Is innovation addiction creating confused consumers?
A.G. Lafley, Procter & Gamble’s CEO, believes that the continual push by retailers for more product innovation is leading to an overload of choices for shoppers.
"I don’t think the shopper or consumer sees it as innovative — the innovation that matters is the innovation she buys," Mr. Lafley said last week at the Consumer Goods Forum global summit in New York, according to Fortune.
His comments came as P&G last August announced plans to shed up to 100 brands to focus on the 80-to-90 percent that generate 95 percent of profits and 90 percent of sales. While looking to create a more profitable and responsive company, the move is also designed to meet the needs of consumers.
"There is a lot of evidence in a number of our business categories that the shopper and the consumer really don’t want more assortment and more choice," Mr. Lafley told analysts at the time. "Consumers want to keep their life simple and convenient."
As often reported, the continual arrival of new items has led to:
Exponential SKU growth: Between 1975 and 2008, the average supermarket’s mix has expanded from 8,948 items to almost 47,000, according to the Food Marketing Institute. Beyond new items, the growth has been boosted by a flood of line extensions as well vastly greater variety in staples such as eggs (cage-free, free-range, with omega-3, etc.);
SKU productivity dwindling: With the expansion, SKU efficiency is now seen by many as following the Pareto principle: 20 percent of a grocers’ mix accounts for around 80 percent of sales;
Shopper confusion: Studies find shoppers undergo "analysis paralysis" when confronted with an overabundance of choices. While larger choice sets are more appealing and enjoyable, shoppers freeze or postpone purchases due to uncertainty and frustration over so many options.
Silicon Valley, with its constant launch schedule, often debates the merits of too much or too little innovation, with Google Glass lately cited as an example of excess. Overdone innovation for traditional retail items is less often discussed but Mr. Lafley feels the pace is too fast.
"In general, we can get tired of our brand, what it stands for, our product, our package, long before our consumer does," Mr. Lafley said last week. "New isn’t the best product in the store; the best product in the store is the one she or he wants, purchase more often, uses more often and comes back to."
- Procter & Gamble CEO says consumers put off by too much choice – Fortune
- Supermarket headache: Consumers confounded by too many choices – WRAL
- Procter & Gamble to Streamline Offerings, Dropping Up to 100 Brands – The New York Times (tiered sub.)
- Up to 100 brands to go as P&G declutters – Financial Times (tiered sub.)
- What to Do When There Are Too Many Product Choices on the Store Shelves? – Consumer Reports (sub. required)
- Too Many Choices: A Problem That Can Paralyze – The New York Times (tiered sub.)
- When It Comes to Making Choices, Ignorance Really Can Be Bliss – New York Magazine
Is the mantra of continual innovation and newness leading to an inefficient mix of products in CPG categories? If so, what’s the key to finding the right balance between new and established products?