Smart packaging to deliver “disruptive innovation” to online grocery, claims Tetra Pak report

03 Jul 2018 --- As digitalization permeates a range of sectors, “smart packaging” technologies based on unique digital codes will take both online and off-line grocery in exciting new directions during the next few years, according to the Tetra Pak Index 2018. The growth of smart packaging will enable suppliers to utilize digitalization technologies to respond to some of the largest trends shaping online and physical grocery, such as sustainability, personalization and convenience. 

Online grocery shopping is growing at a double-digit rate, while traditional stores are being reinvented, merging together into an omnichannel where consumers expect to be able to buy whenever, wherever and however they choose, with the smartphone as their compass, according to Tetra Pak. Packaging will play an important role in response to the trends that are shaping the growth of online grocery.

The introduction of technology into packaging has opened up a range of possibilities for brands to create deeper and more personalized relationships with their consumers, Alexandre Carvalho Global Marketing Services Director at Tetra Pak tells FoodIngredientsFirst.  This is accelerating the direct-to-consumer trend and as many as 80 percent of consumer-packaged goods companies are predicted to migrate to this model by 2025, he adds.

“The key to this technology is digital printing, which makes it possible to print unique digital codes on each and every package. This can then be scanned with a data scanning device or smartphone, allowing all kinds of innovative possibilities. We have already tested this technology with customers, by adding a layer of digital experience to packages in Saudi Arabia and also in Spain, where consumers scan a unique identifier on the package to take part in a brand promotion. The information flow is two-way. It allows brands to capture specific and valuable insights about their consumers as part of the digital code interaction on where they are scanning the products and how often they are scanning them, that enables them to adjust promotions almost in real time to ensure they get maximum reach, maximum engagement and increase sales,” he adds.

Therefore, smart packaging technologies based on unique digital codes can play a double role, allowing consumers to interact more personally with brands, while brands can capture consumer insights and build more personal experiences from the data.

E-retailers are also calling for unique identifiers compatible with the robotic technology used in their warehouse and distribution, as this is widely seen as the key to success in e-commerce. Data and full traceability can help them navigate complex logistics and improve efficiency, moving closer to real-time order fulfillment. Ultra-convenience has been pegged as a future trend.

Where has it been adopted so far?
China and Korea are leading the way with “disruptive innovation” in the grocery space. In China, for example, “smart packaging with features that enable digital purchase and an enhanced consumer experience is highly regarded. It is also welcomed by retailers in the region as it allows them to experiment with new business models and payment methods. In Saudi Arabia promotions are important, and also in the US where consumers are focused on saving money, with coupons and vouchers playing a key part of consumers choice of retailer. In terms of upcoming regions for smart packaging technologies, 65 percent of the most influential online consumers in both the US and UK are interested in smart packaging features that enable package interactivity,” says Carvalho. 

In terms of industry players, Amazon is highlighted as being a key player in the reinvention of physical retail, “both through its acquisition of Whole Foods and also its Amazon Go checkout-free concept store [which is] selling ready-to-eat foods, meal kits and grocery essentials, including its own brands, such as Wickedly Prime. The store employs the same types of technologies used in self-driving cars: computer vision, sensor fusion and deep learning. Similar moves are happening in China, which is setting the pace globally for omnichannel retail innovation. Alibaba first announced its “New Retail” concept – integrating online, offline, logistics and data across a single value chain – back in 2016.”

However, Carvalho notes some R&D challenges that the industry is facing with the rise of smart packaging. Cost efficiencies will become prominent as manufacturers experiment with finding ways to add a digital layer to their packaging without increasing the cost per case. Furthermore, consumer awareness and education will play a role as consumers are encouraged to use their smartphones to scan their packages. In order to educate consumers, the key here will be running consumer campaigns that develop a code scanning habit, Carvalho adds. 

Essentially, as the digital technologies for “smart packaging” develop and become more affordable it is likely that it will become ever more significant globally in both upstream and downstream logistics through unique data codes, as well being used increasingly to position online grocery items as premium products. FoodIngredientsFirst has recently reported on the introduction of such “smart packaging” into the grocery space, such as “smart” bottles and “connected” coasters from the Jimador tequila brand. 

By Laxmi Haigh