By Amy Looker
Delegates at the 19th annual Australian Liquor Stores Association (ALSA) conference have been told that focusing on new product development (NPD) will be one of the main drivers to stimulate the market.
Nielsen's Michael Walton presented to retailer and supplier delegates yesterday and revealed that despite a flat outlook and flagging consumer confidence, NPD has brought more than a billion dollars into the industry over the last five years.
"We're facing a period of real consumer restraint and confidence levels are down," Walton said.
"Consumers have been given a rallying cry to save money in the spectre of the carbon tax, which has shaken people's confidence, so we're looking at a long period of restraint that will go on for further than three years and creates a pretty flat outlook.
"The implications for retailers mean they've got to find ways of stimulating their local market to buy some more products, making new product development (NPD) a big focus. They also need to embrace speed so they can move quicker and faster.
"A billion dollars that is in the retail till now wasn't there two years ago – and that's because the products weren't there two years ago. So retailers need to get stuck in."
Walton also said that effective stock management is key, given the influx of new products available.
"SKU counts have rocketed in the last five years, jumping from 36,000 SKUs five years ago to about 46,000 today. Brands that may have had one SKU now have eight variants… and how do you embrace new products if you're restricted on space? Retailers need to decide what products deserve the space in their store. It's not as simple as 'one in, one out'. It's a case of which products give good profit or bring customers in that buy other items in the shop."
Walton warned that suppliers are also feeling the pinch, but need to remain focused on creating market share and developing new products instead of cutting costs.
"Suppliers aren't feeling particularly bullish and are under fairly strong trade pressures, and the concern we have for the industry is that managing directors are more likely than any other group of suppliers to hit the very things that drive category growth, such as NPD, above-the-line spend and marketing activity, which is a real warning for us because this is the voice of the suppliers."
According to Walton, there has been little shift in the market over the last 12 months, with premiumisation still a major trend as consumers trade up to affordable luxuries.
"It's the same story we discussed 12 months ago – premium products, craft beer, anything that has high levels of authenticity – these are the products people find engaging and relevant."
You may be right but why has NPD not grown the Retailers margin and in a lot cases it has declined???
Suppliers seem to forget that we are supoose to grow our margin above category average for NPD to be truely successful for both parties.
Cheers
What the hell is Walton on about, talk about an argument with holes in it. He’s calling for NPD in the same breath he’s asking retailers to stimulate their local market. Retailers don’t drive new products. He also asks retailers to embrace speed, at a time when the market is flat. His call for NPD comes when his own figures suggest SKU’s have increased 27% in 5 years. Gees Michael, I remember when you were part of a buying group that acceptance of new product ranging was totally commensurate to how big the co-op dollar the supplier was prepared to spend on discounts. Give me a break.