As the widespread and indiscriminate impact of inflation puts increasing strain on consumers and businesses alike, retailers and their suppliers have begun to seek savings and innovation in seemingly mundane areas that historically have been relegated or ignored.
A prime example of this growing focus on cost cuts and new efficiencies can be seen in the recent surge in interest surrounding packaging — a critical but often overlooked aspect of retailing that got little attention and was typically seen as a simple cost of doing business.
That laissez faire approach to packaging is a thing of the past, as retailers are now being forced to rethink everything they buy, sell, ship or import. Whether goods are wrapped or packed in paper, plastic, glass or metal, the cost of doing so has skyrocketed to the point where finding alternatives suddenly makes a whole lot of sense — or cents — as the case may be.
“Demand in the packaging segment remained very strong as sales volume in both our containerboard mills and our corrugated products plants had record-setting performances,” Packaging Corporation of America CEO Mark Kowlzan told investors on the company’s Q1 earnings call in April.
While the company is slated to update its results on July 26, the same mix of inflationary pressures that are crushing its customers — and retail consumers — has not bypassed their business.
“We still face unprecedented inflationary headwinds in our manufacturing costs as well as freight and logistics expenses,” Kowlzan added, noting an inventory level of containerboard that was below historical norms, and prompting PCA to seek out its own cost reductions, efficiency improvements, integration and optimization enhancements and investments to mitigate the problem.
Enter Innovation
In the past two week the retail industry’s biggest players both made announcements concerning plans to revise their own packaging, as well as the millions of merchants who supply them or sell goods through them via their respective stores and websites.
While some of the catalyst for packaging innovation is being driven by ongoing sustainability efforts, the new push is also clearly mindful of the bottom-line implications.
For its part, Walmart just announced its inclusion and support, alongside 850 other global businesses and organizations, for the US Plastic Pact’s first-ever award program, via a “call to all packaging innovators.”
“These inaugural awards have been designed to inspire new solutions and provide a unique platform for innovators to test their ideas,” the Walmart statement said, noting the focus on recycling, reuse and composting. At the same time, the retail giant said it was opening its own sustainability hub and database — known as the Circular Connector — to the public after launching it in April.
For its part, Amazon said July 7 that is was phasing out the use of air pillows across its European fulfillment network.
“This includes items sold directly by Amazon, and by third-party selling partners who ship their products using Fulfillment by Amazon (FBA),” the global eCommerce leader said, noting its plan to use 100% recycled — and recyclable — packing paper going forward to prevent shaking and breakage in its famed, blue smiling, boxes.
According to the company’s statement, Amazon is also encouraging vendors to use easy-to-open packaging that is “recyclable and ready to ship to customers without additional Amazon packaging” while encouraging third-party sellers outside of its network to do the same.
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