Friday, August 12, 2022
Bringing the Latest in News Straight to Your Screen

CPG Brands Are Looking To Connected Packaging To Connect With Consumers

By News Creatives Authors , in Business , at July 21, 2021

The pandemic has challenged the consumer industry in unprecedented ways and for consumer brands, it has made two problems particularly acute: First, the need to connect more directly with consumers has become critical in a world of e-commerce and on-demand experiences, while lockdowns and retail closures have made grabbing and keeping shoppers’ attention more competitive than ever. And second, consumer and regulatory demand for transparency about products, their origins and the ingredients they’re made from has become even more urgent and complex.

One solution CPG brands are increasingly adopting to establish more control over their relationships with consumers is connected packaging, which allows shoppers to interact with products by pointing their smartphone at a code printed on a package. The code provides access to information, personalized digital experiences and e-commerce options and enables consumers to interact with the product at the point of purchase in-store or post-purchase once the item has been delivered.

Because brands themselves typically control product packaging and labeling, the interactive code—often a QR code used in conjunction with a product cloud platform to control experiences and gather data—creates a first-party connection between brand and consumer, independent of retail channel, giving the brand the ability to gather data directly from the consumer and influence and originate transactions.

In the US and Canada, more than 60 CPG companies, including Colgate-Palmolive, Nestlé, Procter & Gamble and Unilever, are now giving shoppers access to product information through a digital tool called SmartLabel®. Launched in 2015 by the Trading Partner Alliance, a group created by the Consumer Brands Association and the Food Marketing Institute, the tool provides consumers with easy, instant access to details about hundreds of participating brands’ food and beverage, household, petcare, and personal care products. This early mover, which uses a QR code on packages, seems likely to converge with the GS1 Digital Link standard first launched in 2018. The GS1 is an upgrade to the traditional 1D barcode standard used at point of sale and relies on QR codes (as well as other formats) to enable both consumer smartphones and point-of-sale systems to interact with packaging.

The Consumer Goods Forum, a powerful precompetitive platform whose members include Nestlé, Procter & Gamble, Unilever and many other top-tier consumer brands, affirmed its intent at its annual Global Summit last month to apply product digitization for end-to-end traceability and to improve information access and brand connectivity for consumers.

An Inside Take from Reckitt

Reckitt (Reckitt Benckiser Group PLC), the UK-headquartered global consumer brand owner, has a 200-year history and a portfolio of some of the most trusted consumer health, hygiene and nutrition brands, including Air Wick, Calgon, Durex, Enfamil, Lysol and Woolite. The company is rolling out connected packaging as an “always on” medium across its portfolio and I recently spoke with Jos Harrison, the company’s Global Head of Brand Experience and Design, for an inside take on how Reckitt plans to use the packaging.

Niall Murphy: What was the impetus for Reckitt to use connected packaging and which brands are you starting with?

Jos Harrison: We’re in the middle of a paradigm shift in the user experience. Consumers have a far greater desire than ever before to access more detailed information and more personalized experiences when they interact with brands. The CPG sector is no exception and Reckitt sees a huge opportunity to better serve our customers by enabling on-demand information and services through connected packaging. We’re currently using it for our Air Wick and Lysol brands and will be expanding the program to other brands.

NM: What points on the consumer journey are you focused on and for what applications or functions?

JH: There is a wide variety of use cases for connected packaging, ranging from simply providing information to facilitating customized services. The package itself is present from the consumer’s first encounter with an item in-store all the way through the usage cycle, making it the perfect entry point for users to connect with the brand or product as long as the mechanism is simple and the value exchange is relevant to the individual shopper. Reckitt brands are top of mind for many people when it comes to hygiene and homecare, especially right now, and consumers want product information that both helps inform their purchase decisions and ensures they can use products correctly to provide as much protection as possible for themselves and their families. Reckitt’s focus so far has been on providing relevant and actionable information to consumers. The critical thing is to fully understand users’ needs in order to provide them with a compelling reason to connect—and then be sure to deliver on the promise of relevance and value.

NM: What are the trends you’re seeing in consumers’ interactions? Which geographic regions or demographic groups are responding most?

JH: CPG brands have seen varying degrees of shopper engagement with connected packaging. Some product categories that might previously have been considered “low engagement,” such as cleaning, laundry and homecare items, have recently seen a significant uptick in users engaging with packaging. As people have become more cognizant of the way they clean and sanitize their homes, they’re showing a far greater desire to understand the contents of the cleaning products they use. As a result, we’ve seen interaction with packaging increase not only among tech-savvy millennials and Gen Zers, whom we might expect to be more open to adopting new ways of engaging with technology, but among elderly shoppers, too—and the trend has not been limited to just developed markets.

NM: What are Reckitt’s future plans for connected packaging?

JH: Over the next few years, Reckitt plans to implement connected packaging across all of our global brands, enabling richer and more contextually driven digital experiences throughout the usage cycle of products. Ultimately, this should create a platform for our brands to help more people, in more ways, with increasingly personalized experiences that go beyond product and into multi-touchpoint solutions to their everyday needs.

Taking Control Before It’s Too Late

Reckitt’s foray into connected packaging is helping the company build consumer relationships and connectivity it can use to further influence shopper behavior. Unilever has similarly begun to deploy connected packaging. While some brands are using it to drive traffic to their own e-commerce platforms, others are using the connection with consumers to direct repurchases of products to local or regional retail or e-commerce partners.

These efforts may help the companies avert outcomes similar to those that privately held consumer brand owner Mars Inc. experienced as it sought to scale its petcare e-commerce subscription business a few years ago. With nearly 50 pet health and nutrition brands in its portfolio, the group was reportedly developing a subscription program for pet products and involving Amazon’s subscription services.

Amazon moved to introduce its own subscription petcare business in 2018 and launched its own private-label dry dog food, Wag, exclusively to Prime members. The net effect was that Amazon essentially scooped Mars Petcare and used its own scale and pricing power to further grow its category share. A survey by market research firm Packaged Facts found that Amazon accounted for 55% of online pet product traffic in the first quarter of 2018, followed by Chewy at 26%, PetSmart at 19%, Petco at 17%, and Walmart/Sam’s Club at 14%.

New Rules, New Tools

The pandemic has driven tremendous innovation in retail experiences, from click-and-collect to in-store ordering with home delivery, and connected packaging is helping brands enhance these offerings and manage their retail channel portfolio. Puma, for instance, is now using connected packaging to enable shoppers in its US stores to interact with products for richer content experiences and to engage with products post-purchase to reorder and purchase complementary items. By creating tools to play a role in originating and directing transactions toward e-commerce or fulfillment partners, brands can mitigate risk and reduce the costs of customer acquisition.

Another effect of the global health crisis on retail has been increased demand for transparency from consumers and regulators alike. Consumer awareness of and attention to food safety and sustainability in the supply chain, for example, have risen sharply. A recent survey of 14,000 consumers across 18 countries by taste and nutrition company Kerry Group found that more than 60% of consumers have increased their focus on food safety in the wake of the pandemic and that 49% now consider sustainability when purchasing food and beverages.

Amid these concerns, the US FDA has recently announced that it is working to “create a safer and more digital, traceable food system,” with the end goal of reducing foodborne illnesses. The FDA’s “New Era of Smarter Food Safety blueprint for the next 10 years portends an environment where US consumers have direct access to trusted information about the origins of food products.

Meanwhile, in Europe, retail giant Carrefour is using product engagement to provide consumers with access to recycling information and the European Union is exploring a “digital product passport” to improve data sharing between manufacturers and recyclers to enable circularity programs such as packaging and bottle returns.

Advances in digital printing speed and cost efficiency have made it practical for even mass-market items to carry digital engagement codes today. SABMiller, for instance, is using interactive codes on beer cans for consumer loyalty programs in sub-Saharan Africa. Technology innovation in packaging and labeling materials is accelerating, too, promising richer data and experiences. One European packaging vendor is providing thermochromatic inks that can change the form of QR codes based on temperature exposure. The technology creates a solution for cold-chain food safety and consumer confidence whereby consumers can directly access information from the smart code on the packaging and share it back to the brand owner.

With consumer e-commerce and QR code engagement boosted by the pandemic, connected packaging is emerging as a key pillar for consumer engagement and first-party data generation. Interactive packaging is enabling brands not only to provide consumers with access to information and enable them to authenticate items directly themselves, but also to gather traceability data as items move through the supply chain and to facilitate transactional experiences at the point of sale and post-purchase.


Leave a Reply

Your email address will not be published.