A review of new product releases by Kantar Worldpanel shows a declining appetite for launching or listing new products. This trend is partly due to the rising costs for brands but also due to a more conservative approach from retailers in taking on new listings.
However, past recessions may provide a lesson on innovation: growth can still be found. Kantar found that between 2007 and 2013, 33% of categories grew out of the 1,230 categories examined in six countries.
“In other words, there are still trends to which you can attach yourself when times are tough. The tendency can sometimes be to buckle down and cut costs, but there is clear evidence that those who invest in tough times can find growth,” said Sam Hart, Head of Marketing Insights at Kantar Worldpanel.
Hart said the key to winning was innovating with confidence by clearly identifying an unmet need state or an emerging need state for consumers and delivering something that directly met those needs.
"Fewer, better, smarter innovations will be key. The evidence shows that the appetite for the right products continues even in tougher economic times. Those who invest intelligently in their new products come out of recessionary periods in better shape.”
“Interestingly, innovations versus renovations — what we might consider tweaks such as pack size and flavour additions — don’t have as much impact as larger innovation initiatives for those who get it right,” said Hart.
He said those who were most successful followed a clear formula to determine their ability to deliver incremental contributions to their respective categories:
Hart poses the following questions. Is your new idea addressing:
- A new group of users?
- A new trend?
- A new occasion?
- A new channel?
- A truly new and differentiated benefit?
If the answer is NO to all of those it is advised to focus on another innovation.
Hart also said it was essential to communicate realistic targets to retailers alongside transparent product positioning and a guaranteed approach to building consumer awareness of the products.
“There are also differences to what we saw in the past. In the 2008 recession, discounters such as Aldi and Lidl didn’t have the footprint they do today. Given the shift in market share towards discounters as inflation worsens, innovation has a place in finding a point of differentiation from what the discounters are offering,” Hart said.
Learn more about the importance of innovation during the cost-of-living crisis here.