Consumer packaged goods companies (CPG) recognize the revenue potential of including the warehouse club channel in their mix but also realize the unique challenges posed by competing in the club environment. It requires tailored approaches to packaging and merchandising within the limited SKU space that club stores provide. Grossing more than $150 billion annually, this retail segment—consisting primarily of Costco, Sam’s Club and BJ’s—is expected to continue growing at a rate of more than 6 percent annually through the end of the decade.
While entering the warehouse club store mix has huge upside potential, the CPG brand manager must do so with a completely different mindset when compared to traditional retail.
Club stores offer a no-frills, no-shelf environment for product placement. Whatever secondary packaging your product arrives in at the store is what’s put on the floor. Referred to as retail-ready packaging, it has become a system of packaging and merchandising that allows goods to be moved directly onto the store floor with minimal in-store handling. Typically pallets of products in their primary packaging are parked alongside the aisles, which make it essential that your delivery packaging accomplishes two tasks:
1. safely deliver your product to the store
This is secondary packaging’s most basic function and cannot be compromised. However, because most secondary packaging hides or covers a product’s primary packaging, creative thought needs to be given to the organization and display of primary packaging on the pallet in order to make this display impactful and effective as a retail-ready unit. This step often consists of using simple pallet wrap to effectively protect the primary packaging and keep the product safely contained on the pallet.
2. serve as your product’s display
For general merchandise it is best to use pallet-sized display assemblies that can be easily and quickly placed into service. Half-pallet and quarter-pallet displays are sometimes used, enabling precise point of purchase (POP) placement and flexibility in showcasing a variety of items, including products that are located in the refrigerated or frozen areas.
While refrigerated or frozen products are typically removed from pallets when placed in coolers or freezers, secondary packaging is generally required for the product to be stacked one on top of another. A poorly designed display system—whether due to bad structural design on secondary packaging, use of inferior or non-moisture resistant structural material or because of poor product presentation inside the packaging—can be a large deterrent to shoppers choosing your product and putting it in their carts.
Disrupt The Consumer
Unlike a typical retail store setting, the club store has little to no in-store promotion. Cement floors, poor lighting, high ceilings and rows of metallic gray warehouse racking typically greet the club store shopper. So, just as in any retail environment, your product must stand out to get noticed. And, as in any other environment, The best way to accomplish this is through your package design!
The visual excitement that draws shoppers to a specific pallet display is critical. As shoppers navigate the environment, your packaging must pass the “5 in 5” rule: Within a five-foot distance of the pallet, which is the average visual range shoppers concentrate on, your packaging has five seconds to grab and hold their attention. If your product and its packaging fail to do this, and the shopper’s eye is caught by the product next to yours or the more colorful one further down the aisle, you’ve lost your sale.
For your best chance of success, these are the recommended design approaches:
1. create a color cube
Design secondary packaging that replicates the same color palette as the primary packaging. The visual result is a color block that is bigger and more dynamic than single packages standing alone. Research also shows that a strong color block enhances visibility and eye tracking.
Creating an in-store billboard occurs when you unify images on individual packages into one larger contiguous or continuous image. This is achieved when packaging is designed to interact and connect with each other when set side by side, spreading the visual impact across a larger surface. By doing so, you are building and reinforcing your brand messaging as it attracts and engages attention.
3. prioritize icons or images
A picture is worth a thousand words in packaging. If you’ve built your brand with an icon, image or logo, making it a large and prominent part of your packaging is a necessity. That image communicates more to the customer in a single glance than multiple ancillary messages describing what a product is, how it will make you feel and what it’s used for.
4. five-sided branding
Because of the physical nature of club store environments your product display must be able to perform from any side and from any visual vantage point. A top panel of your primary packaging might be easy to overlook because it is rarely seen when a pallet is full; however, as product is removed from the display, all sides of your primary packaging will eventually be exposed. By planning for this effect as a part of your display system design and making your fifth panel as important as your first four, you are able to maintain visual impact and consistency as product is removed.
Describe The Product
Every product must sell itself in the club store environment. Therefore, between the primary and secondary branding, it is left to the packaging to tell consumers everything they need to know, both consciously and subconsciously, and to provide all the information they need to make informed buying decisions without help from sales associates.
In short, your packaging must quickly and efficiently describe what your product is and communicate its appeal. This includes:
- Who you are: your brand, product and variations
- What form your product comes in: size, content and use
- What value your product brings: price per ounce, price comparison, convenience or savings
Additionally, be mindful that your packaging system is 100 percent compliant with the merchandising requirements for the retail environment you are selling into when planning for and executing your club store packaging. Confirm your packaging meets material requirements to avoid costly rework and lost sales.
Other Packaging Considerations
The following are a few other things to keep in mind about club stores in general with regard to your packaging.
Club stores have become increasingly conscious of the environmental footprint of their products and are introducing new sustainable packaging priorities. Some stores have done a great deal to integrate sustainable packaging initiatives with manufacturers and packaging suppliers.
need to be innovative
Because the club store model is based on high-volume sales, low-cost buying and efficient distribution, these retailers offer low levels of personal engagement with customers. This means your packaging must sell itself. Competition is usually fierce. To stay ahead of trends and competitors, your product packaging needs to remain fresh and innovative. Explore customizing your club or structural packaging to create perceived product innovation as value-added solutions to customers.
freshness in packaging
Since club stores have to continuously revitalize their presentations, you must regularly update and change your packaging designs to keep pace. It’s important to stay in close contact with club store buyers so you are aware of when changes are coming and how they may impact your product and packaging planning.
Anyone who has worked in business long enough knows that any business venture is a risk-reward proposition. That is definitely true when entering the warehouse club store retail environment: The rules of engagement are certainly different, advertising is non-existent, product life cycles can be extremely short if a product fails to perform, and the physical environment is like none other.
Warehouse club stores have demonstrated consistent and predictable growth and sales in recent years. Because these stores operate on efficiency and reduced overhead, it’s the product packaging that will determine your success in this environment.
With the right design partner at your side, you can lessen your risk and increase your chances of reward. You should look for a partner with a strong plan, a solid creative direction and a history of success.
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