Three Packaging Innovations Driven by Consumer Trends

Irrelevance is the most dangerous future a business can face. Often the result of unmet consumer demands and ignored trends, it is the death knell of a company. Industry and consumer trends are useless if those findings are not integrated into the business strategy. For consumer packaged goods (CPG) brands, packaging innovation is one important way to respond to consumer demands.

There’s no factor driving consumer demands and trends right now more than the pandemic. COVID-19 has pushed businesses of all types, including CPG brands, to accelerate the pace of innovation. CPG and retail brands have been forced to meet the demands for e-commerce sales that have grown more than 30% year-over-year since the pandemic began in the face of unprecedented — and unpredicted — shortages across the supply chain.

But that’s just one way consumers are pushing brands to evolve. Here are three innovations in the packaging industry driven by consumer trends:

1. E-Commerce Packaging

Before the pandemic, consumers were increasingly willing to shop through alternative channels outside of physical brick-and-mortar stores. Then, the outbreak of COVID-19 ushered in an extreme shift in consumer experience in a matter of months. By some estimates, the pandemic accelerated e-commerce by 10 years in 10 months with the widespread adoption of delivery services, buy-online-pick-up-in-store (BOPIS) and other omnichannel offerings. This is the time for a CPG digital transformation.

Brands are rapidly transitioning away from a world where packages only sit on store shelves waiting to entice potential buyers to one where a larger mix of product sits in warehouses or fulfillment centers awaiting a “purchase” webpage click. This requires a different type of packaging innovation to meet e-commerce needs.

Shopping online is now a regular part of most people’s lives. As of the end of 2020, online sales accounted for 21% of total retail purchases made in the U.S., up from 16% just a year earlier. E-commerce is central to the omnichannel retail experience and influences all other trends — from auto-replenishment with connected packaging to sustainable shipping materials, both of which are discussed below.

As people are purchasing more online, they’re also shifting to purchasing goods that may have been exclusively in-store purchases in the past — a pandemic-induced behavior that may not be going away anytime soon. For example, a May 2020 McKinsey report found that some beauty product brands were seeing e-commerce sales twice as high as pre-COVID-19 levels, while Sephora and Amazon’s beauty department saw increases of 30% online. Meanwhile, another survey by McKinsey found that between 35% and 40% of consumers expect to continue purchasing kitchen and household supplies online at the same level or higher as they did during the pandemic. More than 50% said they plan to do the same for pet supplies and vitamins, supplements and OTC medications.

With so many consumers buying online, brands are rethinking how products can and should be packaged. Some retailers are developing packaging for refill formats purchased via e-commerce. So far this has come in the form of concentrates, like laundry pods or cleaning products. For example, SC Johnson has created refillable versions of Windex and Scrubbing Bubbles. Consumers purchase a starter kit containing a durable, reusable bottle or container (possibly a connected container) and the cleaning solution.

When they run out of the initial cleaner, the replacement comes in the form of either liquid or powder concentrate. The consumer just adds water in the reusable container, and they’re good to go. Many cleaning products contain 90% water and 10% product, so concentrates drastically reduce weight of the product and packaging, tying into both sustainability goals and connected packaging technologies.

Personal care brands are also branching out into refillable products. Earlier this year, Dove launched its first refillable deodorant, which uses 54% less plastic than its typical products. The plastic it does use is 98% recycled.

Companies can leverage this e-commerce boom as an opportunity to rethink their packaging needs. When more products are sent directly to consumers and there is less need for romance packaging that catches a potential buyer’s eye among a sea of competitors on store shelves; the door to creativity is flung wide open.

2. Connected Packaging

Convenience is king (and queen) for the modern consumer, and connected packaging is perhaps the biggest step yet toward a completely frictionless retail experience. With connected packaging, a physical packaging platform interlocks with smart devices. The physical platform may have various benefits such as active materials or packaging design features that extend shelf life. It also uses the Internet of Things (IoT) as a means of communicating with an app on a mobile device or computer, with most of the intelligence contained on a smart device.

These two components, paired with a consumable package that is delivered when a refill order is triggered, are the building blocks of Jabil’s auto-replenishment system. The capabilities of existing devices like coffee makers, paper towel dispensers and water filters can be amplified with these connected solutions like auto-replenishment. Consumers don’t even have to think about reordering their coffee or paper towels; the product just shows up at their doorstep when their current supply reaches a certain reorder threshold.

For retailers, the upsides of connected packaging solutions are plenty. Connected packaging lifts the customer’s mental load of remembering to buy everyday necessities, from paper towels to dish soap, giving them a positive experience with the product from the start. Week after week, order after order, the consumer’s brand loyalty continues to strengthen, all without lifting a finger. Additionally, packaging for product refills tends to be smaller and lighter than it is for standard goods, tying into the sustainability goals that every CPG brand is pursuing.

Finally, this technology also allows brands to integrate smart sensors into packaging that help provide insights into how consumers are using the products at home, make their inventory much more accurate and even assist with anti-counterfeiting efforts (proving that a product is the real deal).

To see the consumer benefits of connected packaging, look at the example of coffee. It’s something many people use every day and thus needs to be repurchased on a regular basis. With a connected package, the consumer first receives a durable, reusable canister. It comes alongside simple-to-install sensor that measures the quality and quantity of the ground coffee inside the canister.

The consumer then uses an app to pair and calibrate the device as well as choose their desired product (in this case, the brand and type of coffee) that will be ordered to refill the container when the existing product falls below the designated reorder threshold. Once the system is set up, you will never again shuffle to the kitchen at 6 a.m. only to discover you forgot to pick up coffee at the grocery store or add it to your Instacart order.

Retailers are increasingly moving toward smart or connected packaging as well. In Jabil’s Future of Retail Technology report, 30% of survey participants said they are implementing or considering smart packaging to improve customer experience. To improve operations and efficiencies, 45% are implementing or considering auto-replenishment technologies. Overall interest in implementing home integrations like automatic reordering and usage tracking grew from 42% in Jabil’s 2018 survey to 50% in the 2020 survey.

Consumers are leading this tech-driven charge. The pandemic has drastically changed consumer buying habits and made them even more primed for connected packaging and auto-replenishment services. In Jabil’s 2021 connected packaging attitudes and perceptions survey, 27% of survey participants said they subscribed to auto-replenishment services for household staples — up from 17% just a year earlier. Almost 80% said they are at least slightly interested in using these services for products like home, personal or pet care.

For CPG brands, connected packaging is the next (perhaps the final) frontier in shopping. Customers won’t even need to go online — where they are likely to encounter products from competing brands — to shop because they’re already engaged with the brands they need.