New Products Set the Pace in HBC/GM
By George Anderson
It’s long been said that new products are the lifeblood of the retail business and 2006 was no exception. A host of innovative, high quality products were rolled out to meet specific consumer needs in health and beauty care (HBC) as well as general merchandise (GM) categories.
According to IRI’s 2006 New Product Pacesetters report, “customized beauty and personal care was a big theme” among items introduced to the market. The categories that saw the most activity in terms of customized solutions were cosmetics, shampoo, hair conditioner, dog food, soap, skin care, hair styling gel/mousse, toothbrushes and related dental items, hand and body lotions and hair spray.
For consumers, enhanced performance and customize solutions went hand-in-hand as is evident when looking at IRI’s top pacesetters for last year. According to IRI, two-thirds of the products that it identified as pacesetters offered “enhanced consumer experiences through new technologies or improved effectiveness.”
Gillette had two items on the list, Fusion and Venus brand products, coming in at number one and number 10.
Other enhanced products making the list were Zantac 150 (quicker acting antacid tablets), Tide with Febreze (removes odors), Tide Coldwater (reduces energy costs) and Huggies Pull-Ups with Wetness Liner (to assist in potty training).
This last item points to an opportunity for retailers. According to the Pacesetters report, “expect to see more innovation around baby and toddler care as the country is in the midst of a new baby boom.”
IRI
recommends retailers take a number of actions to more effectively capture new
product opportunities including:
- Establishing a system to identify emerging
trends earlier; - Identifying consumer markets/niches that offer a high potential
for growth; - Evaluating if there is a fit between a new product and the consumers
served by a retailer; - Benchmarking rollouts against historical successes and
failures; - Identifying sourcing opportunities to bring in branded and private
label items not carried in competitors’ stores; - Determining assortments on
a localized basis; - Supporting rollout with in-store media;
- Erecting multiple displays and leveraging
sampling to induce trial; - Measuring performance including the impact on the
rest of the category.
Discussion Questions: What consumer-need opportunities do you see opening up and what does that mean for HBC/GM manufacturers and retailers? What recommendations do you have for retailers looking to leverage the power of new product introductions?
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Information Resources New Products Pacesetters Report measures success by sales dollars. The report does not account for cannibalization or profitability. Most CPG manufacturers want to improve market share, not just replace their own products’ sales. Will the new Coke flavor make headway against the competition or will it just induce Coke drinkers to switch flavors? And since the IRI report doesn’t discuss profitability, it isn’t clear that beating a sales benchmark might simply be a function of unsustainably high ad and trade promotion spending rather than consumer adoption. It’s easier to reach $100 million sales if you spend $200 million in promotion than if you spend $20 million. But which can be sustained?
As far as retailers are concerned, a couple of IRI’s comments should resonate well. First, match these new products to the profile of your target market. Second, private label in these emerging product categories represents a real opportunity to realize a differential advantage in the marketplace. The key to the latter is to value differential advantage over margin. Margins will follow if retailers are able to demonstrate to their target markets that the retailer’s offerings match their needs and lifestyles.
One of the larger opportunities will be creating new products that will appeal to the baby boomers as they reach retirement age. They will not only have the disposable income but are also very health conscious.