Supermarket competition boils down to packaging

CEBU, Philippines – As consumer preferences and lifestyles change through time, supermarket suppliers are encouraged to develop better packaging innovations to cope with stiffer market competition.

In a seminar during the World Food Expo (WOFEX) Visayas 2009 3rd Food Processing, Packaging and Food Service Expo held at the Cebu International Convention Center, Roy C. Chua, the vice president of the Philippine Amalgamated Supermarkets Association (PAGASA) discussed the topic on “Marketing of Supermarket Items Thru Packaging: The 5th “P.”

Chua discussed the difference between a convenience store and grocery from that of a supermarket and a hypermart or a warehouse club.

He said that convenience stores were designed to capitalize on the consumer attribute of convenience and not necessarily on price and variety because it provides “on-the-go” consumption and because of its smaller size, it can squeeze into high traffic metropolis.

While groceries capitalize on convenience and not on price but it has improved variety and supermarkets on the other hand focus on price and variety, which is two to three times wider than that of groceries.

Warehouse clubs or hypermarts on the other hand, which is a much bigger version of the supermarket focus on complete variety of fast moving items with lower prices and bigger value plus with a wider range of item per category.

Chua said that it is important to realize the distinction between these retail outlets so that potential suppliers could tap into the specific markets and consumer needs that are being catered to by these different store categories.

He said that for potential suppliers and entrepreneurs who want to display their products in supermarkets, owners look at the following qualifications: company and product track record, product category whether it is a sunrise and sunset goods; product innovation and advertising support; in-store promotion and support as well as the terms and conditions of the selling.

“Supermarket owners would want to be the first to display new items and they look for uniqueness and differentiation in every product they put on display. If you have a sunset product then it will have lesser opportunity than sunrise products which are fast moving,” said Chua.

He stressed that the most important feature of a particular products’ packaging that supermarket owners look for is innovativeness.

Chua said that for suppliers to be successful in penetrating retail outlets, they should have better and nicer packaging against competitors.

 “Rather than you go with the norms, the aesthetic, attractiveness and saleability of your product’s packaging against existing product will also give your product big chances to be noticed. The relevance and advocacy of your product will also give you an edge. You will have a hard time penetrating retailers if your product has no relevance in the industry or in the competition and if you do not provide solutions to consumer problems,” said Chua.

He said that there should be product innovation in terms of material, function and durability because these products are handled by different people before it goes on display so it must be able to preserve the product.

Another is product innovation in size and shapes so that it will be more attractive against competing brands in the shelves and should be visible considering the throng of products displayed.

He said that among these latest material innovations are the sachetized packaging for smaller quantity and the doy packs which provide better handling and stacking.

“We emphasize that packaging innovation is not a pocket science technology. It’s how well you observe the changing lifestyle and needs of Filipino consumers. Things evolve rapidly so you should catch on how things are changing to spot the needs of consumers. Supermarkets these days want to innovate so they can recreate the supermarket experience of consumers,” stressed Chua.

PAGASA addresses the basic concerns of the industry from varied issues with greater impact to both retail owners and consumers and through position papers and organized rallies, the group expresses itself as a voice in the supermarket industry that caters more for the mass market.

Right now, the organization has 300 member stores operated by less than 100 companies and here in Cebu, their member include the Prince Warehouse Club chain of retail stores.