The Future of Smart Packaging in the Retail Industry

Nowadays, 90 percent of smartphone owners use their devices in-store to research products, meaning brand owners and retailers face tough competition. Shoppers can be tempted not only by other retail store competitors, but by online stores as well. It’s not enough to offer a good in-store experience or competitive price; consumers are looking for detailed information and personalized offers at their fingertips. Younger generations especially want active engagements with brand owners.

A number of fast-moving consumer goods (FMCG) brands are exploring NFC-enabled smart packaging as an innovative way to connect directly with customers, improve engagement and understand purchase decisions. There was an early buzz around this, and now Markets and Marketing predict that the smart packaging industry will reach $39.7 billion by 2020. So, what's driving this resurgence in interest and how will it help brand owners and retailers connect with customers in fresh, engaging and creative ways?

NFC-Enabled Smart Packaging: Benefits for Retailers

NFC tags can contain unique identifiers by item, not just product type, allowing retailers to connect with shoppers personally. Brands can build customer loyalty by delivering exclusive content such as relevant cross-sell and upsell opportunities and discounts for regular purchases. In fact, 4info research shows that campaigns offering a promotion outperform others by up to 80 percent. If customers can access that discount while next to the item, they're more likely to make a purchase.

To enable this personalized experience, customer identification is critical, as noted by BRP Consulting in its 2018 POS Survey. By using NFC to engage directly with customers and build information on their behavior and likes, the brand owner or retailer can be sure that in the future specific offers are perfectly targeted to increase the chances for conversion.

NFC is a practical alternative to barcodes and QR codes. The tags are smaller, more discrete and can be integrated beneath labels and packaging without affecting the brand identity. NFC technology is also more resistant to cloning; the unique ID prevents counterfeiting and enables authentication of the product by the brand owner or customer.

NFC-Enabled Smart Packaging: Benefits for Customers

We live in an increasingly connected world, with around 80 percent of smartphone owners having NFC readers in their hands. Therefore, it’s unsurprising that people increasingly believe the next step is smart packaging.

Customers will benefit from easy-to-use, interactive and more personalized services, including "how to" guides, recipes, ethical sourcing data, and coupons, all accessible with a quick tap of their smartphone. This content can even be dynamic. Customers can receive different content before, during and after their purchase.

Why is NFC-Enabled Smart Packaging Not Everywhere Now?

Brands including Johnnie Walker, Rémy Martin and Ferngrove Wine Group have all implemented NFC-enabled smart packaging. However, despite numerous benefits, examples of NFC technology within FMCG products are limited, largely due to cost. Until now, NFC-based campaigns have been restricted to either high-value goods with a high profit margin, or low-volume product trials and marketing promotions.

Although NFC tags now cost over 50 percent lower than 10 years ago, their current cost is too high for everyday items. To break into the FMCG world, costs still need to decrease dramatically. Luckily, imminent new processes and technologies will impact both the cost of key components, such as the IC (integrated circuit), and how the antenna and tag is assembled, bringing us closer to the elusive 1 cent per tag target. Most experts agree that NFC-enabled smart packaging will become a must-have feature and projections for mass market adoption will become a reality.

Gillian Ewers is the vice president of marketing at PragmatIC, a unique technology platform that delivers ultra low cost flexible integrated circuits (FlexICs) that can easily be embedded into everyday objects.