Millennials and their packaging preferences deserve attention because they command a sizable share of today’s market, especially for consumer packaged goods, and will dominate for some time to come. But what shifts in packaging design and production might we see once the next generation—Generation Z—grows up and wields more economic capital?

Stephan Ango, co-founder and head of product for Lumi—a packaging service based in Los Angeles that supplies many of the emerging direct-to-consumer brands that are disrupting retail like MeUndies and Primary—shares some ideas in his blog “Vertical commerce and how the next generation of retail will be built.”

Stephan Ango

Ango talks about vertical commerce brands (VCBs)—companies that originate online—and how they meet the expectations of Gen Z consumers, who were born between 1995 and 2015. He asks and then examines, “What will Gen Z’s idea of retail look like?”

Good question, so let’s start there…

What will Gen Z’s idea of retail look like and how will packaging need to evolve to meet those needs?

Ango: Gen Z will be looking to have an even more personal relationship with the products they buy than any other generation that has come before. They are a mobile-first generation that interacts directly with the creators and brands they follow. They want to personally relate to the people who made, designed or curated what they buy.

The democratization of media through new platforms such as YouTube, Snapchat, Instagram (and whatever comes next), has led to a flourishing of niche brands that have smaller but much more dedicated audiences. We already see the beginnings of this with brands such as Ipsy, which emerged from the YouTube star Michelle Phan.

Packaging will need to accommodate the needs of these brands looking for custom, personal touches at small quantities. At the same time, I believe Gen Z will enter the workforce with a much more informed perspective of the global environmental crisis we face. They will not only expect the products they buy to be personal, but to also respect the planet. Packaging has to follow suit.

In your blog, you say, “VCBs sell physical things, atoms. But when it comes to making and moving them, VCBs want these physical things to behave more digitally, like bits.” Can packaging help in this regard? If so, how?

Ango: VCBs see the products they sell in the same way they see data on their servers. They want the flexibility to quickly move their inventory, ramp it up, ramp it down—all without having to physically interact with it themselves. This means they need manufacturing, warehousing and fulfillment that responds quickly to their needs. They are thinking less about cases of product going to retailers, and more about individual units that will ship to consumers.

As we shift from physical retail to online retail, the role of packaging is changing. In a world where people make their buying decision online, the packaging does not need to sell the customer. In the past, packaging was about selling the product to the customer in the store. Today, packaging is about shipping the product to the customer at home.

Because the customer doesn’t benefit from a physical retail experience, packaging can become more experiential. Its job is to not only to deliver the product in good condition, but to also become the first physical touchpoint a consumer has with a brand.

We know from Amazon’s efforts with “frustration-free packaging” that consumers are looking for simpler, less wasteful packaging. Branding must therefore move outwards to the shipping box. Packaging needs to be a shippable “unit of experience” for the customer. For example, what would a bottle of laundry detergent look like if it were designed to be shipped, rather than sit on a shelf?