Innovation levels in the consumer goods industry have yet to bounce back from the days of Covid lockdowns. However, there is evidence that brands with the right approach can still successfully put winning products into the market despite the economic downturn. History tells us that the brave and observant will win.
Brands often face pressure to pull back on new products as economic uncertainty prevails. And, of course, a recent review of new product releases shows a declining number of new product launches appearing in the Kantar databases. Retailers also tend to be more conservative in taking on new listings in challenging times for consumers and intuitively lean more towards own label offerings.
But those who choose to sail against the conservative tide have history on their side.
Though past recessions came about in (very) different circumstances, they provide a clear lesson for innovation: growth is possible. Kantar Worldpanel found that between 2007 and 2013, 33% of categories grew out of 1,230 categories examined in six countries through the recessionary environment.
Many of those successful products came about because they met consumers' ever-changing needs, including identifying unmet demand. Time and again, the key to winning was innovating with confidence by clearly identifying a need state or emerging need state of a consumer and delivering something that directly met those needs.
These wins can be achieved in a pressured market, again based on the evidence, by going after fewer, better, and smarter innovations. Appetites for new products persist in more challenging economic times. Building a so-called “better mousetrap” will be money well spent in the right circumstances. Those who invest intelligently in new or reimagined products will be on a solid path to coming out of this recessionary period in better shape.
It should not stop big thinking either. True innovation in new product development is likely to have a bigger impact than smaller scale renovations to existing products.
The most successful follow a clear formula to determine their ability to deliver incremental contributions to their respective categories:
Innovation ChecklistIs your new idea addressing:
If NO to all…focus on another innovation
But a good idea alone won’t be enough. It is essential to communicate realistic targets to retailers alongside transparent product positioning and a guaranteed approach to building consumer awareness of the products.
The retail landscape also provides room for innovation. 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 offer.
Own label will also have a place in the innovation landscape. Retailers are expected to extend their range on both the value and premium end of the price spectrum.
