Number of new product launches falls by 13% as UK retailers cut ranges – IRI 2016 New Product study Thursday 28 July 2016 PDF Print The number of new products being launched by manufacturers into UK retail stores is falling significantly, according to a study of the performance of new grocery products from launch, published by IRI, a leading provider of FMCG market intelligence and predictive, actionable insight. As major retailers like Tesco cut their ranges to remove slower selling items, resulting in 1,000 fewer packaged grocery items on shelves (a drop of 6.3%), the study shows that 13% fewer new branded items were launched in 2015 compared with 2013. IRI’s 2016 New Product study shows a drop in the number of new products launched in both food and non-food categories. The number of new private label items launched also fell, but twice as quickly – by 26%. This trend is continuing into 2016, with the rate of new product innovation falling further. According to IRI, first year sales of branded NPD contributed just 2% to overall sales in the UK across 2014 and 2015, down from 3% (based on a similar study of new products by IRI in 2011). While NPD is recognised as a key driver in category growth, encouraging consumers to trade up at a premium price, there were less new branded items launched across food and non-food sectors. “As UK retailers look to rationalise their ranges, new products are finding it harder and harder to get listings. At the same time, however, suppliers are producing fewer new products, largely due to budgetary pressures brought about by massively high trade promotion costs and squeezed margins as market prices drop,” comments Tim Eales, author of the study and Director of Strategic Insight at IRI. “We are also seeing new products not being supported by trade promotions as much as they used to be, which is contributing to their price premium having increased and, arguably, negatively impacting rate of sale. Delisting is happening more often and more rapidly under the scenario of more aggressive range management by retailers. All of this culminates in a big drop in the contribution of NPD to overall grocery sales, a serious concern given that it is recognised as the lifeblood of an industry that is struggling to cope with a number of serious challenges. He adds: “NPD has the potential to give UK retailers, such as Tesco, Asda, Sainsbury’s, Morrison’s, Co-op and Waitrose, a competitive advantage versus their discounter competitors who have limited SKU ranges, as they offer new news and increased choice to shoppers. The key question our study raises, however, is whether manufacturers and retailers can find a way to collaborate andchampion the right innovative NPD, whilst managing range reduction agendas. If they get this right, NPD can continue to be a differentiator for all parties.” IRI’s study also shows that new products are finding it harder to achieve distribution in multiple retailers. On average, the maximum distribution achieved by new products in multiple retailers in the latest study was 44%, 5 points lower than when IRI measured it in 2010/11. It was 3 points lower for food products and 9 points lower for non-food products. According to IRI’s Tim Eales: “Achieving good distribution is essential to maximise sales of new products, but this is getting harder and harder to do. To be successful with new product development, manufacturers will often aim for 75% distribution within 12 weeks. In fact, what we’re actually seeing is that only 1 in 20 new launches achieve this target in multiple retailers, and only 1 in 7 ever achieves that level of distribution at any point in their life. It seems that as retailers concentrate on reducing range, it has become more difficult to grow distribution for new products.” IRI 2016 New Product Study: http://www.iriworldwide.com/en-GB/insights/Publications/Rang... Source: IRI - a retail and FMCG market intelligence company. Study based on c.3000 product launches from 2013-2015 across; food, soft drinks, confectionery, personal care, health and household categories. Notes for editors: Background to the study The IRI new product study excludes the slowest selling new products – those that never achieve at least 5% category weighted distribution (CWD) or sell less, on average, than £10k per in an average four-week period. New products can be entirely new brands, range extensions and new sub-brands, but new sizes are not new products, while new formats and scents or flavours can be, but not exclusively. IRI measured 3,378 new products launched between January 2013 and June 2015, analysing how well they were distributed, promoted and priced, as well as how they performed against their competition based on value sales, and, where possible, compared with a similar study on new products launched in 2010/11. In order to measure sales performance, each new product was compared with its competitive set to give a number known as the Sales Rate Index (SRI). SRI measures the relative performance of each item in the new product’s range against the average item in the category or sector based on sales per point of distribution. About IRI: IRI is a leading provider of big data, predictive analytics and forward-looking insights that help FMCG, OTC health care, retailers and media companies to grow. With the largest repository of purchase, media, social, causal and loyalty data, all integrated on an on-demand cloud-based technology platform, IRI guides over 5,000 clients globally in their quests to remain relentlessly relevant, capture market share, connect with consumers and deliver growth. www.IRIworldwide.com. Follow IRI on Twitter. Contact: Amanda Hassall, PR Consultant email@example.com T: +44 (0) 1628 822741 M: +44 (0) 7855 359889 This press release was distributed by ResponseSource Press Release Wire on behalf of Eureka Communications in the following categories: Food & Drink, Business & Finance, Media & Marketing, for more information visit http://pressreleasewire.responsesource.com/about.