Inflation and innovation
This week we look at what we can learn about new product activity from previous periods of inflation and economic downturn. Competitiveness remains very high at such times!
Inflation and economic hardship do not lessen the competitive importance of innovation
Following the last high inflation period in 2008, the numbers of new product introductions increased and then remained steady through the subsequent economic downturn. Renovations dominate with 87% of the total.
Don’t reduce new product activity now.
A very high proportion of the top brands introduced new products between 2009-18 despite inflation and economic hardship
The market context in any one year remains very competitive with 70% of the top brands launching new products. This was especially high during the economic downturn up to 2013. Therefore this is a key investment at any time and a concern that there was a drop off later over this period.
Innovations are 20% of the share generated by new products even in hard times
On average from 2009-2018, innovations accounted for 4% of brand volume. Whilst renovations dominate (at 16%), they are much less important in terms of sales share than SKU share. It is also likely that many renovations substitute existing products. Real innovations remain important at all times and again a concern that their share of brand sales dropped after 2016.