3 Consumer Trends Driving Product Innovation and Packaging
Consumer trends are a subject of intense study for brands — and of fascination for consumers, too. While shoppers may be more interested in knowing which style of jean to wear or which décor to put in their living room in order to be "on trend," what brands really want to track are the trending "who," "what," "when," "why" and "how" of these purchases. By drilling down into the details of these consumer trends, brands can provide more unique, seamless customer experiences.
Younger consumers are leading the charge on most trends in the CPG world. Millennials, individuals between the ages of 25 and 36, are pushing the most for sustainable packaging. About 60% of them tell PwC that they intentionally buy products made with sustainable packaging or support companies that are environmentally conscious.
Gen Z, whose members range from about age 11 to 25, is the consumer group most coveted by CPG brands. Pre-pandemic, it was estimated that Gen-Zers' direct and indirect buying power (the money they spend themselves or influence their household to spend) was approximately $143 billion. Now, they are spending even more than they did before COVID-19 hit.
Brands have a keen interest in how the digital natives of both the millennial generation and Gen Z are adopting e-commerce. According to the retail research firm Drapers, about 40% of both Gen-Zers and millennials prefer to shop online, with fewer millennials than Gen-Zers planning to return to stores post-pandemic. Furthermore, 73% of Gen Z reported using retailers' apps to shop for fashion and other goods. For this younger demographic, finding new, smaller brands they can't find in physical stores is a draw to e-commerce, along with convenience; 58% of Gen-Zers and 67% of millennials say they prioritize this factor when shopping.
The demands of these younger generations influence those of their parents and grandparents, driving trends overall. It's no surprise, then, that e-commerce is today's dominant consumer trend and has some degree of influence over most other trends in packaging and innovation. For CPG brands, having a robust online presence is no longer an option. Simply for competition's sake, the internet and its global marketplace has driven these companies to innovate faster and keep consumers engaged with their products everywhere from social media to in their own homes.
That innovation is in service of meeting consumers' evolving demands for the types of packaged goods they're buying, how they buy their goods and how their goods work for them. And as more devices get connected to the Internet of Things (IoT), packaging can be customized to more precisely meet consumers' needs, even once it's inside a home.
Personalization, coupled with convenience and a sense that they are making socially responsible choices, are ultimately what modern consumers are looking for from their packaged goods. To that end, here are three consumer trends driving product and packaging innovation.
Consumers crave convenience
Retail business models that emerged during the pandemic for health and safety reasons, like buy-online-pick-up-in-store (BOPIS), delivery and curbside pickup, have become familiar parts of consumers' weekly routines. Even as vaccines have rolled out and stores have reopened, some consumers have continued these new habits and are still shopping in non-traditional ways more frequently than they did before the pandemic.
In Forrester's June 2021 Consumer Energy Index and Retail Pulse Survey, 40% of surveyed U.S. adults said they enjoy shopping in stores a lot less now than they did before the pandemic. Then in March 2021, a year into the pandemic, Ernst & Young found that 43% of consumers planned to shop online more often for products they had previously purchased in store. BOPIS popularity is also climbing, with a Deloitte report noting online ordering for pickup could expand 26% compared to pre-pandemic levels.
These offerings were launched for safety. But as it turns out, they're convenient, too.
Inside consumers' homes, connected packaging takes convenience up a notch. With built-in sensors, this next generation of packaging knows how much product is left in the container at any given time and can automatically order a refill when that level gets too low. It removes a few of the simple, but still strenuous, mental burdens we all carry in our hectic world. Nothing's worse than returning from the grocery store and realizing you forgot to put a household staple on your list, let alone put it in your cart. Or say you go to feed the dog or start the laundry and behold — the food bag is empty, and you used the last detergent pod yesterday. Connected packaging ends these worries.
How Connected Packaging Works
There's lots of opportunity in the connected packaging space for CPG brands. For one, convenience can turn into habit-forming behavior. People tend to prefer repeated stimuli to new stimuli, explaining why they tend to choose the product they've seen or heard about most often when they approach the store shelf. If the "store" becomes their own home, they're going to choose the product they already have to reduce the number of choices they have to make in their day. With connected packaging and auto-replenishment, this choice is effortless, and a new habit is formed.
Connected packaging helps consumers by collecting data on how much of the product is used. But it helps brands by also collecting data on how and when consumers are using the product — information that helps them make better products. If a laundry detergent brand determines that, on average, consumers are using more or less detergent per load than the brand recommends, they might consider redesigning the cup used to transfer the detergent to the washing machine or perhaps change the amount of detergent provided in each refill. The ultimate goal is utmost convenience.
Retailers are another player interested in the consumer insights connected packaging can provide to elevate BOPIS and omnichannel offerings. Using the Internet of Things (IoT), connected packaging can indicate to a store which products a consumer likes to buy, along with the day and time they like to shop. The store could prepare that group of items for pickup at that time for the consumer, even notifying them a few days in advance to let them edit their order. Connected packaging could open doors to new omni-channel offerings for retailers to explore.
Additionally, connected packaging comes as a system of durable, reusable containers and refill products shipped directly to consumers with less extraneous packaging — making it more sustainable overall than traditional packaging. One example of refillable connected packaging is device and consumable systems.
When COVID-19 began spreading in early 2020, most people suddenly became hyper-conscious of how many surfaces they touch on an average day. With their automatic dispensing features, device and consumable systems are a great packaging option for soap, beverages and other products that can easily be refilled. The system dispenses metered amounts to help control product inventory in a more hygienic way than traditional pumps and can be connected to facilitate automatic refill orders. In addition to being convenient, these refills come with less packaging waste than traditional versions of the product within the system (say, a plastic hand soap container).
Incorporating device and consumable systems into their packaging repertoire is one way for CPG brands to meet consumers' demands for sustainable packaging. Sustainability has become one of the biggest factors pushing packaging evolution, driven mostly by millennial and Gen Z consumers' increasing consciousness about impacts their choices have on the planet.
Consumers want environmental responsibility from brands and their products
Consumers are actively seeking out goods made with more sustainable materials, like metal, glass or biodegradable or compostable substrates instead of traditional plastic. According to Trivium's 2021 Buying Green Report, 52% of consumers are actively looking for information about sustainability or recycling on the packaging of goods they consider buying, while 57% say they are less likely to buy a product in harmful packaging (like a plastic water bottle instead of one made from a more recyclable material).
Important to note for CPG brands, almost three-quarters of people are willing to pay more for sustainable packaging. Close to 30% of younger consumers, both millennials and Gen Z, said they would be willing to pay more than 10% more for their goods if they came in sustainable packaging.
Although consumers clearly want sustainability, as we discussed, they also want convenience. So businesses should look for ways to make packaging sustainable without needing much work from the consumer — whether that's refill programs like Loop, which handles container cleaning so consumers don't have to, packaging that is fully recyclable in at-home bins, transparent sustainability information on packaging, or even just the option to choose more eco-friendly packaging on e-commerce orders.
One packaging trend to keep an eye on is paper packaging. In the summer of 2021, Ecologic, Powered by Jabil, launched the Eco.bottle, a substitute for the traditional single-use water bottle made from a combination of paper and plastic. The bottle uses 70% less plastic overall, and a unique tear strip separates the paper and plastic components for simple, proper recycling. Considering less than 10% of plastic ever made has been recycled — partially due to the varying success levels of recycling programs around the world — this type of packaging could help make recycling easier for the average consumer.
Still, paper is not the only eco-friendly packaging option. Numerous sustainable packaging solutions are being rolled out or are in progress within the CPG industry. There is no single or simple option; what works best will likely look different from product to product and brand to brand. What we do know is that making sustainable packaging a reality will require buy-in from a wide range of stakeholders — including governments, local municipalities, private investors, CPG companies, consumers and more.
For consumers looking to make more sustainable packaging choices, it's often the digital world — with its array of eco-friendly products and enabling of connected packaging — that they turn to for options. The online world has entered the real-life packaging discussion for consumers in a huge way.
Consumers embrace a digital reality
While I'm not talking about virtual reality here, the digital world and the physical world are connecting like they never have before. Think about online grocery shopping. With a few clicks, the ingredients you need for this week's dinner or the snacks you need for your kid's soccer game can go from pictures on an app to real items in your kitchen within a few hours.
People in all generations have come to embrace this new reality, with digital-focused consuming, like online shopping, becoming more popular every year — especially in 2020. Globally, 31% of Gen-Xers and baby boomers reported buying groceries online during the second quarter of 2021.
Occasionally using an app for a grocery order or buying from an online retailer like Amazon is just the beginning of this new "digital reality," though. As consumers begin embracing more facets of e-commerce, like connected packaging, the interoperability of this packaging and smart home devices needs to be improved. In Jabil's 2021 connected packaging survey, seven out of 10 consumers said connected devices need to be very simple to use. Connected packaging must be able to effortlessly "talk" to consumers' smart devices, from smartphones to built-in control panels, to create a seamless ecosystem that's easy to set up and operate. Otherwise, the packaging's biggest selling point — convenience — is lost in a haze of frustration and unsuccessful Wi-Fi connections.
Beyond the convenience of knowing what you need and when, connected packaging can also help create a personalized consumer experience. Sensors and digital displays on food or medication packaging can provide consumers with specific best-buy dates and recall information. When a consumer is at the store, they can pull up their smartphone app to see how much product is left in the container. Or, most crucial for safety, connected medication packaging can tell consumers if they've already taken their medicine for the day.
By knowing how consumers use their products, CPG brands can send tailored offers and information. For example, sensors could pick up that a box of baking soda is kept in a cold environment, not a room-temperature cabinet. The insight that the baking soda is being used to help keep the refrigerator smelling fresh might trigger a brand to send that consumer offers for cleaning products, not recipes for baked goods.
While connected packaging reinforces the purchase of the same products, when consumers are looking for new products, many turn to search engines and social media. According to a 2021 report by Sprout Social, 34% of consumers use social media to learn about products, brands and services. A third of survey respondents said social media is their preferred way to get information about brands and products.
In recent years, it's become more common to be "influenced" by a brand or individual to purchase a product, via paid ad or organic endorsement, and shop — from cart to completing the transaction — directly on social media platforms. In 2019, Instagram first introduced the option to buy products directly from your feed, a tool that has only grown with the introduction of the app's "shopping" tab. Between Instagram shopping, Facebook Shops and TikTok's new partnership with Shopify, it's quite simple to learn about a product and purchase it without ever closing out of a social networking app.
CPG brands previously designed packaging to stand out from their competitors on a store shelf. Now, they must consider how to create visually interesting or unique packaging that will catch consumers' eyes as they passively scroll through a cluttered social media feed. They're competing against not just other products like theirs but against news about current events, family photos and funny animal videos. It takes a lot to stand out.
Still, social media is a way for brands to showcase how they are bringing together consumers' demands, including convenience and sustainability, on a digital platform. Thanks to the internet, today's consumers are armed with more information and choices than ever before. Thus, many trends in product innovation and packaging center around making brand engagement on social media, through brand websites and even in physical stores simple and hassle-free for consumers.
As smartphone and 5G wireless technologies continue developing, connected packaging options are likely to grow. In the meantime, phones will continue to be consumers' go-to product ordering devices, with search engines and social media apps their first stop on the way to new product discovery. What will they find next? That's up to CPG brands to decide.
Jabil Packaging Solutions
Jabil Packaging Solutions leverages three unique solutions suites to incorporate packaging, electronics and digital capabilities into intelligent ecosystems that connect brands and retailers with evolving consumer needs.