Packaging industry: digital boost as a result of the Crisis?

Digitalisation and sustainability have been the leading trends in the paper and packaging industry for years. Nevertheless, current study results show that only a few companies have a well-developed strategy to address these topics. Will the COVID-19 crisis finally force the industry to adapt its approach?

The strategy and marketing consultancy Simon-Kucher & Partners conducted a survey at the beginning of 2020, which asked managers in the paper and packaging sector about trends in the industry. As in previous years, sustainability and digitalisation dominated the trend radar. The industry knows the aspects it needs to address but is reluctant to act. According to a mood barometer conducted by the management consultancy during the coronavirus crisis in May 2020, the effects of the pandemic could force the industry to rethink its processes.

Companies still respond to these topics in a very reactive way, especially when it comes to sustainability. Customers and retailers are increasingly demanding sustainable packaging, but only 12% of companies surveyed stated they took the initiative to promote this topic out of their own vision. In addition, more than half of companies have yet to develop a clear strategy for sustainability and have only introduced various individual initiatives.

Daniel Bornemann, Partner at Simon-Kucher, explains, “Again and again, we’re seeing that sustainability is often viewed as a ‘hygiene factor,’ one that is interesting to customers and only serves to create a positive image for the company. It is quickly labeled a marketing topic and not actively promoted as a growth path to, for example, develop new products for the mass market.”

Sustainability has become less of a priority in recent weeks, primarily due to change in demand behaviour and strong refocusing on security of supply and hygiene. However, in the medium term, companies should consider taking a more strategic approach to the topic. The study results show that over a quarter of B2B customers are now willing to pay more for sustainable products.

Bornemann recognises major opportunities for companies in this area. He continues, “Tapping into this additional willingness to pay requires effective storytelling that can be used in sales. Companies have to address the needs of different customers because everyone has their own preferences.”

Digitalisation continues to be a major topic in the industry, primarily affecting company processes. For 37% of those surveyed, digitalisation plays the most important role in sales processes, closely followed by production and logistics processes. The latter benefit, in particular, from increased demand for transparency and traceability.

The study results suggest that sales teams are also reluctant to take full advantage of the opportunities offered by digitalisation. While the importance of e-commerce is increasing in the industry, it will be overshadowed by traditional wholesale and direct sales, with around 40% of companies surveyed stating they will continue to see them as predominant sales channels compared to just 11% for e-commerce.

However, the effects of the coronavirus could create an unexpected upswing for e-commerce. Bornemann has observed that the limited mobility in recent months has made remote selling a new sales reality at many companies. He concludes, “So far, it seems the industry has been missing out on the opportunities generated from switching to online. The need for customer-specific solutions in the sales process was often overestimated. As a consequence, companies were reluctant to push more sales into e-channels. However, modern technology enables them to configure semi-customised products online and allows to put more focus more on e-channels.”

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