The IGD (Institute of Grocery Distribution) does an annual survey which looks at the areas where
retailers and their suppliers are placing most of their effort. This year the top priorities are new products, deeper understanding of what goes through
shoppers minds as they decide what to buy, and how best to manage the various
channels through which they choose to buy whether online, or in convenience
stores, discounters or the traditional supermarket.
The emphasis on shopper behaviour is not new. Continued
pressure on finances means that consumers now have a very different mindset
when it comes to shopping than they did when money was freer. They work to
tight budgets, even to the extent of handing a product back to the cashier at
the till if the bill goes over the amount they are prepared to pay. They look
for money saving offers, meaning that over 40% of grocery items are bought on
promotion. They compare prices on line before setting foot in a shop. Yet they
are prepared to splash out on special occasions, or on top quality, as shown
the 10% growth in sales of their premium “Taste the Difference” brand announced
by Sainsbury a couple of weeks ago.
The emphasis on different channels is not new either. The efforts
of Morrisons to get into convenience stores and online shopping are well
documented, as is the contribution to growth made by these channels as well as
discounters Aldi and Lidl.
The most interesting finding from the IGD’s research is resurgence
of interest in new product development. The most likely reason for its move up
the agenda is that overall the grocery market is showing little sign of growth,
margins are under pressure because consumers are so cost conscious and
retailers and suppliers are now very keen to find products which are
sufficiently different and exciting to persuade shoppers to spend a little more
than would otherwise have been the case.
For a new product to receive a favourable response from
retailers it will need to be genuinely value adding. Not only will it need to
be different from anything else currently available, it will need to chime with
what consumers see as important, and will probably need to command a premium
price.
New products can take several forms – the product itself
could be innovative, the way it is grown or reared or processed could be new,
or the format in which it is sold could be new.
New product development can be risky . What must not be
underestimated is the time it takes to come up with something new, the level of investment required in time and
money, and the chance that after all that effort it does not work. Careful
thought therefore needs to be put in to how to de-risk a venture.
But it is an exciting opportunity for the food industry.
No comments:
Post a Comment