Looking to the future12 April 2017
Looking to the future
Looking to the future
By Alex Manisty, Head of Strategy, DS Smith
Twelve months ago, few would have predicted that Donald Trump would become the 45th US President and that the UK would vote to leave the European Union. As 2016 demonstrated, some of our most basic assumptions about the world are being questioned. Globalisation is coming under fire and political and economic rulebooks are being torn up. While we can’t forecast every innovation and disruption before they happen, we believe it is vital to try and look into the future and understand the powerful forces set to shape the packaging industry in the next few years.
Looking to the future
To do this, we recently brought together a group of exceptional thinkers, from inside and outside DS Smith, to examine trends that are currently impacting our world. We then thought about how those drivers might develop and interact, shaping our ideas into three different versions of the world in 2025. 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
E-retail seems unstoppable but the old-style supermarkets and department stores are fighting back. Shops are becoming delivery hubs, allowing same-day orders to be fulfilled, and returns to be managed easily. Long established names 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.
During 2017 we see Uber kick-start 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, allowing the traditional retailers to fight back. 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.
By 2019, half our shopping is delivered to the doorstep. This behaviour begins to transform retail spaces, and the packaging of the goods. It has to protect products 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.
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. 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. So a whole new age of creativity begins as brands and their packaging designers start to create ideas that work in the new e-commerce supply chain, at the same time as seducing consumers in store – truly packaging for the new retail omnichannel.
Scenario 2: Everything is an experience
In 2017 the barriers to entry in many FMCG categories begin to diminish. OEM factories are able to produce small runs of products, distribution is handled online, and viral marketing doesn’t need big media spend. Microbrands are already threatening global players in craft beer, cheese and chocolate. Packaging is critical for these small brands. In many instances, it’s the only publicity they get.
By 2018, consumers are becoming much more interested in provenance, and sources of ingredients have to be verifiable. Throughout the supply chain, as well as being beautiful, packaging becomes smart and traceable; anybody who wishes to check where the beans in their chocolate bar came from can just scan the wrapper.
The Airbnb generation
By 2019, the sharing economy has really taken hold, with consumers less interested in owning 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, 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, investing in male grooming academies across the US to teach men how to look their best.
By 2021, instore marketing spend overtakes traditional advertising. Supermarkets and shopping malls became theatres for brands, with crèches, 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. 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. China’s growing middle class becomes increasingly concerned and restive as the problem worsens.
In 2018, pollution rises to deadly levels in three mega cities and protests spread into the streets. The Chinese government makes big promises to clean up the air. China is already investing twice as much in clean technology as the entire EU.
Measure for measure
So, 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, electricity outlet, cardboard box and plastic bag being subject to the new rules. By 2020, the data scientists are reaching some surprising conclusions. They decide that recycling infrastructure is less efficient in China than it is in Europe or America, and in any case much of the material the Chinese recycle is actually being shipped from the West. It is a trade with a high carbon footprint, but more importantly it makes China dependent on Europe and America for critical resources.
The Chinese announce that although they will continue to recycle their own used packaging, they won’t go on buying recovered fibre from Europe and America. Instead, they’ll grow their own. Millions of trees spring up across Asia – genetically modified for fast growth and carbon absorption. Farmers who once grew coffee, cocoa or palm oil become foresters instead. The price of recyclable fibre crashes, and in the West companies and governments respond to the new Asian model by creating real circular economies built on dramatic improvements in the way that materials are recovered and reused.
Throwing out the rulebook
By 2021, the world is starting to think hard about what China has achieved, and implications for the way things work in the circular economy outside Asia. Companies and governments realise that the developing world has different ideas about what is ‘sustainable’. This means new targets, dramatic improvements in the way that materials are recovered and re-used, and rules to make packaging part of a low carbon recycling solution.
At the same time, Delhi’s citizens are choked with exhaust fumes from the cars and trucks that jam its streets. India decides all deliveries are to be performed at night, using electric driverless goods vehicles.
Packaging is information technology
By 2025, astonishingly powerful computers monitor emissions around the world, making us more efficient, tracking transactions, and stabilising the planet’s eco-system. Most citizens seem happy to trade some privacy in return for cleaner air for their children. The packaging companies that reacted to this early, did so by realising that they were in the information technology business. They now make sensor-friendly packaging and work with governments and NGOs to help create today’s standards of materials and sizes, leading to a functioning, data-rich circular economy
The times are changing
These scenarios are designed to stimulate our thoughts - no one knows what the next decade will actually have in store for consumers, brands, manufacturers and the packaging - but we do know that the times are changing. At DS Smith we are passionate about not just observing the changes but shaping them too. Join the conversation - #rehearsingthefuture