Avery Dennison has found that consumer engagement is key in connecting at the shelf. Consumers are also leaning toward minimalist packaging, meaning clean, clear and transparent labels. The shopping experience has changed, as well, as more people are living their day-to-day lives on the go. Smaller portions and on-the-go eating are all customary in today’s society, so the packaging must function with these tendencies.
Of course, the digital experience must also mimic real life. “People want to have the same experience in the store that they have online,” said Wittmann. “Stores realize they have to compete with Amazon somehow, so they’re making the online experience easy to get products to their customers quicker.”
The label and package must enhance the consumer experience in some way, which lends itself toward NFC and RFID technology. According to Noll, 87% of connected consumers are “experiencing more” by purchasing tickets for leisure and entertainment activities, and 52% of US travelers have tried something new on vacation in the last year. Delta has responded to these trends by placing RFID inlays in baggage tags. Airlines have roughly a 7% adoption rate, but as more airlines get on board with this trend, the result could be several billion tags per year.
It’s important for the packaging to connect to the consumer, Noll emphasized. With 77% of Americans owning smartphones, there is an opportunity to engage with a significant number of customers at the shelf. Not only can smart labels play a role, but consumers regularly use their phones to buy products and conduct research.
“It’s really important for brands to understand how people shop and interact with traditional stores,” Noll said. Nearly one-third of online purchases get returned to a brick and mortar store, and for clothing that number is closer to 40%. Some 50% of consumers will purchase products online and pick up in the store–also opening an avenue to sell more products to that consumer in the store. For example, Macy’s noticed a 7% jump in sales as consumers picked up their orders and purchased additional items.
E-commerce is projected to grow 21% in 2019, reaching $560 billion. In the United States alone, 14 billion parcels were shipped in 2018, and 40% of online shoppers say they shop online due to ease and speed.
“Shopping is reinventing itself every couple of months, not every couple of years,” said Noll. “People went from being willing to wait five days to receive a package-for free-and now we’re down to three days.”
By 2020, it is estimated that one-third of all grocery sales will be online in the US. RFID labels can improve the consumer experience in multiple ways. Stores can keep better inventory of their products, ensuring that when a customer arrives to pick up a product that is said to be in stock–that it is actually there.
With grocery sales moving online, the packaging will continue to play a key role in the sale. “Freshness drives packaging,” said Noll. “Consumers want to see it’s a new, fresh product. Meal kits are also driving new labeling tracking opportunities.”
In the first half of 2018, 9% of Americans, or 1.05 minion households, purchased a meal kit in the first half of 2018.
Smart packaging is also growing in other segments such as pharmaceuticals and nutraceuticals. In nutraceuticals, dietary supplements and functional foods are the fastest growing segments with a CAGR of 8%, reaching a value of $119 billion by 2023. Pharmaceuticals, on the other hand, will reach $490 billion.
Smart packaging is seen as a large driver in pharmaceuticals, Noll said, especially with its track and trace capabilities.
In the automotive field, there were $1 billion worth of RFID labels in 2016. By 2025, that market is projected to grow by 40%.
According to Avery Dennison, the global RFID tags and inlays market is projected to reach $24 billion in 2023, ranging across markets like pharmaceuticals, medical devices, retail, manufacturing, transportation and more. In North America, UHF RFID is expected to catch up with Europe in the coming years.