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Smart packaging

Despite its importance, theory on packaging and its role in NPD is underdeveloped as it has received little attention from researchers (Trott and Simms, 2017). Studies on NPD normally focus on technology intensive industries whereas innovation in the packaging sector is low tech incremental innovations (Baregheh et al., 2012).

There are two notable empirical studies Ernst & Young (1999) and Francis et al.’s study (2006) that study NPD in the FMCG sector, but both fail to capture the packaging related development in that specific context (Trott, 2014).

Some of the recent publications – (Carter and Rogers, 2007; Securing and Muller, 2008; Srivastava, 2007) provide insights on green and sustainable supply chain practices of firms in the construct of the social, environmental, economic aspects of these practices.

Current literature on packaging mainly focuses on marketing aspects and importance in product positioning/mix (Ahmed et al., 2005; Simms and Trott, 2010; Ampuero and Vila, 2006).

Even very little literature is available that link or elaborate on the influence of the retail network of a manufacturer on its packaging practices or decisions, a void that this study plans to contribute to.

The study aims to investigate whether the influence of big retailers in the UK is pushing FMCG manufacturers to adopt eco -friendly practices and how they have been able to create this relation, i.e., forced or collaborative.

This research will contribute to understanding how the retailers, the contact point to most fast moving consumer goods (FMCG) can affect or are affecting the packaging decisions backward I,e manufacturers and suppliers of FMCG products.

The study will present evidence of green packaging practices from both the retailer and manufacturer sides of the supply chain. This investigation will benefit supply chain stakeholders namely retailers, manufacturers and regulators in three ways.

The interview specifically addresses questions to understand what acts as barriers for manufacturers to adopt eco-friendly packaging decisions. Moreover,whether the retailer or manufacturer is the major factor fostering the change.

It will help identify which stakeholder in the manufacturer- retailer UK supply chain holds the greater influencing power for regulators to develop and implement targeted incentives or punitive policies. For the manufacturers, the study will benefit them in comprehending the eco packaging requirements of the retailers.

Packaging Market Overview

Innovations and development of product packaging have no doubt reformed product development, marketing, and consumer usage. It plays a vital role in preserving, protecting and delivering of the product.

The global packaging industry amounting to USD 839 billion in 2015 is expected to reach USD 998 billion dollars in 2020[1]. There are six categories that the global packaging industry is categorized in – plastics, paper and board, glass, metal, wood, and textile.

The market is dominated by flexible (refers to the flexibility in form and shape to the product it wraps or carriers, e.g., aluminum foil and carrying bags) and rigid plastic packaging materials.

The main end consumer of packaging material is the food industry,Smart packaging around 50-60%, followed by the health care and cosmetics sector, (Olsmats and Kaivo-oja, 2014) both of which are FMCG products. Therefore, the study of packaging developments and innovations in these sectors can intensely affect the global practices.

Literatures suggests that packaging is considered an important tool in sustainable management due to its influence on the economy and ecology (Dobon et al., 2011). Hajkowicz and Moody (2010) discuss the four industry megatrends that are strongly impacting global packaging practices.

Out of these four, the first emphasizes the challenge for firms moving towards environmental efficiency in the production, usage, and disposal of packaging material. In simpler terms, the need for clean and sustainable packaging has become a hot area globally.

Product packaging is associated with negative environmental impact due to energy consumption, pollution at production and product transportation stage and later wastage at the disposable stage.

Eco- Packaging Practices in UK Retail and FMCG sector

Every year around 10.5 million tons of packaging is used by UK retail industry. Out of this, around 4.9 million tons is forwarded towards households of which more than 50% eventually ends up in landfills and waste piles (WRAP, 2009).

Over the past decade, growing number of retailer across the UK are showing stronger commitment towards the use of recycled content and eco-friendly packaging production.

For example, Waitrose, UK based retail chain in agreement with WRAP (Waste & Resources Action Programme) has taken several commitments such as -Courtauld Commitment 3 to deliver on waste reduction and resource optimization.

WRAP and Envirowise are government funded programs that are specifically targeted towards reducing food and packaging wastes.

Similar examples can be seen in other retailers offering wider product ranges such as Marks and Spencer (apparel, furniture, and food). A recent initiative “Project Thin Air” launched in 2016 entails a reduction of plastic used in packaging for 140 popular food products saving almost 75 metric tons of packaging in a year.

M&S also part of the WRAP’s Courtauld Commitment supports the British Retail Consortium’s Better Retailing Climate initiative aiming to reduce retail waste reduction to 1% (Plan A report- M&S, 2017)[2]

Research Aim and Objective

This study aims to investigate how the supply networks specifically retailers’ influence the relation between NPD and adoption of packaging practices by managers in the FMCG sector in the UK.  The study will include examining the level of awareness and decision-making process by the NPD managers at different firms (methodology discussed later)

The study would also be used to highlight the benefits to manufacturers on how sustainable green practices can yield to better profitability in the long run.

Research Aim: The influence of retailers on manufacturers to adopt eco-friendly packaging: an investigation from the fast-moving consumer sector of UK.

Research Objective: The purpose of this research is to explore the key business drivers for retailers to undertakes eco-friendly packaging practices.

Research Questions

Q1; How can retailers impact the development of eco-friendly packaging?

Q2; What are the key decision taken to measure the environmentally friendly aspects of packaging?

Q3; What are the main barriers to creating and developing eco-friendly packaging?

Our research model is displayed below in diagram 1.

Diagram 1- Retailer influence on smart, eco-friendly packaging practices

 

 

 

 

 

 

 

 

 

 

 

 

 

Literature Review

This section explores the available literature, studies, and theory on the dissertation topic, with the inclusion of more recent research. With a primary purpose of highlighting contemporary perspectives, this analysis investigates discussions or evidence provided by other researchers.

The discussion begins with an overview of the crucial role/ functions of packaging in FMCG sector with a review of packaging models explaining different packaging development processes in the context of NPD in the sector.

With glimpses of CSR and eco practices globally, the discussion flows into FMCG supply chain and how it can influence firm behavior and priority of adoption of green practices, specifically eco-friendly packaging. The study later discusses the role of stakeholders namely retailers and consumers that are significantly influencing green packaging practices to emerge.

 

FMCG sector and NPD

 

The FMCG sector comprises of all goods that are non-durable, low priced and frequently used households or consumers, e.g., food and grocery items (Francis et al., 2006). It is characterized by extensive and interlinked supply chain and other stakeholders – suppliers, manufacturers, middle institutions, distributors, retailers, customers, competitors, etc.

Various studies link supply chain designs to NPD and co-knowledge creations (Appleyard, 2003; Hillebrand and Wim, 2004; Hult and Swan, 2003; Joglekar and Rosenthal, 2003; Petersen et al., 2003).  Petersen et al. (2005) defined NPD as the process that leads to the creation of new products and innovations.

Evidence indicates that NPD in the FMCG sector as “poor” normally geared towards process/aesthetic innovations (Sakellariou et al., 2013). A study by Tidd et al. (2001) highlights that less than 2% of the innovations/ NPD in FMCG sector can be categorized as radical or actual technological breakthroughs only. Thus 98% of NPD in FMCG companies are incremental in nature.

 

Packaging in FMCG

 

Product packaging is unarguably amongst the few product features that define its success (Wansink and Huffman, 2001). Vernuccio et al. (2010) state that packaging innovations are normally striving to attain some competitive advantage. Vazquez, Bruce, and Studd, (2003) highlight that this particularly relevant to highly competitive sectors such as food and FMCG sectors.

If organized, packaging aspect can be clubbed into three strategic and managerial categories- marketing (Kotler, 2006), logistics, and ethics. Diagram 1 outlines the Vernuccio et al. (2010) conceptual model that shows how the co-existence of these three dimensions in relevance to the packaging functions.