In today’s challenging retail market, brands and retailers must find fresh and innovative ways to engage with customers, but with 90% of smartphone owners using their devices in-store to research products via search engines and online web stores, companies need to recapture customer attention by leveraging new technologies. Although the young people spend more than 3 hours each day on their smartphones, 67% still prefer to shop in-store, so it is clear that a shift in focus is required from traditional retail marketing to a new approach that blends the digital and physical worlds.

Research by the National Retail Federation and IBM revealed that the young people would like more active engagement with brands. Near Field Communications (NFC) technology in smart packaging enables brands and retailers to offer an enticing and interactive customer experience. With currently around 1.4 billion smartphone owners with NFC capability, and this number expected to double by 2020, NFC-enabled smart packaging can be used to deliver the personalized experiences that customers now demand-with product information, promotional offers, how-to-guides, videos and reordering reminders available with a simple tap of a smartphone. A recent survey by Epsilon and GBH Insights found that 80% of customers are more likely to make a purchase when brands offer bespoke content.

For brand owners and retailers, NFC provides opportunities to develop direct engagement and build customer loyalty. This is possible as NFC tags contain unique identifiers by item, not just product type, so content can be targeted and dynamic (different before and after purchase). These tags are small and can be integrated into packaging without impacting on the brand identity. NFC technology is also more resistant to cloning as the unique ID prevents counterfeiting and can enable authentication of the product by the brand owner or customer.

Despite the numerous benefits, examples of NFC technology in high volume, low margin products such as FMCGs (fast moving consumer goods) have been limited, largely due to cost. Until now, NFC-based campaigns have mainly focused on high value products or low volume marketing promotions.

However, new technologies and production processes are emerging that will significantly reduce the cost of the key components required for mass market smart packaging, such as the IC (integrated circuit) that is the brain behind the NFC tag. For the first time NFC-enabled smart packaging will become economically viable for FMCG brands, and the young people are likely to be the driving force behind its adoption.