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Friday, August 20, 2021

CPG Company Innovation Traps

Some useful thoughts in the space: 

CPG companies can dodge three common innovation traps

Implementing proper checks and balances throughout the innovation process can help you create long-term growth. by Sharon Kao and Nicholas Hilgeman

Today’s consumer packaged goods (CPG) companies confront a strange market paradox: continued demand for new products but reduced shelf space in stores. Organizations have long used innovation as a tool to meet the shifting needs of consumers and to drive growth. In fact, in their 2020 annual reports, all ten of the highest-grossing publicly traded global CPG companies highlighted innovation as a key growth lever.

Product development is a highly capital- and labor-intensive process, and left unchecked, results in a questionable return on investment.

But the space to display this proliferation of new products is shrinking as retailers weigh costs and consumer experience, focusing on smaller storefronts with hyperlocal offerings and a less overwhelming array of choices. At wholesaler BJ’s, for example, smaller, new-build stores house 16% fewer SKUs than regular stores. Similarly, British supermarket chain Asda recently revealed plans to cut SKUs by up to 40% as it shifts to a simpler discount model for its stores. Another reason retailers are reducing shelf space is to avoid being overstocked as consumers do more online shopping. In PwC’s June 2021 Global Consumer Insights Pulse Survey, more than half of global consumers surveyed said they became more digital even in just the six-month period from October 2020 to March 2021.  ... " 

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