distribution arrangements set up within each international location.

Craig Nightingale, Keenpac’s Sales and Marketing Director explains;

“Many of our global clients want us to manage their packaging supply chain throughout the world. It’s more cost-effective of course, especially with our buying power, but it also takes away a major headache from the retailer. We have a hugely experienced team, who have learned to get to grips with the vagaries of local market conditions, and avoid some of the main pitfalls involved with getting deliveries through the inevitable red tape”. Says Craig;

“It’s also about flexibility. It’s not unheard of for a customer to have up to 200 separate distribution arrangements in one country alone. Deliveries can be direct to store, bulk to a single distribution centre, direct to port or picked up directly from the local supplier. And where franchises are concerned, we often have to deal with the franchisee as a separate trading entity from the retailer they are representing, so we have to take on the risk ourselves. Fortunately, our customers have the trust in our processes to make it work.”

And yet handling the multi-channel approach is just one area where Keenpac has been able to support its global retailers. As routes to market have become more fragmented, the packaging itself, sourced, supplied and managed centrally, has taken on a crucial role in helping ensure the brand is delivered consistently, in whichever corner of the globe it is experienced. The dichotomy for global retailers, as they reach out towards international markets? Choose a multitude of local suppliers but risk diluting the brand, or choose just one, save on cost, but maintain control and reduce complexity.

For Keenpac, effective management is our cornerstone. It gives us the best of both worlds.

We can enjoy the benefits of having suppliers in different locations, but with centralised processes, especially where quality is concerned, it means we can keep a tight control over the product wherever in the world it’s produced and delivered. Interestingly, as China has become more and more affluent, it’s no longer simply a manufacturing source, it has become an attractive destination for some of the world’s biggest luxury brands. Armani, Prada, Louis Vuitton, Christian Dior, Cartier, Burberry, Calvin Klein and Chanel, have all seen the opportunity, rapidly opening stores in order to bring their sought after products to this new younger and wealthier customer demographic.

Typically responding once again to the needs of its retail customers, Keenpac Asia, once at the heart of Keenpac’s Far East sourcing, has now entered its next phase. With a brand new office and new team, it’s now an active sales division, set to manage the distribution at a local level across a brand new and rapidly expanding Far Eastern marketplace.

Keenpac retail and product packaging specialists. Our innovative designs and cutting-edge solutions have been enhancing some of the world’s biggest brands.

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