In recent years virtually every form of the media has taken notice of Private Brand, often with broad generalizations and a lack of in depth analysis that would reveal the true potential of Private Brand. This article from Advertising Age takes a look at national brand packaged goods companies and their surprising lack of innovation. Retailers must use this as an opportunity to permanently change the playing field.
Packaged Goods Suffering From Dearth of Innovation
Bad Economy Might Seem to Favor Basics Like Shampoo Over Frills Like IPads, but Not This Time
Packaged goods are supposed to be recession-resistant staples people can’t do without. Yet things have been different in this recession. People have proven they can do without, or at least spend less. The downturn hit household and personal-care products harder than expected last year, and the rebound this year has been weaker than many expected.
Private-label market shares, while stalling last spring after a big run up, resumed their upward march this summer. While packaged food did fare well as people ate out less, private-label shares have surged there, too.
On the surface, all this makes sense. The market is tough. But consider this: As people cut back on packaged goods, they are still doling out for such things as smartphones and tablet computers — many of them coming with steep monthly tariffs on top of three-digit price tags.
The reason? According to some industry watchers, it’s simple: Tech companies are innovating; CPG companies aren’t.
“Only four in 10 CPG companies are investing more in product research than they were 10 years ago,” said Pat Conroy, vice chairman and U.S. consumer products leader at Deloitte. “They’ve lived on product extensions as opposed to developing truly innovative products.”