Rehearsing the future
At the moment, some of our most basic assumptions about the world are being questioned. Globalisation is coming under fire. In politics and economics, rulebooks are being torn up. Today, it seems harder than ever to look into the future. That’s exactly why it’s so important that we try. While we can’t forecast every innovation and disruption before they happen, it’s vital that we understand the powerful forces set to shape our industry in the next few years.
At DS Smith we recently brought together a group of exceptional thinkers, inside and outside the company, to look at current trends that are having a big impact on our world – creating a shortlist of eight key drivers ranging from e-commerce and brands, to demographics and technology. We then thought about how those drivers might develop and interact, shaping our ideas into three different versions of the world in 2025, and describing how the journey might look over the next ten years. These three Scenarios aren’t predictions, but they are plausible. We hope to use them to spur debate amongst customers, consumers and colleagues, exploring what the packaging industry can do to manage the risks and embrace the opportunities of the various possible futures.
Scenario 1: Caring convenience
In 2016, e-retail makes up about 10 per cent of purchases in Europe and America, growing fast and seemingly unstoppable. But the old-style supermarkets and department stores are fighting back hard. Shops are becoming delivery hubs, allowing same-day orders to be fulfilled, and returns to be managed easily. Long established names such as Macy’s and Marks and Spencer invest in high quality entertainment at the front of store to bring in the customers, alongside pickup points and changing rooms where visitors can collect, try and return their orders. E-retailers may have the edge on price, but they can’t compete with this level of convenience.
Anybody can be an e-retail powerhouse
In 2017, Uber kick-starts a major change. It begins accepting deliveries as well as passengers, and the price of last-mile fulfilment drops as radically as taxi fares have. Instead of sharing rides with strangers, our co-passengers become groceries, Lego sets and clothing. We even get money off our taxi fare if we’ll take packages to neighbours’ front doors. This allows smaller players to compete with Amazon on price and beat them on delivery.
The second moment of truth
By 2019, half our shopping is delivered to the doorstep. This behaviour begins to transform retail spaces, and the packaging of the goods. Once, marketers obsessed about the ‘First Moment of Truth,’ when a consumer saw a package on a shelf. Now the First Moment of Truth happens online, and the second moment is when the goods arrive at home from Carrefour or Zara, and all those expensive brand values need to be reinforced, not destroyed. So the transit packaging has to protect from damage, have no wasted space, be delightful to open and easy to re-use. The leading brands invest heavily in this area, creating masterpieces of engineering, ensuring their goods arrive pristine and beautiful. However, not everybody is happy.
The cardboard backlash
In 2020, the average household receives more packaging every two weeks than a single dustbin can hold. Local authorities do their best, but can’t cope with the surge in materials for recycling from the doorstep. Logistics and waste management costs start to rise. The e-retailers, working on razor-thin margins, have to pass those costs on to consumers. Suddenly e-commerce doesn’t seem like the miraculous bargain it once was, and inspired by consumer and environmental pressure groups, the so-called “Zero Packaging Movement” takes to the streets to protest. With so much concern from consumers, packaging companies realise that it’s time for radical solutions, not small improvements. A whole new age of creativity begins as brands and their packaging designers start to think more clearly about the need to design packaging that works in the new e-commerce supply chain, whilst also seducing consumers in store, and being easily recyclable.
Scenario 2: Everything is an experience
In 2016, the barriers to entry in many FMCG categories are diminishing. OEM factories are increasingly able to produce small runs of products, distribution can be handled online, and viral marketing doesn’t need big media spend. Microbrands are already threatening global players in certain aisles of the supermarket. Craft beer now accounts for 21 per cent of the US retail market. The US artisan chocolate market is currently worth $100m per annum, and is estimated to be growing at over 8 per cent a year. Packaging is critical for these small brands. In many instances, it’s the only publicity they get.
By 2018, mass-market consumers are becoming much more interested in provenance, and this means that sources of ingredients have to be verifiable. Throughout the supply chain, as well as being beautiful, packaging also needs to be smart and traceable; anybody who wishes to check where the beans in their chocolate bar came from can just scan the wrapper.
Sharing economy brings transformation
In 2019, the sharing economy has really taken hold, with consumers buying fewer durable goods and renting more. A generation who’ve grown up with AirBnB and Zipcar take naturally to the idea that they can rent a DIY tool. Big brands get in on the act, turning their products into services. In 2020, Bosch rents more power tools than it sells, and for a small price, it will arrange a DIY expert to help you do a great job. The packaging becomes critical, ensuring everything arrives and is returned in perfect condition, day after day.
In 2020, Levi’s stores stop selling clothing. Instead, they become places where customers are measured for bespoke items, which are then tailored and delivered to people’s homes. Levi’s aims to custom-tailor every pair of jeans sold in the US by 2025.
In the same year, reacting to the astonishing success of Unilever’s Dollar Shave Club, P&G makes its Gillette razors available only by subscription, at the same time announcing that it aims to become a lifestyle services company over the coming years, investing in male grooming academies across the US to teach men how to look their best and use P&G products.
Packaging becomes part of the show
By 2021, instore marketing spend overtakes traditional advertising. Supermarkets and shopping malls became theatres for brands, with crèches, games, live entertainment and cafes. In this new environment, packaging has to communicate the features of a product and make it glamorous at the same time – the pack is now part of the theatre, part of the storytelling of brands. Even the materials become a crucial part of that story: where they are sourced, how they can be recycled, reused or upcycled. The smartest packaging companies start to understand that they have to create a delightful experience that engages with the shopper long after they have left the store, via shapes, graphics, and connectivity to the Internet of Things. Every unboxing becomes a shareable moment – we’re all in showbusiness now.
Scenario 3: Asian new deal
In the winter of 2013, Beijing residents encountered a choking smog that caused a public outcry. Monitoring activity since then suggests that 83 per cent of Chinese people are exposed to air that the US Environmental Protection Agency would describe as dangerous. China’s growing middle class is becoming increasingly concerned and restive as the problem has worsened.
In 2018, pollution rises to deadly levels in three mega cities. Protests finally erupt across social media and spread into the streets. The Chinese government reacts swiftly to the demonstrations. It makes big promises to clean up the air. The government also sees an opportunity: with slowing growth, clean tech could be the next engine that drives the world’s second biggest economy. It is already investing twice as much in clean technology as the entire EU – now it really steps up the pace, embarking on the biggest data gathering programme the world has ever seen.
The great carbon tax begins
By 2019 emissions are measured and then taxed. The government brings in a European-style cap and trade system on companies and individuals across the country, with every exhaust on every truck, every electricity outlet, every cardboard box and plastic bag being subject to the new rules.