In the aftermath of the COVID-19 pandemic, new product innovation in consumer goods remains difficult but no less essential. New innovations will likely be fewer in number and highly focused around a few key themes: promoting more control and convenience for consumers, creating value in challenging economic conditions and rebuilding certain categories to better align with long term shifts in consumer priorities.
By many measures, the environment for product innovation in FMCG could not be more difficult: household incomes are expected to shrink in the aftermath of the COVID-19 pandemic, while major producers and retailers seek to aggressively cut the number of products in each category. SKUs in most industries have declined substantially since March, while large producers continue to announce reductions in spending, brand discontinuations and other cut-backs.
Despite an operating environment with unprecedented challenges, there remains an imperative to “act now”. Brands must seek the smart, targeted investments that align with the sustainable long-term shifts in consumer priorities and retailing behaviour. Small, scalable and agile investments will be essential in areas ranging from remote work to preventative health, home sanitation and contact-free physical retailing.
While it may be difficult to distinguish the stopgap measures and fads from long-term changes in the way people consume and shop, some behaviours (DIY home improvement, cooking from scratch) and new health priorities (re)discovered (particularly sanitation, immune support and stress-relief) will have a lasting impact.
The value equation will be redefined across consumer goods, first and foremost by a simple desire for low prices as a deep recession becomes apparent in the second half of 2020. The definition of high quality and service will also change, prioritising simple, reliable everyday solutions (potentially private label) and trustworthy brands.
Inevitably, the pandemic will yield long-term changes that are not simply kneejerk reactions to unusual circumstances or temporary adjustments in behaviour. Particularly in the areas of personal health and retailing (physical as well as digital), the innovations of the next year could produce much longer-term improvements in overall experience.
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