The world of packaging is evolving, as a newer generation becomes the dominant consumer group. According to Green Retail Decisions, 59% of millennials consider packaging sustainability important throughout the entire value chain. Additionally, they are more likely to purchase eco-friendly products than older generations, even if it means paying a higher premium.
Let’s take a closer look at what sustainable packaging means, its growing importance and what this means for retailers and brand owners.
Sustainable packaging uses recyclable materials such as papers than can be re-pulped and reused. It is designed to optimize materials and energy. Biodegradable materials are also used in packaging design, since they can break down quickly.
As the Sustainable Packaging Coalition® cites, sustainable packaging also:
- is manufactured using clean production techniques
- is beneficial, safe and healthy for people to use throughout its lifecycle
- meets market criteria for performance and cost
Growing Importance: Shift in Consumer Mindset and Behavior
Today’s consumers are becoming more environmentally conscious; over 70% consider themselves to be eco-friendly. However, it does not necessarily mean they want to consume less. Instead, they want to consume smarter.
These consumers are interested in less packaging, less waste and more recycling. As a result, sustainable packaging is at the forefront of their purchasing decisions.
In fact, 85% of millennials consider packaging material part of the overall brand experience. This consumer group encompasses people born between 1980 and 2000. Additionally, four out of five millennials consider the type of packaging important when making a purchase.
Furthermore, the way today’s consumers shop has evolved. Millennials shop online, use social media and make value-driven decisions. For instance, as stated in Future of Packaging for the Millennials:
- 70% recommend favorite brands online
- 47% share positive experiences online
They look beyond the product itself and are interested in the brand’s environmental impact. Millennials also look for brands that reflect their values.
What Does This Mean for Retailers and Brand Owners?
Retailers and brand owners that respond to the shift in consumer mindset and behavior have an increased likelihood of attracting and building brand loyalty. Those that embrace sustainable packaging can achieve 2 to 4% net sales increase and a 1 to 2.5% improvement in EBIT margin.
In addition to boosting sales, sustainable packaging increases operational efficiency and margins within the facilities. This refers to:
- Packaging automation: streamlines end-of-line packaging process
- Rightweighting: determines the overall optimal weight for improved performance and reduced costs
Once in-store, smart packaging yields higher-shelf space, decreasing replenishment time and costs. Retailers and brand owners are able to charge more for these products as well.
However, the shift in consumer mindset and behavior has brought new challenges to retailers and brand owners. They now must tailor their packaging to be sustainable, natural and authentic. Yet, these challenges have opened up new opportunities to grow their businesses while improving the environment.