The Future of Packaging is Connected

Brands and retailers have historically relied on a trusted set of tools and tactics to control the customer experience. Brands leveraged a steady drumbeat of advertisements and designed attractive packaging while retailers arranged planograms and retail shelves to guide customers’ eyes and wallets. But as constant connectivity, social media and algorithmic decision-making exert their influence on all aspects of our lives, they inevitably come to influence the consumer packaged goods (CPG) space. How will this impact the future of packaging?

The relationship between brands and consumers will never be the same, and the recipe for success is changing. This is as much an opportunity as a challenge, and I believe that with smart use of the Internet of Things (IoT), CPG brands can take control of the future of packaging in a connected world. Packaging innovation is here.

Outside of the traditional retail model, brands are exploring connected packaging as an avenue to forge a direct relationship with consumers inside the home. Sensors let the brands know when a product is running low and how consumers are using the product in their everyday lives. This newfound stream of first-party CPG data enables capabilities like auto-replenishment that provide more convenience, ease and efficiency into consumers’ lives. 

But as connected packaging continues to grow in popularity, how will it transform the CPG landscape? Here are seven key areas in the future of innovative packaging:

1. Cheaper Components Will Eventually Make Smart Packaging Ubiquitous 

Inertial motion-sensing units were originally bulky and expensive navigation units found mainly in airplanes and spacecraft. Over time, they came to be found in more commonplace vehicles, driving the self-balancing capabilities of Segways, for example. 

Originally used for dead-reckoning in navigation, this newer generation of sensors pack gyroscopes, accelerometers and magnetometers into a compact package enabling complete new uses for the technology, such as counting the number of steps someone is taking, or sensing when someone flips their phone around to look at the time, or recognizing gestures. As this feature rose in popularity, manufacturers started producing the component in massive quantities, and the cost quickly dropped. And as that cost dropped even further, inertial measurement units now turn up in fitness trackers, game controllers, consumer drones and remote controls, imbuing everyday objects with new modes of interactivity.

I foresee a similar progression in connected packaging solutions. We’ve already seen ample evidence that consumers and brands are ready for connected packaging. Sensors and connectivity are finding their way into every class of hardware product imaginable—from automotive to healthcare. The mass adoption of different sensor types and the movement to an Internet of Everything world are driving component costs down across the board. As a result, it’s now cheaper than ever to add sensing and connectivity to everyday things.

The improvement in component pricing will have a massive effect on the availability and application of connected packaging. But bear in mind, there’s cheap, and then there’s cheap. Right now, the costs of sensors and Wi-Fi or Bluetooth® wireless technology connectivity are still too high to include in primary packaging. They are a better fit for relatively inexpensive, “counter-worthy” durable devices. But near-field communication (NFC) or radio-frequency identification (RFID) tags, simple switches and LEDs can be had for pennies (or less); and innovative techniques like printed electronics can even further reduce the cost of manufacturing simple circuits. When the cost barrier is removed, prepare for a new model of packaging: a more sustainable model of refilling a durable device or consumable system. Lower component prices will also allow connected packaging to move from niche applications in developed countries to big volume, global rollouts. 

Doug Stephens, the expert behind the blog “Retail Prophet,” predicts that we are entering what he labels the “replenishment economy.” He writes, “In the replenishment economy, the refrigerator becomes responsible for ordering more margarine, milk and eggs. The dishwasher is responsible for replenishing detergent. Our automobile becomes responsible for ordering new tires once tread depth falls below a safe level. The grunt work of shopping for routine items will done by our devices. We will need only to approve, reject or modify the order before it’s sent off and fulfilled. In the same way we take air conditioning, running water and indoor plumbing for granted, so too will we take automated replenishment of commodity items as a simple fact of everyday life.”

2. Ecosystem Integration Will Become More Seamless

For a long time to come, the typical “smart home” won’t have connectivity built into the walls. It will be connected at the surface layers that are relatively easy to change. The “connected home” is really the collection of connected devices inside the home: a refrigerator, thermostat, speaker, coffeepot and maybe a hub to orchestrate everything. 

As the number of household items that are part of the IoT increases, smart speaker adoption is expected to grow as well. In fact, Business Insider conducted a study showing that in the five years smart speakers have been on the market, they are well on their way to distinguishing themselves with one of the fastest consumer adoption rates of any technology device in history, outpacing even the smartphone. 

Smart homes are here. Now. Today. Consumers are equipping their homes, piece by piece, with affordable, useful connected capabilities. But generally these systems don’t provide the kind of ideal, seamless experiences we might have imagined in our predictions of a connected future.

Even a universal, standard IoT protocol is practically brand new. Matter (formerly known as Connected Home over IP) is designed to simplify device development and provide consumers with increased compatibility. So while this means that the smart speaker of one brand may be speaking a different language than the connected package from another brand today, this interoperability may be easier to navigate in the future. But how does this relate to the future of the packaging industry?

In his book “Atomic Habits,” entrepreneur James Clear explains that part of the reason people develop bad habits is because they’re easy, whereas people resist good habits because they’re difficult. For example, it’s easy to not go to the gym, because it requires no effort at all. Eating fast food and cheap snacks is an easy habit to fall into because they’re quickly, cheaply and widely available. But implementing positive habits requires effort. 

One of the biggest benefits of connected devices – including connected packages – is the insight and data it provides. But when connectivity requires too many apps to manage various devices, consumers are unlikely to invest in these solutions. It’s safe to assume that in order to convince consumers to invest money into connected packaging solutions, in the future, brands will have made the experience as seamless and easy as possible. Jabil's 2021 Connected Packaging Survey of more than 1,100 U.S. consumers affirms this: nearly seven in 10 participants say that connected devices need to be very simple to use. Furthermore, nearly half say they dread setting up anything that needs to connect to the internet.

Download the survey report.

3. Product Recalls Will Be Easier and More Efficient

Connected packaging will lessen the shock of the heart-stopping moment when you discover your painkillers, child’s toy or dog’s food is on a recall list by ensuring consumers are informed as quickly as possible, rather than weeks or even months after the fact.

In September 1982, seven people died after taking cyanide-laced capsules of Tylenol, Johnson & Johnson’s best-selling product, resulting from drug tampering. James Burke, the company’s CEO at the time, put customers first and made the decision to pull the 31 million bottles of capsules off the market. In addition to being the recall that started them all, the company reintroduced its product to the market two months later with tamper-proof packaging, which is standard for over-the-counter drug products today. The company’s management was widely praised for its management of the crisis. While the whole episode couldn’t have been easy to manage back in 1982, if something similar were to happen today, connected packaging could help inform customers promptly, minimizing or preventing harm to people.  

Connected packaging will make it easier for a consumer packaged goods company to effectively notify consumers that they need to return a potentially dangerous product. Rather than just putting out mass marketing messages or placing a warning in a newspaper, brands can use additional channels to send targeted messages directly to impacted individuals. Not only will this help keep consumers safe and informed, but it will mitigate the risk of litigation due to injuries or – worse – deaths. 

This will be particularly valuable to households with young children, a prime demographic for connected packaging solutions like auto-replenishment. When products could pose danger to children, it becomes an especially sensitive issue.

4. Greater Levels of Packaging Sustainability

In 1950, the world’s population of 2.5 billion produced 1.5 million tons of plastic; in 2016, a global population of more than 7 billion people produced over 320 million tons of plastic. This is set to double by 2034.

Unfortunately, one of the biggest producers of single-use plastics is the packaging industry; about 40% of all plastic produced is used for packaging. This leads to packaging waste and plastic waste worldwide. But brands are stepping up to take action by sourcing post-consumer recycled resins and other recycled content, improving packaging end-of-life and aiming to aid a circular economy, which several industry experts discussed in Jabil’s documentary, “The Sustainable Packaging Revolution.” 

In a sustainable packaging trends report Jabil published, 94% of packaging decision-makers stated that they at least discussed creating a plan for sustainable packaging. However, less than a quarter have a fully mature sustainable packaging program. Connected packaging can help get to more sustainable solutions.

Through device and consumable system auto-replenishment, brands can reduce romance packaging (and their environmental impact), which is designed more for its ability to woo the consumer than durability or sustainability. “Packaging designed to stand out on a retail shelf is often oversized, with…redundant features to reduce theft and [is] not capable of surviving the journey to the customer,” said Brent Nelson, senior manager of packaging and sustainability at Amazon in Tom Szaky’s book, “The Future of Packaging: From Linear to Circular.” 

Because refill packaging doesn’t have to be designed to compete for attention on a retail shelf, it avoids being oversized and outfitted with extraneous features to catch shoppers’ eyes or prevent theft. If designed for e-commerce fulfillment, it also sidesteps the issue of having to include a lot of secondary packaging for delivery, especially if brands are leveraging concentrates.

In the formulations of products companies sell, there are active and non-active ingredients. A concentrate is a version of the active ingredients that are needed for products. This corrects an age-old packaging problem: most household cleaning products are only 10% chemicals and 90% water. Since tap water is easily accessible to most consumers, the water in these products wastes space, and its weight causes more fossil fuels to be burned to transport it. Therefore, when a package’s sensors inform a company that a consumer is running low on (for example) glass cleaner, the company can send a concentrate as opposed to boxing up a bulky spray bottle and sending that.

Even without concentrates, the refill model is a more sustainable packaging solution. For example, Common Good, a company that sells non-toxic cleaning supplies, such as dish soap, glass cleaner, all-purpose cleaner and laundry detergent, offers refill stations across the U.S. in addition to selling refill boxes. The refill boxes' packaging design use 80% less material than the original packaging.

In this way, connected packaging can make it easy to reduce the amount of packaging material brands use, thereby decreasing the weight and size of each package. This means that in addition to using less plastic and other packaging materials, trucks and other transportation vehicles can carry more of a certain product, which translates into fewer vehicles on the road and subsequently fewer carbon emissions while making packaging more efficient.

Finally, we must discuss the role of connected components. While pricing has definitely been a major factor keeping electronics out of primary packaging, there is a big sustainability discussion at play as well. For an industry that must think about sustainability every step of the way, adding additional e-waste into the picture would not be a viable choice. We believe that connected packaging will have a strong hold with devices and consumable systems, avoiding waste by relying on relatively long-lived devices. However, there is a place for removable tags or labels on disposable packaging, to help keep them easy to recycle. 

5. Stronger Omni-Channel Retail Solutions

In the past few years, we’ve seen a definite trend in retail toward omni-channel solutions. Retailers need to be able to integrate various platforms and fulfill orders regardless of how consumers want to buy it: in-store, online or a combination of the two. All of these need to be seamless options available to the user. In the future, connected packaging could enable a better integration of online and offline retail.

Already, many stores have instituted an order-online-pick-up-in-store option. By tracking consumer habits through connected packaging, retailers can take this click-to-brick strategy to another level.

Let’s say a store knows that once a month, a consumer picks up cat litter, dishwashing soap and Tide pods. Let’s say this consumer likes to shop on Saturday mornings, so on the last Thursday of every month, the retailer notifies them that there will be a box of litter, soap and detergent pods, ready for pick-up, and gives the consumer a chance to add a few more things to their box. In this way, brick-and-mortar stores act as warehouses, which would solve a problem many online retailers face: last-mile delivery.

This service can not only make shopping more convenient, but it can save consumers money. More than eight in 10 of Jabil’s Connected Packaging Survey participants admitted to mistakenly buying products that they already own. This tendency comes with several clear downsides: putting items in a different spot because of lack of room and then forgetting about them; running out of storage; and items going bad before they can be used. With auto-replenishment, companies can ensure that consumers are receiving the correct quantities of a product at the exact time they need it. 

This model can also benefit brick-and-mortar retailers. Automated reorder gets customers to the store to pick up their box, where they may then find a few more products to buy.

6. In-Store Retail Will Shift

With the emphasis on a direct-to-consumer model, there has been some speculation as to whether e-commerce is the death knell for brick-and-mortar retail. In my opinion, it isn’t a death knell, but it is a big change. We’ve seen the demise of retailers that didn’t adapt, but those that do will thrive. 

There will always be certain items people want to shop for themselves so they can see, feel or smell them. For example, they may want to buy their own produce, being able to compare the color of tomatoes or squeeze avocados to determine ripeness. Or they may want to smell scented candles or cologne. Retail will become much more about creating a pleasurable customer experience.

Connected packaging will likely be used for household staples that don’t require much decision-making or re-evaluation. I personally don’t know anyone who gets excited to buy laundry detergent or needs toilet paper-shopping to be a sensory experience. But these staples still need to be warehoused and transported the last mile, and retailers with a smart omni-channel strategy are well positioned to do just that. I think we can expect to see brick-and-mortar retail increasingly bifurcate into experience-driven and invisible shopping.

7. A More Loyal Customer Base

Steve Jobs famously wore the same outfit every day: a black turtleneck, blue jeans and New Balance sneakers. Similarly, Mark Zuckerberg often wears a gray t-shirt and jeans. This self-imposed uniform wasn’t born out of a lack of fashion sense or angst over wearing the wrong thing. These CEOs pre-select their outfits because people can only make so many decisions a day, and a lot of brainpower is wasted on trivial matters, such as should I sleep another 15 minutes? Should I go to the gym? What should I eat for lunch?

People are constantly looking for ways to reduce decision fatigue and streamline their lives. Although they may not pre-select the same outfit every day, auto-replenishment services enabled by connected packaging can eliminate the unnecessary headache it takes to, say, pick toilet paper. Charmin or Quilted Northern? “Ultra Plush” or “Soft and Strong”? Twelve rolls or 24?

This not only relieves the burden on cognitive overhead for consumers, it helps brands secure consumer loyalty. If the consumer chooses to forgo the decision-making process, then there is little chance that they will end up brand switching. However, this does put the brands into a race to adopt auto-replenishment and build a user base. Early adopters will have a significant advantage over latecomers with this innovation.

Everyone wants the same thing: to have products and services available to them that make life easier and help them regain the most valuable commodity of all – time. Connected packaging will shift the future of retail in many ways, both for the consumer and the brand. It will create an overall experience that helps people feel more relaxed and ensure they have what they need to help life go a little more smoothly. Sometimes good things can come in small packages. How are you building your packaging strategy for the future?

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