The Future of… Innovation in Retail & Consumer Goods
Welcome to “The Future of…” blog series, where we explore the dynamic landscape of innovation in various industries. In this first instalment, we dive into the world of retail and consumer goods, uncovering the challenges faced by the industry and gaining insights from Emma Schootstra, one of our talented innovation strategists at Elemental. Emma’s experience working with renowned brands and her passion for driving purposeful change provide us with a unique perspective on the future of innovation in this ever-evolving sector.
Experiencing the Industry’s Struggles
Drawing from her extensive background in the field, Emma highlights several critical challenges faced by the retail and consumer goods industry today. One key issue is the phenomenon of being stuck in the middle. As inflation increases, consumers want to find good deals, so private label brands have gained prominence, while premium brands leverage innovation and sustainability to capture attention. Consequently, mass-market brands find themselves at a crossroads, requiring strategic repositioning to remain relevant and competitive.
Another pressing concern is the tendency for brands to follow rather than lead. Emma highlights that when brands introduce new flavours or products without a clear overall plan or innovative approach, they often fall behind new trends. This puts them at risk of becoming irrelevant and facing significant disruptions. Additionally, brands struggle with effectively communicating sustainability initiatives, wrongly assuming that the cost implications and consumer demand are the primary obstacles. Actually, it’s important to emphasise and promote the genuine unique selling points (USPs) of sustainable products, like their superior taste, to effectively communicate their value to consumers.
The pace of innovation has also become a critical factor in the success of retail and consumer goods brands. While agility and rapid adaptation are expected in 2023, many larger companies still lack the necessary innovation processes and capabilities to implement, test, and learn efficiently. The news is increasingly highlighting the triumph of smaller brands in supermarkets, as they embrace innovation and set the standards for the entire industry.
Another challenge for well-established companies is their tendency to avoid taking risks. When the market is uncertain, the fear of failure often prevents them from trying out new ideas and taking risks. However, Emma believes that it is crucial for large organisations to promote a culture of innovation. This involves training board members and teams with the necessary skills and mindset to encourage experimentation. It is essential for the survival and growth of these companies.
Shaping the Future, Insights and Recommendations
Considering her rich experience, Emma envisions several transformative directions in which the retail and consumer goods industry is moving. Brands that truly embrace a sense of purpose and the art of storytelling are in a prime position to thrive. While many companies invest in stronger narratives, the integration of purpose into every aspect of the business is essential. Aligning innovation strategies with a well-defined purpose enables brands to create meaningful connections with customers, paving the way for lasting success.
Moreover, Emma predicts an increase in price polarisation. With inflation pushing consumers towards private label brands and a rising interest in local, craft, and innovative brands, mass-market household brands are confronted with the task of positioning themselves effectively. By prioritising innovation, these brands can differentiate themselves and appeal to the discerning Gen Z consumers who value both affordability and innovation.
Another critical factor that will influence the future of the retail and consumer goods industry is the increase of consumer health demands. As research on diet and preventive healthcare gains importance, shoppers are becoming more careful about the ingredients found in the products they purchase. Brands such as Upfront and Deliciously Ella serve as examples of companies that prioritise transparency, clean ingredients, and simplicity. In a market where trust and health-consciousness are highly valued, these brands stand out by offering products that align with consumers’ expectations and priorities.
When asked about the core decisions she would make to drive change, Emma emphasises two fundamental shifts. Firstly, brands need to align their innovation efforts with their purpose, weaving purpose-driven strategies into every aspect of their operations. Secondly, collaboration between large and small brands is vital for solving challenges collectively and leveraging the power of collaboration. Forming industry alliances and coalitions allows brands to tap into shared knowledge and resources, fostering innovation and growth.
Innovation is crucial for the success of the retail and consumer goods industry, and Emma Schootstra’s insights provide valuable understanding of the upcoming challenges and opportunities. By directly addressing the industry’s challenges and embracing purpose, innovation, and collaboration, brands can adapt to the changing landscape and shape a successful future. Stay tuned for more fascinating insights in our ongoing “The Future of…” series, where we explore the exciting frontiers of innovation across different industries.
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