New product innovations are the next victims of the economic downturn, because people are sticking to the familiar. According to Information Resources, Inc., 75% of consumers bought fewer than six new products last year, and only 2% bought more than 15.
Why the change in behavior? IRI says people are keeping fewer products in their home (down to 361 UPCs from 400 in 2005). So shoppers are sticking with trusted products that have proven their value.
Shoppers and retailers have long been overwhelmed by the confusing array of SKUs. Is now the time for CPG manufacturers to reevaluate and simplify their SKU-productivity strategy? Who would benefit from fewer SKUs?
Manufacturers could focus on strengthening the equity of their core brands and grow share by providing the proven, long-term value that shoppers are already reverting to.
Retailers would have an easier time choosing which products to carry and would be able to give proven brands more facings, better positioning, and more focused program support.
And because shoppers would be able to find and buy their familiar brands more easily, they would feel better about the shopping experience, the retailer, and ultimately the brand.
Can manufacturers make the shift? Companies feel tremendous pressure to constantly offer the latest and greatest to consumers. If they choose instead to concentrate on their base business, will they lose to brands that continue to bring new products to market?
– Contributed by Carrie Glassburn