Connected Packaging Moves to the FMCG Forefront as Nestlé, P&G and Peers Deepen Direct Consumer Reach

The COVID-19 pandemic has created unprecedented challenges for the consumer industry. For consumer brands, two issues have become especially acute: in an e-commerce and on-demand environment, the need to connect with shoppers more directly is now critical, while lockdowns and retail closures have made winning and keeping shopper attention more competitive than ever. At the same time, consumer and regulatory demands for transparency on products, provenance and ingredients have grown more urgent and more complex.

To gain greater control over consumer relationships, a growing number of FMCG brands are turning to connected packaging. Shoppers can interact with a product by aiming a smartphone at a code printed on the pack. That code opens information, personalized digital experiences and e-commerce content, and supports engagement both at the point of purchase in stores and after the product has been delivered.

Because brands generally own the packaging and label, interactive codes—most often QR codes paired with a product cloud platform to manage experiences and gather data—create a first-party link between brand and consumer that does not depend on the retail channel. This gives brands the ability to collect data directly from shoppers and to influence or initiate transactions.

In the U.S. and Canada, more than 60 FMCG companies—including Colgate-Palmolive, Nestlé, Procter & Gamble and Unilever—now provide product information to shoppers through a digital tool called SmartLabel. Introduced in 2015 by a trading-partner alliance formed by the Consumer Brands Association and the Food Marketing Institute, SmartLabel offers consumers quick, easy access to detailed information on food and beverage, household, pet care and personal care products from hundreds of participating brands.

These early adopters of QR codes on packaging appear likely to converge with the GS1 Digital Link standard, first launched in 2018. GS1 is an upgrade to the traditional one-dimensional barcode used at the point of sale, and it relies on QR codes so consumer smartphones and point-of-sale systems can interact with packaging.

The Consumer Goods Forum, a powerful pre-competitive platform whose members include Nestlé, Procter & Gamble, Unilever and many other leading consumer brands, confirmed at its annual global summit last month that it intends to apply product digitization to end-to-end traceability and to improve consumer access to information and brand connection.

Reckitt Benckiser, a UK-headquartered global consumer brand owner with a 200-year history, owns some of the most trusted consumer health, hygiene and nutrition brands, including Wizard, Calgon, Durex, Mead Johnson, Lysol and Woolite. The company is rolling out connected packaging as 'always-on' media across its portfolio. Recently, Jos Harrison, its global head of brand experience and design, shared how Reckitt plans to use the packaging.

Reckitt is in the midst of a shift in user experience models. When consumers engage with brands, they want more detailed information and more personalized experiences than ever. FMCG is no exception, and Reckitt sees a major opportunity to serve customers better by delivering on-demand information and services through connected packaging. It currently uses the approach for Wizard and Lysol and is extending the program to other brands.

Connected packaging has many use cases, from simply delivering information to enabling customized services. Packaging stays with the consumer from the first in-store encounter through the product's use cycle. As long as the mechanism is simple and the value exchange is clear, it becomes an ideal entry point for connecting users with a brand or product, relevant to the individual shopper.

In hygiene and home care, Reckitt brands are a first choice for many people, especially now, when consumers want product information that helps them make purchase decisions and ensures they can use products correctly to protect themselves and their families as much as possible. Reckitt's focus to date has been on providing relevant, actionable information. The key is to understand user needs well enough to offer a compelling reason to connect—and then to deliver on the promise of relevance and value.

FMCG brands have seen different levels of shopper engagement with connected packaging. Some categories once considered 'low engagement'—such as cleaning, laundry and home care—have recently recorded a significant rise in users engaging with packaging. As people become more aware of how they clean and disinfect their homes, they are more eager to learn about the ingredients in the cleaning products they use. Reckitt has therefore seen increased interaction not only among tech-savvy millennials and Gen Z, who might be expected to adopt new technology-enabled engagement, but also among older shoppers—and the trend is not limited to developed markets.

Over the next few years, Reckitt plans to implement connected packaging across all of its global brands, creating richer, more context-driven digital experiences throughout the product use cycle. Ultimately, this should give its brands a platform to help more people in more ways, with increasingly personalized experiences that extend beyond the product into multi-touchpoint solutions for everyday needs.

Reckitt's move into connected packaging is helping the company build consumer relationships and connectivity, which can further shape shopper behavior. Unilever has also begun deploying connected packaging. While some brands use it to drive traffic to their own e-commerce platforms, others use the consumer connection to route products directly to local or regional retail or e-commerce partners.

Such efforts may help these companies avoid an outcome similar to what Mars, a private consumer brand owner, experienced a few years ago when it sought to expand its pet care e-commerce subscription business. The group, reported to own nearly 50 pet health and nutrition brands, was developing pet product subscription programs and was involved with Amazon's subscription service.

Amazon began rolling out its own subscription pet care business in 2018 and launched Wag, a private-label dog food, exclusively for Prime members. In the end, Amazon effectively took over Mars Petcare and used its scale and pricing power to further expand its category share. A Packaged Facts survey found that in the first quarter of 2018, Amazon accounted for 55% of online pet product traffic, followed by Chewy at 26%, PetSmart at 19%, Petco at 17% and Walmart Sam's Club at 14%.

COVID-19 has driven major innovation in retail experiences, from click-and-collect to in-store ordering for home delivery, and connected packaging is helping brands enhance these offerings and manage their retail channel mix. Puma, for example, now uses connected packaging to let shoppers in its U.S. stores interact with products for richer content experiences and to engage after purchase for reorders and refills. By creating tools that help initiate and direct transactions to e-commerce or logistics partners, brands can reduce risk and lower customer acquisition costs.

Another retail impact of the global health crisis is rising consumer and regulatory demand for transparency. Consumer awareness of and concern about food safety and sustainability in supply chains has climbed sharply. A recent survey by taste and nutrition company Kerry Group of 14,000 consumers in 18 countries found that after the pandemic, more than 60% of consumers are more focused on food safety and 49% now consider sustainability when buying food and beverages.

Against this backdrop, the U.S. FDA recently announced that it is working to 'create a safer, more digital, traceable food system,' with the ultimate goal of reducing foodborne illness. The FDA's 10-year 'New Era of Smarter Food Safety' blueprint points to an environment in which U.S. consumers can directly access trusted information about where their food comes from.

In Europe, meanwhile, retail giant Carrefour is using product engagement to give consumers recycling information, and the EU is exploring a 'digital product passport' to improve data sharing between manufacturers and recyclers for circular programs such as packaging and bottle returns.

Advances in digital printing speed and cost efficiency mean that even mass-market items can now carry digital engagement codes. SABMiller, for example, uses interactive codes on beer cans in consumer loyalty programs in sub-Saharan Africa.

—This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378152.html