Leverage shopper data for successful new product development


The statistics on new product development are sobering: Each year, 96 percent of shoppers will try at least one new product, and the average shopper will try 11 new products. But of those 11, only two are purchased a second time.

Nearly 10 percent of new items launched are private label, and shoppers of these brands can be just as fickle. Almost 65 percent of shoppers will try at least one new private label item annually. However, just as with national brand items, only 20 percent of private label innovation items are ever purchased again even a single time. Shoppers, just like retailers, won’t invest in products that don’t deliver ? whether they are a store brand or a national brand. How then could retailers figure out where to focus their store brand new product development efforts?

Leverage shopper data

It all begins with leveraging shopper data. This will allow retailers to find distinct opportunities that engage their unique shopper base instead of trying to be a “me too” to national brand products. By understanding what their shoppers are doing, private label manufacturers can build specific innovation strategies to maximize shopper engagement.

To begin, retailers must start with a more thorough understanding of consumer behavior. Most trend prognostications today are based on the fuzzy math of focus groups, online “listening, “ and other methods that typically involve small sample sizes. By incorporating and analyzing large data sets of shopper purchase behavior, retailers will have a much better probability of identifying emerging trends right from the start.

For retailers, this process could mean analyzing hundreds of shopper-related variables, including changes in GDP, digital chatter and the number of times a household purchases an innovative item during a given year. Some of the key macro factors that are most predictive of a trend’s future performance include:

  • Trend acceptance ? Is the trend drawing in new shoppers and retaining shopper engagement over time, or do shoppers try the trend once and walk away?
  • Shopper DNA ? What sort of shopper does it appeal to? By isolating the small changes in the consumer makeup of trends, retailers could begin to understand when trends are starting to move into new lifecycles.
  • Proliferation ? Is it starting to gain broader geographic distribution or larger shelf presence through the introduction of new UPCs?
  • Digital footprint ? How much online traction is there in terms of web searches and social media discussions around the trend?
  • Promotions ? Has the trend picked up enough steam that it is starting to garner mainstream promotional support?

This approach looks at behavior across the entire store and observes shoppers across diverse geographies to understand which trends are emerging ? before they hit “mass” retail. Subtle changes in shopper behavior patterns can be strong predictors of a trend’s growth in the following year.

Five consumer-driven predictions for 2014

After analyzing hundreds of trends and their performance during the last five years, dunnhumbyUSA is able to accurately forecast trends for the year ahead 70 percent of the time. So even though 90 percent of new products fail, we are confident that the following trends will experience at least double-digit growth in 2014:

  1. Back to Basics ? Expect continued growth in items related to the Paleo diet, as well as gluten-free and non-GMO lifestyles. Households are looking for healthy lifestyles involving simplified or modified diets that are free from modern processing and additives, or ingredients associated with food sensitivities or allergies. We’ve seen more than 200 new products launched touting gluten-free claims during the last year, with the expectation of even more in 2014.
  2. Bold, International Flavors ? Shoppers will continue to crave bold flavor palettes originating in other countries to spice up their everyday fare. Sriracha and other exotic flavors such as chimichurri and Southeast Asian spices (e.g., kaffir lime, galangal and peanut sauce) will continue to grow in presence.
  3. Alternative Grains ? The influence of high-fiber, high-protein and healthful alternative grains is spreading. We anticipate that millet, amaranth, and teff will lead the charge started by quinoa a few years ago. One of the primary reasons for growth here is the high rate of shopper trial and acceptance. Nearly 20 percent of households engaged in the trend were new households (or trend triers) as of the most recent quarter. Additionally, we’ve seen a 6 percent repeat rate on these trends, which is 50 percent higher than the average across all the trends we tracked.
  4. Natural, Better-for-You Snacking ? From reduced-guilt snacks and natural candy to kale chips, shoppers are placing a greater emphasis on healthy snacking. We believe these trends will grow as shoppers continue to seek out healthful alternatives to their current snacking classics.
  5. Cocktail Flavors ? Shoppers crave the fruity, sweet flavors of many classic alcoholic beverages such as bellinis and limoncello in their food. We see these flavor profiles entering and expanding in other categories such as ice cream.