Packaged air is a big problem in grocery retail. Here’s what can be done

Prior to Covid-19, I attended a retail sustainability conference in London. I came away with an anecdote that sums up the conundrum facing retailers and marketers today. 

Dave Lewis, the now ex-CEO of Tesco, was talking about Tesco’s unseen initiatives to take action on sustainability. He introduced the concept of packaged air. Over time, brands in some categories have gradually increased the size of their packaging, out of whack with the contents within, to get more stand-out on a shelf. 

The result is more and more brands are packaging air. Chips and cereals are two of the biggest offenders. Taken as an individual pack, it’s not a big drama. 

But Lewis used the example of Hula-Hoops – a classic British crisp brand. 

When you factor in the increased cost of transporting the air around the UK to the stores, it quickly adds up to an extra 250,000 miles of freight distance per year. 

That’s one brand with one retailer. Imagine the carbon footprint for the whole chips category. 

As a result, Tesco is actively penalising brands that package air. This is not just about taking a stand on sustainability. It’s a way of protecting revenue because Tesco is seeing shoppers switch retailers based on its approach to sustainability.

It is a similar story in Australia where brands regularly reduce the volume of contents without adjusting pack size. Again, in effect, packaging air.

Research by Glow shows consumers expect retailers to lean in, both to address environmental challenges and to act as good corporate citizens. And if they don’t? They are more and more likely to shop elsewhere.

In Australia, Glow has found one in four consumers have switched retailers based on sustainability concerns. Glow estimates the value of sustainability-driven switching for the Australian retail sector to be $3.5 billion this year alone. 

Glow’s data states that 60 per cent of Australian consumers say brands stocked by retailers have a big impact on their perception of the retailer’s social and environmental responsibility. This is even more pronounced with younger consumers with 70 per cent of Gen Z and Millennials feeling that way. 

All eyes on supermarkets

There’s no denying consumers are paying close attention to the brands you choose to stock on your shelves. Just like in the case of Tesco, it’s not simply about the actions you take but also what your stock lines say about you. 

It’s clear that making conscious and sustainable choices when selecting the products you offer can make a big difference in how consumers perceive your business. 

US data shows that expectations are highest for supermarkets and convenience stores, followed by department stores and fashion retailers. 

Australian supermarkets are seen to be leading the sustainability agenda. In contrast, department stores and fashion retailers, with notable exceptions (e.g., Patagonia) tend to score lower in consumer sustainability ratings. 

And it’s not just about the products you stock. Where you communicate is also important. The closer to the point of purchase, the more influence your eco-friendly credentials have. For retailers, this can help influence communications plans. 

For brands, it’s time to do good with your packaging and the messages you communicate on your real estate. Also, as brands increasingly leverage retail media networks, there’s an opportunity to highlight sustainability credentials at the right points on the customer decision journey.

Taking the long view

Taking a positive stance on ESG does not have to be at the expense of economic growth. There are plenty of studies that demonstrate the long-term business value of leaning into sustainability. 

We live in extraordinary times. The confluence of a rapidly tightening economy, omnipresent culture wars, technological advances and clear examples of climate change leave many retailers unsure which way to turn. It is human nature to place more weight on the present than the future, to place more emphasis on the tangible and material over the conceptual and potential.

Which is why most retailers would probably rank the economy, technology, position on culture and the environment in that order of priority. Received wisdom will always dictate putting more emphasis on the balance sheet now than in five-year’s time, which is why society and the environment suffer when balanced against the economy and technology. 

This explains why sustainability is rarely weighted with the requisite importance. But taking this approach means retailers are out of step with consumers. 

With the current economic uncertainty and pain confronting Australian retailers this is an opportunity to do the right thing and benefit economically. 

The post Packaged air is a big problem in grocery retail. Here’s what can be done appeared first on Inside Retail.