BRACKNELL: With leading UK supermarkets cutting the number of products they stock by up to 10%, fewer new branded items are being launched and sales from new products are down.
According to a new study by IRI, a provider of big data and predictive analytics for retailers and suppliers, the number of items stocked by supermarkets across the UK declined by 5.7% in the year to end-February 2017; an average of 930 fewer products were available to shoppers in their local supermarket.
Over the same period, 8.4% fewer new branded items were launched; the number of new private label items launched also fell but at a much slower rate of 2%.
IRIR calculated that sales from branded new products were down by 6.5%, which equated to losses in revenue from new product development of £99.6m.
Not only were fewer branded products being launched, they were also finding more difficult to gain sufficient distribution in multiple retailers.
Only one in every seven new products launched achieved more than 75% distribution across the major UK supermarkets, the report noted, and only half of all new products achieved more than 33% distribution.
The average maximum distribution achieved by new products was just 39% – significantly lower than the last two studies IRI conducted on the state of new product development (NPD).
"Because it's becoming harder for manufacturers to stay on shelves as well as get new products into stores, they are finding it more difficult to get the high level of distribution they need to make a success of new product development (NPD) and cover the expense of innovating." said Tim Eales, Strategic Insight Director at IRI.
"Manufacturers are caught in a downward spiral that is becoming harder to climb out of."
He added that the higher cost of communications to support NPD across multiple media could be another barrier to innovation.
But "ultimately, securing distribution is the most important changing variable in the NPD landscape," Eales said.
"Manufacturers and retailers working together with the data, optimising their range with the best NPD, is surely the way forward to ensure that consumers get the right choice of what's new."
Data sourced from IRI; additional content by WARC staff