“Modern Grocery Retail” & the Emerging-market consumer : A complicated courtship | McKinsey

In some “Emerging Markets”, the response to “Modern Grocery” formats has been tepid. What’s a Modern-Grocer to do ??

20 years ago, Modern Grocery Retail appeared poised to conquer every consumer market in the world. Ambitious European grocers, having blanketed their home countries with Supermarkets and Hypermarkets, began setting their sights on growth both within and beyond the continent. They held particularly high hopes for China, India, and other emerging markets, where fast-rising consumer spending seemed to presage an unprecedented demand for gleaming new stores with large assortments, wide aisles, and bright lighting.

In the 1990s, the term “modern grocery retail” was essentially a proxy for a small group of multinational grocers including Ahold, Aldi, Auchan, Carrefour, Costco, Lidl, Metro, Tesco, and Walmart…It was widely presumed that these retailers’ entry into any market would lead to the demise of the traditional trade—the family-owned grocery chains, small independent stores, and informal merchants that at the time accounted for the vast majority of grocery sales in emerging markets. The prevailing expectation was that although there would be local differences due to cultural specificities, in every country the retail landscape would eventually consist of a combination of modern formats: full-line supermarkets and hypermarkets, convenience stores, and discounters..

These assumptions have been proved wrong. Global grocery giants are struggling to grow profitably in many emerging markets… whereas, Traditional trade has proved remarkably resilient…And the market and channel structures taking shape in individual emerging economies are distinct from one another, following no obvious pattern.

Why did this happen? What, if anything, did multinational grocers do wrong? And what does it mean for the future of modern retail in emerging markets?

The Hypermarket’s shortcomings:

To understand the disparity between early expectations and the current reality, it’s useful to examine the roots of the two quintessential modern-trade formats: the supermarket and the hypermarket. The hypermarket in particular—whether in its European form (in which food anchors a massive selection of nonfood items) or its North American one (the “supercenter,” which represents the successful injection of food and grocery into a general-merchandise discount store)—was widely regarded as unbeatable. By offering tens of thousands of products in an immense building just outside or on the edge of a town or city, a hypermarket could operate at a level of productivity that other grocery formats struggled to match. Hypermarket operators passed on these efficiency gains to consumers in the form of lower prices, which served to reinforce hypermarkets’ advantage.

In their first forays into other developed markets abroad, major retailers relied heavily on the hypermarket format. When French retailers Auchan, Carrefour, and Promodès opened hypermarkets in Spain during the first years of Spanish economic reform, they quickly captured a large fraction of that country’s overall grocery sales and dictated the market structure that remains in place to this day.

Expansion across Europe was an exciting growth prospect, but even more enticing to retail leaders and investors was the growth potential of emerging markets. Over the years, that potential has become even clearer: by 2025, we expect emerging markets to account for $30 trillion in consumer spending, or nearly half of global consumption.

When multinational grocers entered emerging markets, they again relied on the grocery formats that were working so well in the developed world. But, in retrospect, it’s clear that the countries in which the hypermarket prospered had several characteristics in common: good road networks and high or fast-rising car-ownership rates, a large middle class that enjoyed decent wages and stable employment, and a high proportion of rural and suburban households with enough room at home to store groceries bought in bulk. Also, those markets had grown to maturity at a time when many women didn’t return to work after having children and therefore had time during the day to drive to and from the store. The hypermarket format draws heavily on consumers’ time, ability to travel, and storage capacity…

In Emerging Markets, retailers encountered an entirely different context. Consumers were less affluent and lived in urban areas; many didn’t own a car, couldn’t afford to travel to and from a relatively far shopping destination, had no room at home to store purchases, or all of the above..

A new respect for localism:

Further complicating matters, emerging markets weren’t just different from developed markets; emerging markets also differed from one another in nontrivial ways. That was true in the 1990s and it remains true today. Based on our research—which involved in-depth study of the retail sector in ten developing countries in Asia, Eastern Europe, and Latin America, as well as interviews with more than 20 local retail and consumer experts and analysis of channel-growth data in these markets—we’ve developed a perspective on the factors that have hampered the growth of modern trade in emerging markets.

On both the demand side (what customers want from retailers) and the supply side (the means by which retailers can deliver what customers want), different factors shape the retail ecosystem in each country. Together, these factors produce wide variability in the level of modern-trade development in countries around the world (Exhibit 1).

On the demand side, for instance, food-shopping habits have turned out to be largely localized and deeply entrenched. Emerging-market consumers tend to prepare their own meals and cook more than their peers in developed markets do, and they are accustomed to shopping at open-air market stands or small neighborhood grocery stores that offer a familiar selection of fresh food and household staples. They don’t necessarily perceive customer service at modern retailers as superior to that of the traditional trade. Customers of India’s kirana stores—small, family-owned retail shops in or near residential areas—already benefit from personal service from the store owner, free home delivery, and credit and cash rebates if they remain loyal..

On the supply side, a big factor is the informality of traditional trade: many small retail businesses rely on unpaid labor from family and friends, pay no rent because they own their storefronts, and don’t pay corporate taxes. Modern retailers cite this informality as a major challenge when competing with local retailers. A European hypermarket chain found that its considerable operating-cost advantage from better sourcing and supply-chain processes was canceled out by the fact that it was paying taxes while local competitors were not..

Another major factor affecting modern trade is public policy. India’s restrictions on foreign direct investment have limited the growth of modern retail there; in China, by contrast, city governments are assessed on the level of economic activity and foreign investment they attract, which makes them biased toward supporting modern trade. As a result, modern-trade penetration in China’s largest cities has grown significantly over the past 15 years..

A further supply-side factor in emerging markets is the fragmented supplier base, which places a natural limit on the benefits of scale. A retailer can’t source products as efficiently as it would in a mature market because it must buy from a complex network of regional and local entities. And even retailers with a national buying team won’t easily find national manufacturers who are eager to partner with them—a point we pick up on later.

Incumbent advantage is yet another powerful factor shaping retail ecosystems. Today’s market dynamics tend to become tomorrow’s market structure—so, for example, in markets in which a highly efficient wholesale system serves the traditional trade, it becomes much harder for modern grocers to gain a foothold. That said, wholesalers can also be vanguards of modernization. In Turkey, for instance, some Bizim Toptan stores have developed a substantial retail business. These wholesalers-cum-retailers illustrate the fact that ecosystems in emerging markets are partly shaped by players that can concentrate and coordinate a critical mass of what otherwise is a complex set of routes to market..

“Seven” strategic levers for success:

In parts of the world where the market structure is itself still in a formative stage, retailers need a bespoke strategy. Our research and experience suggest seven strategic levers that lead to success in emerging markets. These levers—having to do with delivering what consumers want, working effectively with other players in the ecosystem, and generating lasting productivity advantages—reflect perennial concerns for retailers everywhere, but they are especially critical in helping retailers secure a profitable future in the world’s fastest-growing economies.

The levers are by no means comprehensive. For one, they don’t touch on digital technology, which may well be just as important in emerging markets as in developed ones; indeed, rapid adoption of smartphone technology may allow emerging markets to leapfrog more mature markets and reconfigure the value chain farther upstream (for example, by giving smaller suppliers direct access to national and even global markets). Rather, we draw attention to areas that we believe require deliberate action in emerging markets-

1. Prioritize proximity.

2. Keep prices low—and make sure consumers know.

3. Obsess over productivity.

4. Make the business case to manufacturers.

5. Educate policy makers on the benefits of modern trade.

6. Consider partnering with the traditional trade.

7. Adopt a city-based strategy.

For any modern retailer, success in emerging markets isn’t guaranteed. Our research confirms the complexity and local specificity of market development and the degree to which it depends on initiatives taken not just by retailers but also by governments, manufacturers, wholesalers, and others in the local retail ecosystem. International retailers thus need to become experts at local tailoring. That said, operating in emerging markets still unquestionably requires excellence in core retailing competencies: marketing, merchandising, supply-chain management, and talent development, to name just a few…

Modern Retailers that excel in all these areas in the context of markedly different emerging-market structures will, in a sense, have conquered the world..!!

Advertisements

“Ripe for Grocers”; The Local Food Movement | Consumer Products & Retail | A.T Kearney

Grocery shoppers today want local food—and they are willing to pay a premium for it…Our second annual study of local food market examines this growing opportunity for Retailers..!!

Walk through the produce section of Whole Foods and you’ll see on the signs, as prominently placed as any other information, the state of origin for its fruits and vegetables. With its Local Loan Producer Program, which provides roughly $10 million in low-interest loans to independent growers, Whole Foods has made a bet that local foods are not just a passing fad in buying habits but indeed a new reality for grocery..

Our second study of shoppers’ local food buying habits bears out the optimism about the “locavore” movement. The study finds that local food is fast becoming a necessity for attracting and maintaining customers. A growing number of shoppers, seeking more sustainable foods and hoping to help the local economy, say that the availability of local food is an important factor in what they buy and where they buy it. And, importantly, more shoppers say that they think more highly of retailers that carry local food and have even considered switching retailers to find better local selections. For big-box retailers and other national chains, there is plenty of work to be done to incorporate local foods, as the market remains dominated by farmer’s markets and specialty retailers..

We recently surveyed more than 1,000 U.S. shoppers to examine the strengths and weaknesses of large grocery retailers compared to other formats when it comes to local food. This study builds on our first report on the local food market, which was released in 2013..

Local Food: A Necessity to Compete:

Unlike organic food, there is no universally accepted (or legally binding) definition of local food. Although Congress passed an act in 2008 that defined “regional” and “local” food as being transported either less than 400 miles from its origin or within the same state, most definitions are less precise. At a more basic level, local food typically involves smaller farms located close to where their produce is sold.

Local food is quickly transitioning from one small way grocers can stand out to a component of the shopping experience that buyers expect. Sales of local food have increased an estimated 13 percent per year since 2008, and are now worth at least $9 billion.

Our study highlights several major trends:

Local food remains important for shoppers..More than 40 percent of respondents say they purchase local food on a weekly basis, and another 28 percent buy local food at least once a month. Most say that local food helps the local economy (66 percent) and brings a broader and better assortment (60 percent). Another 45 percent say it offers healthy alternatives to customers. It is clear that retailers offering local food can positively influence customer perception..

Local food awareness and price perception have improved..Sixty-eight percent of respondents (up 3 percent from last year) say they are aware that their supermarket of choice offers local food. Seven percent (down from 11 percent) believe their supermarkets do not offer local food; of this group 34 percent are considering grocers because of this.

Similar to last year, shoppers indicate their primary reason for not buying more local groceries is lack of availability at their retailer of choice (see figure 1)…This year, however, only 47 percent of respondents say availability is the primary reason they do not buy local, down 10 percent from last year, which underlines growing awareness of local selections. Dividing our respondents by region, the western United States has the lowest availability concerns (43 percent), compared to 48 percent in the Northeast and South and 50 percent in the Midwest..

Availability is the main reason shoppers do not buy more local food

Price perception has improved as well. Only 31 percent of respondents say that local products are too expensive, down from 37 percent last year, with the West and South reporting the best prices. Only the Mountain region cites price as a more important deterrent than availability..

Leaders are differentiating on “fresh”..Our survey respondents said that when they buy groceries, freshness is far and away the most important purchasing criteria (60 percent), followed by price (30 percent). Local sourcing is a powerful way for retailers to demonstrate their products’ freshness, as 30 percent of respondents do not differentiate between fresh and local..

This is particularly evident in specific categories: Many consumers want both fresh and local in categories such as fruits and vegetables, prepared foods, meat, fish and seafood, dairy and eggs, and bread (see figure 2)…While convenience ranks highly for frozen and canned foods, this is less of a factor for fresh categories (aside from prepared foods). Other factors, such as health impact, organic, and taste are generally consistent across categories..

Freshness is an important decision factor for buyers in many food categories

Shoppers are willing to buy local food—and pay more for it..Seventy percent of consumers say they will pay a premium for local food, the same number as in last year’s survey. However more of those consumers say they are willing to pay a bigger premium—one-third (compared to less than one quarter last year) say they would pay 10 percent more. Our findings indicate that more people are willing to pay extra for local food than they are for organics. Still, buyers don’t have unlimited budgets for local food, which still makes up the minority of their shopping baskets. Thirty-seven percent say high prices are preventing them from choosing more local food options..

To gauge interest in local foods for specific products, in this year’s survey we asked respondents how much more they are willing to pay for locally sourced versions of some specific products. More than half would pay 15 percent more for local strawberries, baguettes, eggs, and chicken. On the other hand, the majority of respondents say they would not pay more for local frozen green beans or lasagne..

Locally sourced food has broad-based appeal, with spikes in key customer segments..

While local food has wide appeal for a host of reasons, some customer segments are more inclined to buy local food and pay more for it. As local food costs more and is often positioned as a premium product, it is not surprising that income level is a strong predictor for buying local. Seventy-five percent of high-income earners in our survey are willing to pay extra for it..Overall, the value of local food has increased in high-, medium-, and low-income segments compared to last year. Thirty percent of low- and medium-income workers will now pay up to 10 percent for local, while almost 20 percent of high-income earners are willing to pay more than 10 percent, twice the number as last year..

Respondents from rural and small communities, which are closest to where food is grown, tend to be willing to pay more for local food than those from larger cities. High-income earners in small towns are, on average, willing to pay 10 percent extra for local food, compared to about 5 percent for residents in large cities. There are some broad regional differences when it comes to buying local food across the country, from a 5 percent premium in the Southeast to a 7 percent premium in the West and in the Northeast. The share of local food purchased in the typical shopping basket is also highest in these regions (particularly on the west coast), compounding the regions’ attractiveness for local food retail. The Pacific Coast region leads the pack with 27 percent local food in a typical basket, followed by the Northeast at 22 percent. The Southeast has the lowest rate, with local food making up 16 percent of a typical basket.

Large supermarkets are still struggling to gain customer trust..Big-box stores and national supermarkets are the most common places our respondents shop for food, yet they (along with online grocers) rank well below farmers markets, specialty supermarkets, and local supermarkets when it comes to customer trust. The correlation between fresh and local is further explained by consumer response to which retailers were most trusted to provide fresh foods. Again, farmers markets and specialty supermarkets are considered most trustworthy, followed by locally owned supermarkets, national supermarkets, big-box and online grocers. As we noted in last year’s report, many customers believe that retailers tailor the term “local” to their advantage with little transparency into how they define it. Fruits and vegetables harvested hundreds of miles away are often still declared local, which has drawn criticism from small farmer organizations—and skepticism from buyers..

Recommendations for Food Retailers:

This year’s survey results reveal that big-box and national retailers still lag in customer perception when it comes to providing high-quality, affordable fresh and local foods. What can these retailers do in the short term to refresh their local food strategies ?

Tap into the market for “fresh”..Freshness is a primary factor in grocery shopping decisions—in fact, in last year’s survey respondents rated this higher than price. Large grocery retailers lag their smaller rivals and farmers markets relative to both price and quality perception when it comes to “local” and “fresh.” Given that our research has found a strong correlation between fresh and local, large retailers can build awareness of their fresh products simply by sourcing and marketing local more effectively—particularly in categories such as produce, meat, bread, and dairy..

Test local autonomy over merchandising and sourcing..The local food leaders we identified in our research have given local managers more autonomy to make local food buying decisions. For example, H-E-B in Texas and Wegmans on the East Coast allow local managers to build their own sourcing relationships with local farmers and merchandise these offerings as they see fit. The local autonomy model optimizes quality, freshness, and availability—three critical elements for success in local we have identified in our consumer research. These factors, combined with customers’ increasing willingness to pay for local offerings, can offset the potentially higher costs from the loss of efficiencies such as standardized processes and centralized buying..

Consider a direct supply chain model..There are three primary supply chain models grocers use to source local food, each with its advantages and disadvantages. Wholesale is perhaps the most difficult model to control for quality and freshness; however, it provides simplicity and access, which is likely why Amazon Fresh uses it. Many large retailers use brokers to source local food on a national level. C.H. Robinson, the largest such broker, continues to build numerous sourcing relationships with local farmers across the country.

A third model—establishing direct relationships with independent growers in the region—is generally the costliest but may prove the most effective. The direct supply chain model optimizes availability, quality, and freshness and provides maximum sourcing transparency to the consumer. As shown in the example of Good Eggs in the sidebar on page 3, some upstarts are using this model to upend the traditional grocery supply chain..

We recommend national retailers begin piloting the direct supply chain model on a region-by-region basis, initially as a complement to broker and wholesale market relationships. As quality and freshness emerge as differentiators in local food, direct supply models will be critical for long-term success..

Going Local:

The local food movement has shifted from talked-about trend to burgeoning opportunity for large grocery retailers. However, the window of opportunity is small—there is little time to waste convincing customers that you can provide high-quality, fresh local food, especially considering how much competition is emerging in this space..

It may take some outside-the-box thinking—in particular giving local stores more autonomy and using a more direct supply chain model—but those moves will help make an immediate impact and build longer-term growth advantage in this highly competitive market..!!

In “Omni-channel Retail”, It’s Still About Detail | BCG

“As omni-channel retail increasingly moves from concept to reality, consumers are sending a clear message : Convenience is king…”

But the days when convenience could be defined solely in terms of drive times and the in-store experience are long gone. In today’s reality, “convenience” means letting customers decide when, where, and how to shop. They want to order anytime, anywhere, and from any device; to get their purchases in the store, at a separate delivery location, or through home delivery; to determine their own shopping and delivery or pick-up windows to fit their busy schedules; and to be able to return items at any of the store’s retail locations, hassle-free..

The Rise of Click-and-Collect Retail:

The emergence and growth of click-and-collect retail—which allows shoppers to order an item online and then go get it at a nearby store location or pick-up point—is evidence of the power of convenience in the omnichannel world. For many shoppers, the click-and-collect experience offers a more convenient mix of speed, quality, and flexibility than either traditional shopping or standard home delivery…

Already, 35 percent of shoppers who buy items online have used click-and-collect retail to pick up their purchases, and that proportion will increase to more than 75 percent of shoppers by 2017, according to retail researcher Planet Retail. Shoppers in France can pick up their groceries at more than 2,000 “click and drive” facilities. On the basis of our experience with leading retailers, we expect substantial growth in the use of such services.

Done right, click-and-collect retail can be a way for brick-and-mortar retailers to differentiate themselves from pure-play e-tailers by leveraging their existing store assets to offer fast delivery, low prices, and even greater convenience. That’s why many traditional retailers are eager to capitalize on this opportunity..

But click-and-collect retail can also pose real risks for retailers that fail to execute it flawlessly. A recent survey by market researcher E-consultancy.com found that as many as 60 percent of online consumers in the UK and U.S. said they would not shop at retailers that failed to deliver on their promises. This is as true for click and collect as it is for home delivery—particularly when it comes to apparel, a sector where customers expect to pick up the exact size and color they ordered and not a close substitute. In a hyper-competitive retail environment, an annoyed customer is likely a lost customer..

Supply Chain Imperatives:

So, for retailers that seek to make click-and-collect retail a core component of their omni-channel #RetailStrategy, many specific #Supply-chain capabilities are required. (See Exhibit 1)..All are important, but in our experience, it all begins with providing shoppers—and store associates—with accurate, real-time information on product availability…

One way to manage this critical capability in a click-and-collect retail environment is to deliver the customer order from a distribution center to the store, as UK retailer John Lewis does. Centralizing click-and-collect fulfillment in distribution centers concentrates and simplifies the inventory management challenges. But it also adds precious time to the order-to-pick-up cycle, putting off impatient customers who might simply buy the item elsewhere next time. And many retailers’ legacy distribution networks are ill equipped to fulfill customer orders from existing distribution centers, which are typically designed to pick large orders for stores.

For many retailers, then, a better solution is to pick click-and-collect orders from store stock. But getting the basics of in-store inventory management right presents a real challenge in terms of meeting customers’ expectations about availability. In our experience, a store’s balance-on-hand accuracy can be as low as 60 percent, which would be disastrous for click-and-collect customer satisfaction. Search online for “click and collect” for many big-name retailers, and you will see a slew of messages from customers describing poor experiences and products not being available when buyers turned up to collect them, even though the website had indicated that the goods were in stock. That’s why at Best Buy, for example, clerks physically doublecheck the availability of every item in every click-and-collect order in the stores themselves to overcome unreliable in-store inventory.

Why the poor performance? In support of their initial omnichannel offers, many retailers have chosen to focus first on building new infrastructure—pick-up points, distribution centers, delivery networks, IT systems, and even new stores. No doubt, these solutions can be critical components of a successful long-term omni-channel strategy, but getting the basics right, including in-store inventory, is often the most important first step to creating immediate impact and options for the future…

Back to Basics:

Best-in-class players focus on making in-store processes efficient, rigorous, and self-correcting; their processes are consistent with our six “golden rules” of inventory management. (See Exhibit 2.) No IT system can account for products mistakenly left in the back room, inaccurate distribution-center deliveries, removal of damaged goods from shelves that is not captured by the inventory system, check-out errors, and theft. These unavoidable issues, and their consequences, must be accounted for and captured, accurately, by the inventory system. This often needs to be done by a real person, properly incentivised and managed. Ideally, every touch of inventory at every point in the process should validate, correct, or improve inventory accuracy. In our experience, major retailers with such self-correcting systems and processes can achieve balance-on-hand accuracy of greater than 95 percent; at that level, the impact on items popular with customers is marginal…

Building such an approach, however, requires getting all the details right: understanding where errors occur, why they occur, and what solutions can be implemented consistently and effectively by store employees. In this endeavor, the devil really is in the details…

Eventually, emerging technologies will likely become a key part of the solution as well. Radio frequency identification, or #RFID, for example, has the potential to dramatically improve the accuracy of the information that supply chains depend on. Unfortunately, the ability to tag individual items economically and to scale up the technology to the needs of large retailers is still several years away. In-store cameras are a promising alternative for monitoring store stock, but they will require further developments in high-quality processing and image recognition if they are to make a difference. But even the most advanced technology will never entirely substitute for the disciplined in-store behavior needed to drive true inventory accuracy…

Thriving in an #OmnichannelRetail environment will require a host of different fulfillment capabilities. Retailers must design and execute the best possible customer service across all retail channels, build the infrastructure needed to ensure consistent pick-up and return processes, and continually capture and analyze the data needed to understand their customers and customers’ expectations of each channel so that stocking and flow strategies can be adjusted accordingly.

But that’s a longer-term goal. Near term, #Retailers, that seek to capture their fair share of the growth in click-and-collect shopping should focus first on getting the basics of stock accuracy right. Doing so will deliver near-term benefits to the #Bottomline and position them for success, no matter what #OmnichannelStrategy, they decide to pursue…

“Value of Packaging-Industry is INR`70,000 crore” Business in India | FnB News

The #FoodProcessing, sector probably is exclusive in respect of using the most varieties and forms of #Packaging & #PackagingMachinery….In a Interaction with Secretary-General, Institute of Packaging Machinery Manufacturers of India, spoke about the packaging industry in India and emerging trends. Excerpts :

What is the current value and growth of the packaging industry in India compared to the world?

The value of the packaging industry is estimated at Rs 70,000 crore. This however is very low compared to the global industry value placed at around US$600 billion. Of this, 20% is accounted by Asia region with Japan and China in the lead. The per capita consumption by spend is only one seventh of the world average clearly indicating the potential for the growth and opportunities for the packaging industries in the country..

What is the potential of packaging industry in India with respect to the food processing sector ?

As it is true of the situation in most countries, around 50% of the total packaging production is consumed by the food sector. The food sector probably is exclusive in respect of using the most varieties of package types and forms including machinery…!!

Does India rely on other countries for its food packaging needs ?

The food sector primarily caters to the domestic resources of packaging materials/packages.  Whereas they also source specific technologies and packaging machinery and system for higher ends and exclusive needs.

What are the recent developments in the food packaging industry of India?

The industry has witnessed considerable new trends moving from simple pre-packaging to vacuum packaging, gas flush packaging, CAP/MAP (Modified-Atmosphere Packaging / Controlled-Atmosphere Packaging), smart and intelligent packaging, retort and asceptic systems, barcoding and RFID (Radio-Frequency Identification) and various types of collation and unitisation are specific areas of interest.

What are the operations and challenges involved in food packaging?

Food packaging lines vary considerably depending on the product state, quantities required, variations in the product characteristics etc. The retail and consumer end needs like dosages and conveniences also play a role. FFS (form fill seal)-vertical and horizontal, thermoform-fill and seal, lined carton system, stand up and spouted pouches, flow wraps are typical in this industry.

What are the types of packaging formats used for various food products?

The varieties of packages vary from simple PP (polypropylene) bags to high barrier packages and  asceptic packages. Single layer polyolefin bags to pouches, 2-5 /7 layer flexible laminates, 2-9 layer multilayer films, thermoforms from PS (polystyrene), PVC (polyvinyl chloride), PET (polyethylene terephthalate), PP, PE (polyethylene)and co-extruded structures besides semi-rigid and rigid metal, glow, plastic formats are very common types of packages used by the food sector. These primary packaging media are supplemented by a group of ancillaries like labels, caps and closures, wads, and reinforcements. Developments in these areas are indeed very commendable like dosage caps, smart labels, security/tamper identification labels, coding and marking systems, child-resistant and elder-friendly caps.

How balancing of innovations and risks are important in the packaging industry with examples?

Innovations within the industry and value-added packages are specific areas where possibly the packaging industry has tremendous scope. Responsibility lies both between the package buyers and package suppliers. No doubt this is cost-oriented but soon will become an entity if the industry has to become more and more competitive. India being identified as a good source for development and supply has therefore necessarily to acquire the infrastructure and buildup as a good and dependable source of recognition, globally.

What are the challenges faced by manufacturers of food packaging?

Both package conversion and packaging operations are considered reasonably developed. The existing level, however, need to be constantly updated towards higher technology levels. Opportunities are open for improvements and new material and material combinations with higher functionality. It is equally true of the machinery sector in terms of versatility, ergonomics, eco-friendliness, reduced turnover time, pollution-free, easy changeover and multi-product oriented.

How food packaging plays a role in safety and health standards of food materials?

Food needs to be safe and nutritious. More scope exists and innovation opportunities are higher in packaging possibilities. Consider the global scene – the one point agenda is to save food and reduce losses and make food available to all irrespective of season, location and at uniform price. The FAO/UN (Food and Agriculture Organisation/United Nations) has estimated that about 1.3 billion tonne of food is wasted. Poverty alleviation and removal of famine is only possible if such waste is curtailed. The common enemy seems to be “mindset,” lack of education or importantly poor understanding of the benefits or inadequate convincing and persuasion.

Comment on how flexibility factor will change the future of food packaging industry :

Primarily the laws and regulations should be clear and this yardstick can have no tolerances.  Standards and specifications should be drawn up both in respect of materials and process and details  should appear on the packages. If the system needs to be effective monitoring at the manufacturing / processing sites may not be enough. Market samples should be drawn and quality inspection should be done. Any malpractices or shortcomings or deviations should be dealt with expeditiously with stringent punishments. This cannot be a mere fear complex but an effective baton.

What are the issues about which manufacturers of food packaging have to be cautious?

Primary issues related to package manufacturing are raw material quality, process of manufacturing   site conditions, machinery and system, quality of output and their conformity to requisite standards  and specification complying to statutory and other stipulations.

How Automatic Identification and Data Capture (AIDC) is important for the packaging industry from a consumer point of view?

Consumer safety, health and hygiene being the core of food, food processing and packaging all data right from procurement, in-site manufacturing and supply chain are extremely important and essential. Coding and marking-barcodes/RFID and AIDC are helpful tools in this direction.

With new food mix and products emerging, what is your message for manufacturers and traders involved in the industry?

Product mix – in-depth and width will have to expand. Substitutes and alternates and modifications are part of the game. They will continue to be on the anvil all the time. RTE (ready-to-eat), RTC (ready-to-cook), RTP foods are typical examples. This is irrespective of the food sector – meat and meat products, dairy, flour-based foods etc.

There can be no single answer for packaging needs of these. Also a given package cannot be the answer for all foods and all market conditions. Each product needs to be treated on its own merit considering its characteristics, shelf life, supply chain conditions. It also should be noted that “a package” is a good vehicle and guardian. It will keep the product as it is processed and packed, and therefore ”what is put inside” and “at what conditions” are equally important.

What are the new trends in raw materials used for packaging and how eco-friendly are they?

Lot of discussions are seen in respect of bio-friendly packages. They are debated under different heads. Commercialisation always is governed by availability and cost. These probably are the constraints. Possibly more inputs are needed. Polymeric and coatings( barrier) will find more applications.

What are the challenges and responsibilities in front of the new government to help the packaging industry?

The packaging industry has been under various constraints which affect its expansion and growth.  Most of the converting sector were under the reserved category. The shift in early 1990s clearly paved the way for their expansion and modernisation and over the last and half decade one could witness the sea change. The trend set in will continue. The country still processes a very low percentage (less than 5) of the fresh produce. The scope is indeed very large and would have large influence on the packaging sector. With the retail sector growing at a reasonable pace and shelf- ready packages becoming more popular / necessity the demand for packaging will also increase in a good pace. Although the changing lifestyle, small families, more working women, demand for more and more convenience packages have shown a direct impact on the packaging needs, the cost inputs for packages in a packaged food does not seem to encourage large-scale shift, yet…Having identified “food processing” as a priority sector and a large number of financially-assisted programmes put in place by the government, the momentum needs to be augmented…

The Foregoing could throw up quite a few measures-industrial and fiscal that the government could review : 

  • Encourage processing and packaging centres at the orchards level.
  • Create a part of above as exclusive export oriented.
  • Provide financial assistance for setting up state-of-art processing and packaging centres and review fiscal aspects.
  • Create and enlarge the cold chain supply systems.
  • Set up quality assist centres at processing & packaging centres with emphasis for those at orchard levels.
  • Review the contribution of cost of package to the final product selling price and the part of the duties and levies.
  • Given the current situation and needs – review the fiscal levies to reduce its impact on the final product pricing to increase volume of processed food packaging.
  • Encourage developments in source reduction and make packages more eco-friendly.
  • Encourage easily recyclable and reusable packages.
  • Introduce and expand returnable packages (deposit scheme).
  • Fiscal incentives for those falling under the above schemes.
  • Can the fiscal support include tax holiday system with built-in conditional aspect on steadily increasing volume of packaged foods.
  • Encourage R&D / Innovation in packaging and extend financial support for those bringing in advantages for the consumers adopting state-of-art technologies and materials.

Consider special incentives for SME (small and medium enterprises) sector in the above areas….

The underlying principle and aim should be “Food Safety,” Food Preservation & Packaging…best suited for Tropical Countries and those with Higher Storage & Distribution cost…Such developments in all Types of Packaging – across the cross-section – will add to the choice to meet varying market segments. Packaging food more securely with high productivity and extended shelf life are the technology endeavours today…!!

Does Your “Retail Inventory-Management Processes” Need an Overhaul ?| ArcherPoint

As the Retail Industry adjusts to the needs of the #ChangingConsumer, stores must look at whether their #InventoryManagement processes meet those demands :

Identifying optimal inventory levels is integral to minimizing Losses & Maximizing Profits. Start by examining these three inventory management areas to find room for improvement :

1. Receiving and Tracking : Retailers can better track stock deliveries by gaining more visibility into their processes. Does your retail or warehouse manager know which purchase orders are outstanding and the expected shipment arrival date ? Are the orders going to the warehouse or the store ? Ideally, retailers should have the answers to these questions, and every aspect of their receiving and tracking..

It’s especially important to have clarity into one of the key-facets of the Receiving Process — location…When retail buyers or planners determine the quantity needed to replenish inventory at store locations, they must also decide the delivery location. Should the vendor send the inventory directly to the store, or should the product go to the warehouse to serve as safety stock for multiple stores ??

To determine where to send the inventory, consider THREE Scenarios :

First, for the vendor to send the product directly to the store, retailers must ensure that store management knows there are outstanding purchase orders and what to do with the inventory when it arrives.

Second, consider the shipping process to your multiple stores. If you have one truck that delivers to each of your 10 retail locations, it’s inefficient to ask your vendors to split the purchase order among those locations. Instead, ask the vendor to ship items to your warehouse, where the products will be sorted by cross-docking. That means warehouse workers receive the products at the receiving dock, where they’re immediately sorted and ready to be transferred to the stores. Essentially, the products pass through the warehouse instead of being stocked at the warehouse.

Third, say your buyer estimates that your stores will sell 1,000 items of a particular product, but the buyer doesn’t know the exact quantities each store should carry. In this situation, the vendor should ship the order to the warehouse. Later, when the reorder inventory point is calculated, you can issue a transfer order from the warehouse to the store.

2. Assist on the Store-Floor : Retailers can use mobile point of sale (POS) or mobile inventory tracking to better manage inventory and provide more accurate inventory information on the sales floor…!!

It’s important to know the difference between each. A mobile POS system is customer-facing, meaning it’s used to assist customers with checking out at the register, and includes some inventory status tracking features. Mobile inventory tracking is the mobile interface for managing inventory. It’s possible for mobile inventory apps to record and track quantity on hand, automatically reorder inventory items, display store pricing history for each item, and carry out other #InventoryManagement functions..

To determine which technology is best to manage inventory at your store(s), decide the primary role of your store employees. For example, consider equipping cashiers with mobile POS technology, and equipping other store associates with mobile inventory tracking devices to help them record and restock items..

3. Track inventory as it moves throughout the store: Retailers should think of their store as having multiple inventory locations. One area of the store should be a place for customers to pick items off the shelf, another area designated to hold special orders and a different area for the stockroom or backroom. Modern technology, like bar-code scanning or radio-frequency identification (RFID), can help pinpoint the exact location of inventory items…

Evaluating these THREE Areas of your #InventoryProcesses is “Vital to helping you to identify the Right #InventoryLevels” for your business..

After all, inventory-management plays an integral role in determining your Bottom-line & Profitability…!!

 

“E-commerce Logistics firm “Delhivery” to raise up to Rs.175 crore”: “PE’s interest in Ancillary Service providers” | ET Retail

E-commerce Logistics services company ” Delhivery “ is in the final stages of negotiations to raise up to Rs 175 crore in fresh funding, a development that comes at a time when a number of India’s Top Private Equity funds are betting big on the country’s Digital-commerce sector….!!

The company has had discussions with a number of blue-chip private-equity firms, a list that also includes marquee growth-stage risk capital investor Warburg Pincus, and a deal is expected to be finalised by mid-June, according to sources with direct knowledge of the talks…

If successful, this will be Delhivery’s third round of equity funding….In September last year, it raised about Rs 35 crore from Nexus Venture Partners, having raised an undisclosed sum from Times Internet Ltd earlier in 2012….The existing venture capital backers are also expected to participate in the new round…

Warburg Pincus recently made the news when it led a Rs 550 crore round of funding in online and mobile classifieds company Quikr in March. Avendus Capital, a leading investment bank, has been given the mandate to structure the transaction. While Sahil Barua, co-founder of Delhivery, and Warburg Pincus refused to comment, emails sent to Avendus Capital did not elicit any response…!!

A potential transaction could value Delhivery at over Rs 500 crore. A number of India’s top private equity firms with a consumer #BusinessFocus but are yet to invest in E-commerce have highlighted their interest in investing in companies that provide services such as Payments, Logistics, #Reverse-Logistics, #Packaging and #SupplyChainManagement…

“We don’t have a preference for businesses that focus on core merchandising…We would rather look at Logistics and Payment-related businesses, which go right across the space,” said managing partner, Tata Capital Growth Fund (TCGF)…!!

The shift is largely driven by the relatively lower valuations and smaller amounts of capital required by #AncillaryServiceProviders, with average deal sizes of Rs 50 crore to Rs 150 crore…!!

“We will consider investments in E-commerce. We haven’t so far, because a number of those businesses are yet to mature to a point where we, as a late stage investor, are comfortable investing in them…

BillDesk, where we have invested, is a classic example of a company that has been a direct beneficiary of what’s happening in the broader consumer internet space,” said.. India head of global private equity firm TA Associates…!!

“Tekla India & RICS promote” Building Information Modeling “(BIM) Technology”, to “Engineering & Construction Markets”| Realty Plus

“Tekla India, a leader in bringing Building Information Modeling (BIM) software to the engineering and construction markets of India, today announces its strategic alliance with the Royal Institution of Chartered Surveyors (RICS) and the RICS school of Built Environment….” 

The main objective of this partnership is to build a critical-mass of  “Quality Talent Pool” and create better Employment Opportunities for Young professionals across the construction and infrastructure industry, in the region..!!

This collaboration will help reach out to the student and education community to educate them on BIM technology using Tekla Structures through the Real estate and Construction Management courses offered by RICS School of Built Environment in their campuses in India…

As a part of this 2 year course, the program will provide students with a firm foundation on Tekla Structures Building Information Modeling (BIM) software…. Tekla India as a strategic partner will also be part of RICS’s conferences and workshops through the year across the major metro cities of the country..

The construction industry is the second largest industry of the country. It makes a significant contribution to the national economy and provides employment to large number of people…!!

The use of various new technologies and deployment of project management strategies has made it possible to undertake projects of mega scale. In its path towards automation, the industry has to overcome a number of traditional and technical challenges. 

Hence, professional training opportunities in this field is a must as this will help them do their jobs better, while achieving greater accuracy, efficiency, and cost management”.
Nirmalya Chatterjee – COO & Business Director, Tekla India said, “We are very proud to announce this one of its kind industry-academic partnership with RICS India. Volume of construction and infrastructure is only increasing in India and use of BIM technology can lead to enormous gains for the industry. 

“Qualified BIM professionals are the need of the hour. It is thus important that we train the younger generation joining the construction & infrastructure industry in their nascent stage…

This tie-up is a step forward to benefiting the student community as well as providing the industry with a larger talent pool. We along with RICS ensure that the best of professional education is offered to aspiring students keen on joining this vibrant industry”…!!

Sachin Sandhir, Managing Director, RICS South Asia said, ” We are honored to be associated with Tekla as it will further enhance our education curriculum at the RICS School of Built environment by providing our students with expertise and knowledge to improve their skills and giving them an edge in an increasingly competitive market ” ….

With advancement in technology, a new era of automation in construction industry has rolled in which clearly shows a huge growth from the manual representations to the 3D modeling and digital level of engineering. The introduction of the newest version of Tekla’s BIM software has improved construction workflow efficiency by providing the means to better organize models, manage tasks and avoid structural clashes..

Construction is about collaboration. As BIM penetrates construction industry processes, architectural trends produce increasingly complex shapes, and buildings include more refined technology, information exchange becomes progressively more important…!!

While information management remains at the core of BIM, building today’s structures requires more information than ever before. The new professionals need to well equip with the latest developments and technologies in the rapidly growing sector..