The retail sector is experiencing an unprecedented tsunami of change that is disrupting the industry in ways yet to be realized. In today’s competitive environment, new technology and rapidly evolving shopper behavior are driving dramatic changes. The old ways of doing business are no longer working, and consumer goods companies and retailers are facing a new set of challenges.

A closer look at shopper behavior tells a story of how Millennials have come of age in a time where technology, access and information are always at the ready—and as a result, expectations of the consumer experience are rising. With Millennials standing as the largest generation in our population, retail and CPG industries are challenged to both understand and quickly adapt to a new business model requiring changes all along the supply chain from raw materials procurement to delivery to the shelf.

THE DISRUPTIVE NEW SHOPPER

Shoppers are increasingly turning to the web to shop and in many classes of trade, an estimated 30 percent of center-of-store sales will migrate online. Shoppers will increasingly shop to a list, as opposed to browsing and making impulse purchases. As connectivity for the consumer increases, the ability for retailers and product manufacturers to influence decisions decreases. And as footprints shrink, room for traditional merchandizing and off-shelf marketing strategies will prove challenging at best. In this environment, in-store material such as packaging and displays must work harder to drive conversion. Product real estate will become limited, and packaging will play an increasingly important role.

Packaging also becomes more important to close the sale in the online environment. Product positioning and claims need to speak for themselves. Then, once consumers make the purchase, the packaging becomes a key brand vehicle—it must protect the product through the delivery lifecycle but also convey brand identity to the consumer. Consumers expect their purchases to arrive damage-free on their doorstep, and even that the unboxing moment be a brand experience.

In the future, both in-store and online, packaging will play an ever-increasing role in the customer experience and require a new approach to win repeat business.

WHAT’S REQUIRED TO WIN?

In this complex environment, manufacturers will need to work with suppliers who understand this new retail landscape and have the capabilities to provide insights and leadership. A few key factors serve as important ingredients to a new success formula:

on-site insights

Within the retail setting, brands must understand what it takes to turn shoppers into stoppers and browsers into buyers. In brand strategies, insights lead to the innovations that can drive competitive differentiation.

However, today’s evolving retail environment will require understanding of the trends and shifts happening all across the vertical. Organizations can’t do that alone, so retailers, consumer brands and suppliers will each serve as key players to this insight gathering.

For example, in the growing discounter class of trade, where low-cost models are crucial, new competitors such as Aldi and Lidl require retail-ready packaging solutions that can easily be placed on shelf, with minimal employee touchpoints required. Clean store policies will demand these packaging configurations help brands stand out on the shelf.

best-in-class partnerships

From R&D to packaging strategies, partnering and information-sharing play important roles in meeting the demands of the new shopper. Increasingly, the need for partners that bring additional value will be important.

As businesses reframe their operations, investments will be weighed with caution and channeled into strategic areas that are proven to deliver ROI. Partner relationships will need to bring valuable insights and drive efficiencies for exploring new areas or approaches where resources for investment may be limited.

Retailers will require differentiation from competitors to attract and hold shoppers, meaning custom short-run packaging capabilities will become critical to success. Supply chain expertise and design capabilities will become ever more critical.

organizational reframe

These changes will require brands to reframe thinking to focus on how their brand fits the retailer’s strategy around their categories.

With new data streams available, retailers now have deep insights into their business and are reliant on brands to help them find solutions to better serve and keep their shoppers. Moving forward, success will require closer collaboration between brands and their distribution channel partners.

commitment to innovation

In the midst of change, brands must commit to insights-driven innovation, evaluating every piece of the supply chain. We are continually identifying new approaches to address shifting retail and shopper requirements.

WestRock’s Connected Packaging solution with EVRYTHNG and Digimarc is an example of bringing Internet of Things to packaging, delivering faster supplier insights and digitizing information. Through mobile and web, Connected Packaging gives consumers an instant opportunity to engage with the brand and the retailer deeper insights into activation.

manufacturing expertise

Undergoing innovation requires the expertise in manufacturing to ensure nimbleness, efficiency and quality—among other important factors. Investments in new technologies like digital printing and providing clients with access to manufacturing Black Belt engineers enables suppliers to deliver increased efficiency and effectiveness all along the manufacturing and delivery supply chain.

test + learn approach

Gone are the days when being a fast follower can be an effective strategy. A company’s response to rapid changes in technology and shopper behavior can determine whether they are either ahead of the curve or behind it. More than ever, embracing the idea of “fail fast, fail cheap” is critical.

Learning lab environments allow us to pilot and assess new concepts with the potential to thrive in the disrupted retail setting. The test-and-learn approach helps us work with our partners to refine ideas and ensure they best address the needs and wants of their target consumer.

With these tools for success, growing a consumer brand in a time of such change can be rewarded with significant gains. From greater market share, to greater customer and retailer relationships, the brands that seize the opportunity to win anew in these areas bear amazing potential for success amid disruption.