Sourcing innovation in all the right places
Owning a leadership position in consumers’ minds is getting harder each year as more and more new products are being introduced in the marketplace. The old control label business model of imitating the national brand once a new product launch succeeds is playing it too safe for retailers to drive long-term sustainable growth or, more importantly, clear differentiation from competitors. The challenge for retailers is finding the best source of new product ideas that have the least amount of risk.
Historically, retailers have sought the advice of manufacturers who are either interested in sharing capacity to drive operational efficiencies or are foreign manufacturers looking to secure a foothold in a foreign growth market. Although the later approach remains a viable option, it should not be a retailer’s only approach to bringing innovation to the marketplace. Having worked for more than 35 years helping both retailers and manufacturers drive innovation, I have identified several resources to consider when seeking new ideas and products to drive growth. For leading retailers whose control label programs are on a rapid growth curve, the ideas below should be considered a checklist to further validate the effectiveness of their programs. For retailers unhappy with the current success of their program, I hope the following will stir some internal discussions.
Consumer need state research
Any innovation program starts with a strong understanding of customer latent or hidden needs. These are the needs that are typically not shared in conventional research and drive consumer’s true purchase behaviors. Identifying hidden need states provides a strong platform for identifying potential private label platforms and offerings as part of a new product pipeline strategy.
Not all consumers participate in conventional online research to validate ideas. Millennials tend to shy away from conventional, one-direction research and enjoy participating in consumer panels where a two-way dialogue is created and shared. Retailers will need to approach this generation, which has become the dominant purchaser, in very different ways to gage their interest and how they define their product needs.
Very often innovation solutions are focused around unique products, while there are many other areas to provide meaningful value and differentiation. We use an innovation wheel that explores the following dimensions:
- Materials such as environmentally friendly substrates or holographic new materials
- Printing that leverages new digital technology to allow for customization
- Shape that ensures the packaging stands-out at shelf while easier to use in the home
- Functional features such as how it opens, stores, pours, etc.
- Social media that includes augmented reality and gamification
- Shelf visibility is the final stop on our wheel, which may include a review of the entire category and plan-o-grams
Who is to say you are the best qualified to identify your next big idea? P&G, Unilever, and a wide range of other leading manufacturers have sought crowdsourcing from inventors, designers and the consumer-at-large to help shape their next big idea. Retailers with a large consumer following and supplier network use crowdsourcing to consider new solutions outside of their current thinking.
The latest trend is to forge strategic alliances with your competitors to identify new product ideas. Many retailers have also sought to license successful brands from foreign retail chains that have built strong products with credible benefits and badge value. UK pharmacy chain Boots has offered North American retailers such as Shoppers Drug Mart access to some of their leading brands to supplement existing offerings.
Collaborative ideation sessions
Companies big and small are structured around silos and the same approach applies when they work with agencies and design firms. However, true innovation comes from breaking down those silos and having external and internal resources from a wide range of departments and disciplines work together to brainstorm new ideas. The broader the expertise and roles of the group, the greater odds the ideas will be truly breakthrough.
Innovation is not a part-time sport played by a few individuals in the company, while others cheer them on from the bleachers. Innovation needs to be a core part of a retailer’s DNA and culture, and should involve all parts of the value chain. Creating a framework for innovation that is driven by the entire company will ensure ideas go beyond the expected, while providing a sustainable business model. Customers today are looking for new and fresh ideas to enhance their lives and retailers who can deliver a significant advantage over their competitors.