An increase in the number of people shopping online is a “good thing” for DS Smith as corrugated packaging will be the natural choice for customers, an investor seminar it hosted was told.
In the seminar yesterday (15 April), Clémence Viviani, European category manager for e-commerce at DS Smith, pointed to research undertaken by the company that showed 66% of Europeans have shopped more online over the pandemic.
Ms Viviani noted: “What we have actually witnessed is a strong acceleration of a switch that was already happening. In a few months we have experienced a sales increase that wasn’t forecasted to be achieved until 2022, so we’ve seen what is expected for the industry, but earlier by several years.
“The reason this is good for us is because more e-commerce means more packaging. We estimate a range of three times more packaging from e-commerce. And corrugated packaging will be the natural choice for customers due to the protection qualities, the ease of reuse for product returns and the fact it is a sustainable product, which is becoming more important to customers.”
She added that by 2025, e-commerce is expected to make up 17% of all European retails sales.
Elsewhere in the webinar, Alex Manisty, group head of strategy at DS Smith, explained how the need for a move away from plastic packaging to sustainable alternatives is “undeniable”, following increased online shopping habits over the pandemic.
Mr Manisty added that segregated material collections should be enforced “all over Europe” to ensure that more online sales do not result in lower recycling rates.
He added that even when retail reopens, shopping habits are likely to still be based online and local shops in the community, which means “further readjustments” will be needed in the way products are delivered and marketed.
Mr Manisty explained: “The tail wind moving from plastic to fibre packaging is undeniable and innovative fibre products are now starting to replicate the functionality of plastic.
“Concern for the environment has become a dominant theme of lockdown as people find themselves in small family units and more focused on their perception on what really matters in life.
“We’ve seen supply chains almost melt under pressure on a massive increase in e-commerce sales. And, the much greater visibility of packaging in the home has accelerated even greater recycling habits. In our view, corrugated packaging is a material just as suited to reuse as it is to singe-use and recycling.”
Despite the dramatic shifts in the market, DS Smith CEO Miles Roberts, noted that the business has had a “first move advantage” in dealing with these challenges.
Mr Roberts explained: “At DS Smith we are at the intersection of three principle global trends. Firstly, how the consumer and retail environment is changing so quickly and will change again in the future.
“And about digital enablements, which has not just changed the way we work with our consumers internally, but also how we work with our customers and supply them wherever they are.
“And, sustainability as well. Reducing carbon and making a product that is fully sustainable going forward. So we find we are ideally placed to really gain from volume and value added growth. Our business model is designed to take advantage of these three principle trends.”