Preparing for a Soft Landing
While much has been uncertain over the past few years, there has been one constant for the package printing and converting industry: Unprecedented demand for its products. Moving forward, though, several analysts expect the industry to experience a deceleration of growth; however, this decreased rate will be more of a return to a normal rate of rise versus a retraction of business. As Alan Beaulieu, president and a principal of ITR Economics, explained to the audience at the TLMI Annual meeting held in Phoenix on Oct. 16-18: “Without any doubt in my mind, there’s downward business cycle pressure.”
Indeed, the U.S. Bureau of Economic Analysis reported on Dec. 22, 2022, in the third quarter, real gross domestic products increased at an annual rate of 3.2%. The increase in real GDP for the third quarter reflected growth in segments, such as consumer spending, state and local government spending, and federal government spending. Specifically, within consumer spending, an increase in spending in services such as healthcare was actually offset by a decrease in goods — both durable such as motor vehicles, as well as fast-moving consumer goods such as packaged food and beverages — but the decrease in residential fixed investment is also expected to offset some of the decreases in packaged goods spending.
A Business Insider article by Nidhi Pandurangi noted, “a record level of young adults in the U.S. currently living at home and all that saved rent is sparking a luxury boom.” An observation buoyed by data released by the U.S. Census Bureau, which found that approximately half of young Americans are living with their parents today. Packaging converters and printers that serve markets with a strong perception of luxury — even if it is the perception of “everyday luxury” — will benefit from this disposable income. Therefore, converters should look at luxury market trends for opportunities to add value to their printed packaging offerings. For example, package printers and converters can find opportunities in the following beauty and personal care trends expected to emerge in 2023 by global market intelligence firm Mintel: Beauty Rx, Evolved Self-Care, and New Rules of Engagement.
The New Rules of Engagement trend will allow brands and their trusted partners to experiment with how they communicate with shoppers, and create an environment conducive to more playfulness within the brand identities and the execution of such identities. In a written statement, Sarah Jindal, senior director, Beauty, Personal Care and Household Research, Americas, at Mintel, noted, “As online and offline formats continue to merge, technology will allow for replication of experiences across channels with simple approaches, from RFID to digital avatars and the metaverse.
“Looking ahead, the development of virtual reality technology, hardware, and content will become convenient and practical enough for consumers to use every day. This will enable brands to use these technologies strategically to create ‘phygital’ [an industry term often used by branding and marketing professionals to describe the convergence of physical and digital characteristics] experiences that will dominate the way consumers discover, shop, and connect with brands.”
The Evolved Self-Care trend will have brands move to messaging that is both uplifting and addresses a more inclusive definition of self-care that includes wellness for every life stage. Paradoxically, this trend also has shoppers looking to be seen both as individuals and as part of wide social groups. This can be an opportunity for packaging converters and printers to approach brands to update their packaging to target a shopper’s relational selfhood, where one’s identity is linked to a collective’s, thus helping to fulfill a fundamental human need for companionship and acceptance from others, and developing more brand loyalty through peer influence.
Furthermore, printers and converters with superior short-run capabilities can help their brand customers lean into this trend by printing packaging with copy and visual communication that speaks to specific subsets. According to Jindal, “The concept of community self-care will gain popularity as people recognize the importance of helping one another as a way to help everyone live better and
Similarly, Beauty Rx represents an opportunity for packaging printers and converters to approach their print buyers about the need to refresh their go-to-market approaches. This direction reverses a previous trend toward simplification of design in packaging with the need for more communication of a product’s efficacy.
Again, packaging is a natural vehicle for this messaging. The Beauty Rx trend also plays in some global consumer trends identified by Mintel, such as Intentional Spending. In a written statement, Simon Moriarty, director of Mintel Trends, EMEA, noted that consumers are becoming more skeptical and discerning as shoppers are refocusing on what value means to them.
The global consumer trend of Me Mentality on the surface might seem to contradict the Evolved Self Care trend’s focus on community. However, dive further into Moriarty’s explanation, and one can see that this trend involves consumers looking to build up new parts of their identity and brands helping to fill in those gaps.
The correlation between both trends spotlighting shoppers’ desires to use purchasing power to support their participation in and identification with certain groups can be a strong driver for versioned packaging, as well as frequently updated printed packaging that evolves with consumers as their identities become more complex.
Furthermore, the need for consumers to reconnect with communities is reinforced by the global trend of Hyper Fatigue, which notes that consumers are being stretched in many directions while being bombarded with content. As a result, consumers will become even more vigilant about triaging incoming messages to those relevant to them, their communities, and their values. This can be an excellent opportunity for package printers and converters to encourage their brands to use their packaging to communicate how brand fans are helping create positive change in their communities. For example, a printed package can have messaging and imagery that spotlights a brand’s values and charitable work.
This type of printed packaging also plays into the Power to the People trend, where consumers use their spending dollars to effect social change. Simon states, “Consumers are shaping brands with their dollars and their voices. Beyond conceding that ‘the customer is always right,’ this will be an evolution where consumers are investing, co-creating, and voting for change alongside brands.” Understanding the opportunities within these global consumer trends and an awareness of a changing economic landscape can help package printers and converters take the upcoming decelerated growth to evolve their businesses and their relationships with print buyers. Critical to a package printer’s success, though, is a realistic set of business objectives.
As Beaulieu explained to the TLMI Annual meeting audience: “Now, if you’ve got[ten] used to the sugar high of 2021 and you thought that was normal, then you’re gonna get hurt. Firms that think they can repeat 2021, that’s not going to happen. So if your sales goals are tied to 2021, you’re not going to make[it]. If your company is dependent on that kind of growth because of the infrastructure you built or the inventory or whatever it is, you’re in trouble.”
Package printers that look at the upcoming time as an opportunity to execute on goals that were hindered by supply chain challenges driven by the unprecedented demand can not only grow but evolve.