Increasingly big-box retailers such as Walmart, Target, Amazon and others are tightening their sustainability expectations on vendors wishing to sell products in their stores and on their sites.
As they themselves commit to ambitious sustainable packaging targets, the pressure on their vendors to support their plans grows even more.
Take European supermarket giant Aldi as an example. In 2019 they sent a notice to all their vendors to inform them that by 2025 all products sold within their 10,000 stores had to be either package-free or wrapped in recyclable, reusable, or compostable packaging. While some retailers have made commitments to using 100% sustainable packaging for their private label brands (a major shift on its own), Aldi has upped the ante by puting the same requirements on their entire vendor ecosystem.
Consumer goods brands are moving quickly to avoid being locked out of distributing products through their most lucrative retailers by going all in on sustainable packaging. Brands like Unilever have already started to respond to changes coming from Walmart. Beyond their own sustainable packaging goals Unilever announced at Walmarts 2019 Sustainability Milestone Meeting that they would be rolling out their “Bring It to the Bin” program in partnership with Walmart stores to encourage recycling their products.
As sustainable packaging becomes a requirement for many retailers, the prospect of substantial changes to product design just to maintain selling privileges is a tough pill to swallow for small or growing consumer brands. The good news is that in their efforts to promote changes to vendor behavior many retailers are offering a wide variety of tools and incentives to encourage change. Keep reading to find out more about why sustainable packaging can help you get access to and stand out with large retailers.
Retailers Focus On Sustainability
Understanding how to take advantage of mandated sustainable packaging rules by retailers starts with exploring what has influenced their strategy. Many factors have led to these decisions by retailers but John Furner, the President and CEO of Walmart US, summed it up at the 2020 National Retail Federation Big Show when he said:
“The role of corporations has changed, and it’s not about simply creating shareholder value anymore, but creating great employment opportunities, making a difference in the environment, and adding value to the customer.”
Responding to a changing world
As Walmart’s CEO indicated, value is at the center of what they’re trying to deliver in experiences with their brand. The environmental impact of consumer choices are having a growing influence on people’s buying behaviors. Access to information is making consumers more informed about their world and causing them to place more value on brands that help them make responsible choices about what they buy and its impact on the environment.
Getting ahead of legislation
A stark reality that is influencing retailer strategies on mandating sustainable packaging is that legislative efforts aimed at packaging are becoming laws in many countries. In recent weeks Canada announced a ban on all single use plastics by the end of 2021, setting in motion a rush for manufacturers and retailers to rethink their products to stay compliant.
In the United States, packaging legislation remains a patchwork of state and federal laws or proposals. However 2019 saw a flurry of activity at both levels of government to take action on sustainable packaging targets with states like California leading efforts.
Beyond North America, the European Union has long taken an aggressive stance on regulating packaging. The most recent update to the EU’s comprehensive Packaging and Waste Directive mandates 70% recycled content in all packaging in all member countries by 2030.
Competition is fierce
It’s well known that consumers are willing to spend more on sustainable products, up to 10% more for some consumer groups, and retailers everywhere are eager to capitalize on this behavior. For retailers like Walmart, doubling down on packaging as a part of their overall sustainability strategy helps them differentiate their sustainability story from their biggest competitors. From drop off programs, to in-store education, to labelling, and material use, Walmart uses packaging as a differentiator amongst competitors.
Amazon’s $10B announcement to fund climate science is seen by some as ignoring the impact their products and services have on the environment. This plays a part in Walmart looking to differentiate their sustainability story through packaging efforts which are a weakness in Amazon’s strategy.
Sustainable Packaging Retailer Commitments
With a constant stream of environmental pledges coming from retailers it can be hard for consumer goods brands to keep track of what’s expected of their packaging strategies. From certifications, to partnerships, to material use it can be hard to keep track of which pledges impact vendors directly. Here is a breakdown of what three major retailers are pursuing for sustainable packaging strategies.
Walmart
Among major retailers, Walmart stands out in sustainable packaging commitments with specific goals and outcomes that impact both their private label business and overall vendor ecosystem. Specific packaging goals include:
By 2025 Walmart will use 100% recyclable, reusable, or industrially compostable packaging in their private label brands globally.
By 2025 they plan to increase their use of post-consumer recycled content by at least 17% in their private label packaging globally.
Since 2017 they have achieved 70% of their goods sold in the US have come from vendors enrolled in their Sustainability Index.
Target
The efforts by Target are more narrow as their commitments focus only on their private label brands, while also tagging along as partners with ambiguous programs like the U.S. Plastics Pact which have broad goals for societal change. Specific packaging goals include:
By 2025 Target will use 20% post-consumer recycled content in their private label brands packaging.
By 2025 they will average 30% recycled content or responsibly sourced bio-based content in plastic packaging.
By 2025 they will use 100% reusable, recyclable, or compostable packaging, and as part of the U.S. Plastic Pact, they will champion actions to effectively recycle or compost 50% of their plastic packaging in the U.S.
Amazon
Given the diversity of their business the approach taken by Amazon focuses on their overall net impact on the environment. Specific packaging goals include:
By 2030 delivering 50% of Amazon shipments with net zero carbon by 2030 as part of their Shipment Zero pledge
Launch of its Frustration Free Packaging Program which aims to have vendors provide products in less packaging as they arrive at Amazon before fulfillment and shipping.
Incentivizing Sustainable Packaging
To encourage brands to adopt sustainable packaging strategies many large retailers are offering unique incentives to support them with making changes. These can include everything from financing, to crediting, to search tools, and
Better Financing
A unique and out of the box incentive Walmart is offering to brands that have sustainably made products is the option for better financing rates with banks. Via a partnership with global bank HSBC, Walmart has organized for better financing rates for vendors who demonstrate progress in their Gigaton Project or Sustainability Index. The end goal is that vendors not only make efforts to create more sustainable products to qualify but that they also can reinvest back into their own green business operations with better loan terms.
Retailer Credits
Another unique incentive has come from Amazon launching and continuing to expand its Frustration Free Packaging Program. Vendors that optimize and certify their packaging to meet the programs guidelines receive a one-time early adopter credit on every unit received by Amazon. This is aimed at helping compensate them for the cost of making changes to more sustainable packaging. Each time the program has been launched in a new region they provide the crediting option to early adopters that qualify.
Greater Findability
An increasingly common incentive that retailers are offering to brands that have sustainably packaged products are tools to increase the findability of their products. This is especially useful for brands that drive a significant amount of revenue from their retailers’ ecommerce sites. Amazon has their Climate Pledge badging program which is an overarching certification for brands that already have one of several recognized NGO badges. In addition Amazon also has a Compact by Design badge for brands that make an increased effort at reducing overpacking.
Your sustainable packaging partner
A near future where sustainable packaging is the norm is a certainty for consumer goods brands. The sustainability commitments of major retailers are helping tip the scales in favor of sustainable packaging becoming the rule not the exception. Consumer goods brands that want access to the massive and lucrative customer bases of brands like Walmart, Target, and Amazon have few choices except changing how they package their products.
At AlphaPoly we offer our clients a reliable partnership for their sustainable packaging solutions that draws on more than 30 years of industry experience and knowledge. We pride ourselves on being nimble and responsive to our clients needs and we offer a wide variety of packaging options that are tailor made for our clients needs and industries.
Find out how AlphaPoly can elevate your brand today, contact us to learn more.
