This guest post comes from Doug Baker, Vice President, Industry Relations, FMI and Steve Markenson, Director, Research, FMI
The word innovation has been used frequently in food retail in recent years. This is especially true in private brands. Retailers and suppliers have moved beyond national-brand-follower status to introduce products that are innovation leaders.
However, when the COVID-19 pandemic arrived, many companies temporarily put at least some private brand product innovation on hold to address the crisis. More recently, we’re starting to see a renewed commitment to innovation. Food retailers saw the pandemic generate new consumer trial of private brands, and many consumers liked what they tried.
FMI Research Illuminates Retailer Strategies
FMI’s The Power of Private Brands 2020 report, geared to senior industry leaders, details results from a survey of the private brand industry conducted during the COVID-19 pandemic period. Some 83% of retailers said new products and innovation are very or extremely important for retail leaders to grow private brands. There is also increased recognition that innovation can extend well beyond the products themselves.
Embracing A Wider View of Innovation
The report highlights a range of innovation opportunities.
- Packaging and Design: Anything that makes items user friendly and improves experience — including packaging and design — enhances innovation.
- Price/Value: The private brand industry has put a lot of effort into creating premium products, but it also has an opportunity to take innovative approaches to bringing price and value benefits to consumers, especially during these difficult economic times.
- Bundling Items: Innovation can also center on how retailers bundle together items to address changing consumer needs, such as for home-based meals.
Let’s take a closer look at that last point. The industry survey found that due to the pandemic, 73% of retailers plan to expand the focus on items that support increased home cooking and meal preparation. Retailers are aware of the need to present new ideas to consumers who have been challenged by meal preparation fatigue.
Driving Initiatives to Enable Innovation
Food retailers responding to the industry survey plan to pursue a range of strategies in light of the COVID-19 pandemic. Many of these are aimed at boosting capabilities, but they will also be crucial in fostering innovation. For example, some 83% of retailers expect to advance private brand strategies for e-commerce. Almost all retailers — 97% — are rethinking private brand assortment and supplier strategies as a result of experiences during the pandemic.
How Senior Leaders Can Make Progress
Senior leaders need to ask themselves key questions to accelerate progress. The Power of Private Brands 2020 report spotlights questions on topics ranging from planning investments to enhancing trading partner communications. The report also presents questions to spark innovation efforts. Here’s how this is framed in the report.
“The imperative to innovate goes beyond just new products or flavors. Are you thinking about private brand innovation broadly enough? Sustainability, transparency, health and wellness, partnerships, ecommerce engagement and social media are among areas where innovation can enhance private brand appeal, build loyalty and drive sales. Are you putting resources against these areas to drive success?”
This line of thinking needs to be on the radar of all senior executives pursuing private brand strategies. It is crucial not just for the pandemic period, but for whatever comes after.