New products are the main draw this week in New Orleans for buyers attending the annual Marketplace Conference, sponsored by the National Association of Chain Drug Stores, Alexandria, Va. And as the buyers know all too well, there is irony in what are considered new items.
For supermarkets, new products are its lifeblood, driving demand for easier, faster, high-value solutions. Stores quick to merchandise the latest cosmetics, skin care, over-the-counter remedies and general merchandise can distinguish themselves from their competitors. On the flip side, manufacturer copycatting is bane to retail buying teams who must evaluate how any of 18,000 new items a year could serve their customers and fit within their stores' bursting planograms. (This figure includes 11,037 new food launches in 1998, according to the trade publication New Product News.)
The pace of new-product nonfood introductions has grown steadily this decade -- from 5,070 in 1995 to 6,940 in 1998, according to New Product News, Chicago. But manufacturer creativity too often has lagged behind and created a glut of me-too products that plays a role in creating the disciplines behind efficient product assortments.
"It seems more companies than ever before are restaging their present branded lines. Maybe they are doing that rather than coming out with new products to cash in on their brand image," speculated Terry Born, health and beauty care buyer at Fairway Foods, Minneapolis.
Supermarkets "can't afford to continue looking at new products with a wary eye, wondering how they'll pay their own way, rather than seeing them as growth vehicles or seeing their importance from the consumers' point of view," cautioned Tom Vierhile, general manager of Naples, N.Y.-based Marketing Intelligence Service Ltd. The company's Innovation Index helps the market hone in on new items that will clearly make a difference in categories.
"Supermarkets need to refocus on supplier relationships to get new products quickly, which is far different from Wal-Mart, which tells suppliers to introduce new items," he added. "Unless it's a Colgate Total, a lot of food chains just pay lip service to the concept. But they're particularly vulnerable in health and beauty care and general merchandise if they maintain this attitude, because if a supermarket has a good nonfood selection, it gives consumers a reason not to go elsewhere."
At Chicago-based Information Resources Inc., Howard Cohn, executive vice president for marketing solutions, sees the emergence of frequent-shopper data helping chains to better understand "how consumers react within their retail stores. Chains that share this with key manufacturers enable them to target efforts that will grow their traffic and market baskets. "Line extensions often just trade-out volume. Far better is when customer business teams from both sides align because good ideas can come from anywhere. Retailers are starting to get more involved in the ideation stage of new products," said Cohn.
Yet category management by its nature emphasizes high performers, so it's vital that buyers balance their data with an intuitive feel so new products have ample time to develop their followings and not have too short a life cycle on the shelf.
Both Vierhile and Cohn agree that, by partnering with suppliers, chain buyers can learn what generates trial and repeat purchases and then are better able to balance their short- and long-term needs.
David Bennett, owner of Mollie Stone's market, Mill Valley, Calif., relies on his suppliers to keep him informed about what's new on the market. "New products come on the market and if the trends change it is the manufacturer that keeps us in the loop and helps us understand the new items and how best to merchandise them. Quite often we've never heard of the new products, or we first hear about them on the news or through customer requests," he stated.
The new products boom in nonfood is clearly targeted against aging boomers, said Cohn, citing natural care, smoking cessation and items that keep people looking and feeling good.
"We're seeing a greater emphasis on quality, with products based more on science and technology and superior formulas, rather than on a rush to fill shelf space," he stated, noting that 20% of the U.S. population is currently over the age of 55. This number will grow to 33% by the year 2030, Cohn pointed out. "The boomers' product expectations continue to rise each year. They're becoming increasingly critical and gravitating toward natural products that are healthy, convenient and increase their quality of life."
Urged Vierhile: "Wellness products tie in to health trends within foods and beverages. Supermarkets can't watch the bus go by without hitching a ride."
In a presentation at the recent Food Marketing Institute Convention last month, Cohn presented the 1999 IRI Pacesetters study with Lynn Dornblaser, editorial director of New Product News. This is the fifth straight year of the study, which assesses the revenue effect new products have on manufacturers. "New products can represent 20% or more of a company's dollar sales," he said.
Among the Top 10 new consumer packaged goods tracked by IRI at U.S. retailers in 1998, an overwhelming seven were in nonfood and dry grocery. They were: Downy Care (No. 2 overall at $175.9 million in 1998 sales); Colgate Total (No. 3 overall, $152.2 million); Polaroid Platinum (No. 4, $148.9 million); Gillette Mach 3 (No. 5, $146.5 million); Thermasilk (No. 6, $119.5 million); Febreze (No. 7, $107.4 million); and Kodak Max (No. 9, $100.8 million).
"Less than 1% of all new product introductions hit the $100 million mark," said Cohn, noting how difficult it is to achieve this level. "New nonfood products reap more success than foods, outperforming expectations due to technological innovations and higher price points," he added.
In 1998, companies overall introduced "the fewest new products since 1994, and continued to receive a smaller return on those products in terms of sales. Most of the new products that achieved at least 30% distribution in the U.S. reached less than $10 million in sales," said Cohn.
Yet an analysis in IRI's Growing Brands Study 1997 of the largest 1,500 brands showed that 69% of the dollar volume growth came from new-product launches and line extensions, while 31% resulted from changes in trade support, pricing, advertising, packaging or consumer promotions.
Besides the big volume winners cited in the Pacesetters study, Vierhile tells of adult wellness items, over-the-counter medications aimed at children, and new products that create new revenue streams at mass retail, and upsell customers thanks to their innovation.
Dryel, a home dry-cleaning kit priced at $10 and aimed at the highly fragmented professional dry-cleaning market. "It's the kind of product that makes companies like Procter & Gamble salivate because it's new business rather than having to steal share from another packaged good on the shelf," Vierhile said. "Most chains would get incremental sales from a product like this." A heat-activated cloth works in the clothes dryer to clean, freshen and remove odors from dry clean-only fabrics. It doesn't eliminate the need for pressing, however.
Febreze, a spray product from P&G, that removes smoke and pet odor from clothes and furniture.
Dove Nutrium, a body wash with nourishing skin smoother, whose ingredients combine upon dispensing, "sort of a Mentadent approach to skin care," said Vierhile.
Colgate Navigator, a toothbrush with a flexible jointed head that reduces the amount of pressure on gums while following contours of the mouth.
ClearPlan Easy Fertility Monitor, from Unipath Diagnostics Co., a division of Unilever, which is one of the first packaged goods to include a computer. Meant to retail at about $200, it monitors a woman's hormone level consistent with family-planning goals. "This addresses the drug-free, self-care trend adopted by so many people who don't want to deal with physicians if they don't have to," said Vierhile.
Aussie Land, shampoos and conditioners for children from Redmond Products, with youthful appeal in such offerings as Blue Mountain Shampoo with blueberry muffin scent, Rain Forest shampoo and conditioner in grape bubble-gum scent, and Outback shampoo and conditioner in cherry and vanilla scent.
Band-Aid Sticker Creations Adhesive Bandages, plain bandages packed with sheets of stickers children can use to decorate their own.
No More Tangles Strawberry Blast Shampoo, and 2-in-1 Conditioning Shampoo in blueberry bash from Johnson & Johnson. Sister line Xtreme Clean Shampoo comes in bubble grape blowout.
Pampers Rash Guard Disposable Diapers, which offer a super-dry core, a special skin-protectant liner and cuffs to protect against rash. Breathable air flow cover allows air to move in and out of the diaper.