High velocity change in the food/consumer products sector
I'm in Manhattan tomorrow, speaking at an event for food, advertising and packaging companies on behalf of Readers Digest Food & Entertaining Division. 
I'll be offering a late morning wrap up of observations about the high-velocity change that continues to envelop the sector, particularly the following trends. Dig through the blog -- particularly, the retail or consumer product categories -- and you'll find a little bit more insight about each of them.
- the new consumer is faster -- and innovation isn't just about new product design -- it's about reaching and interacting with the consumer in new and different ways
- the new consumer is connected -- and interactivity is the new brand foundation
- the new consumer is no longer nuclear -- and hyper-nicheing is the new brand reality
- the new consumer is influenced differently -- and social-networks are the new brand influencers
- the new consumer is shifting their focus faster -- and faster paced preference change is the new reality
- the new product is rapidly re-defined -- and time to market and corporate agility are the new corporate capabilities
- the new product is up-side down as innovation changes -- and partnership is the key method to speed things up
Here's one of the statistics in my deck -- 71% of consumers are choosing to prepare meals at home rather than eating out; restaurant trips have declined from 1.5 times a week in 2006 to 1.2 times today.
These statistics, from the Food Marketing 2008 US Grocery Shopper Trends report, came out before the economic challenges of mid-September and the problems on Wall Street.
One of my key messages is that we live in a time when "volatility is the new normal" -- a mantra I've been using for years -- and food companies must learn to innovate faster to capitalize on such fast moving trends.
We'll probably see this particular trend pick up steam -- and there's opportunity for new advertising messages, branding campaigns, not to mention new product offerings!
Faster is the new fast!
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Setting the table: rapid consumer trends in the food industry
We're witnessing hyper-innovation with packaging, design, in-store promotion, new product introductions, rapid change with branding, and perhaps most important, a massive and permanent shift of advertising and influence dollars from traditional media to the online world.
These are all themes that I will be exploring later in the month, when I provide my insight for the Food & Entertaining Division of Readers Digest, the group behind AllRecipes.com, and the magazine Every Day with Rachel Ray, among other properties, at an invitation only event in New York City.
Also sharing their insight during the Symposium will be Phil Lempert, who specializes in providing deep insight into supermarket trends, and Katie-Lee Joel, Top Chef judge and author of the book The Comfort Table.
A few years ago, I dug out the statistic that the typical shopper is so attention challenged that they are scanning some twelve feet of shelf space per second. That was a few years ago : today, their decisions on what to buy and what to eat are influenced by social networks, mobile messages, cutting-edge in-store display technology, and many other trends.
Food companies and packaging companies need to understand the rapidity and depth of the trends that are occurring -- and that's why Readers Digest chose to bring my "high-velocity change" message to the table.
It should be a fun day!
More information
- view the invite for Setting thee Table : Consumer Trends, insights and opportunities for food and packaged goods marketers
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Innovating in the era of the celebrity baby blog!
I just returned from a keynote for the Direct Seller Association; the industry dedicated to selling products to individuals in their homes. One might think in the Internet era that such an industry is on the skids; yet organizations like Avon, Mary Kay, and new direct selling companies continue on a growth trajectory; through innovation in traditional markets, and through fascinating growth in the Asia Pacific region.
My keynote focused on two primary trends: how the customer of today is changing; and how marketing and advertising are changing. I then spoke about how these organizations need to continue to keep up with the rate of change that is occurring around them.
So what's with the picture? One of trends I covered was that today's consumer is influenced differently when it comes to their purchasing activities. It used to be all word of mouth; it still is, but WOM has changed to a significant degree: it's widened to include the world of social networking.
For example, a recent New York Times article commented on the role of Celebrity Baby Blog when it comes to the clothes that parents are choosing for their children. US Weekly also comented on this trend, noting that when it comes to selling, "In the 1990s, everyone wanted to know about handbags.....now it's all about, 'What stroller is Naomi Watts's child in?'" (Apparently it's a Strider 3 Steelcraft in slate at $449US).
That's but one trend of about 20 key consumer, advertising and marketing trends I took a look at. House parties have been social-networked too, through Houseparty.com! As noted in the Times, "Jarden Consumer Solutions, which sells appliances under names like Mr. Coffee and Sunbeam, hired House Party to put on 1,000 parties over the Memorial Day weekend to promote the Margaritaville Frozen Concoction line of drink-making machines, which cost $199 to $379." To a degree, the more things change, the more things stay the same. Direct selling still happens; the mechanism and methodology is changing furiously.
The key issue is this: no matter who you are, what you sell, and who you sell to, your markets, products, customers, touch points and brand issues are changing at a furious pace, and you need to as well. That's why innovation in the consumer goods sector is critical.
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Can we talk -- upside down innovation?
The media is all abuzz with the concept of "user oriented innovation," and that is certainly an important innovation trend. But it's not the only trend. Innovators would do well to recognize that there are many, many other concepts that can help to focus and refocus their innovation efforts.
While everyone focuses on having "customers" modify and design their next product, there is an even more powerful and important trend underway. I call it "upside down innovation," and it involves new levels of innovation partnership between organizations.
It's when packaging companies, retailers, and food producers get together to examine new markets and branding opportunities through powerful new ideas. Or when a retailer works with its suppliers to come up with "pre-packaged lifestyle solutions" that offer time starved consumers a neat-solution or new idea. It's when organizations in a supply chain or industry learn to innovate together -- and that can be more powerful than when customers innovate.
I keynoted the American Nursery and Landscape Association in Vail, Colorado, and offered up this example: traditionally, your local garden store features the same, endless rows of plants, in the same old order, often according to their Latin names. There's no inspiration; there's no excitement; there's no solution to the fact that you are a busy consumer and just want to "buy a backyard."
"Upside-down innovators" take it one step further; they offer a retail environment that provides you with outdoor living solutions. They've combined the insight of leading edge retail ideas, with innovative, packaged solutions, and with unique products that "fit" together.
Today, you want to look at a complete "outdoor living room solution," that happens to include all the elements you need: plants, patio furniture, outdoor entertainment solutions, decor, candles, some wine glasses -- and everything else. And that solution has been put together by the retailer with the assistance of their suppliers and packaging companies,
into one unique, outdoor lifestyle vignette.
Here's what upside-down innovators do:
- partnership is a key focus: they recognize that great ideas might come from others in their supply/production chain
- collaboration is critical: they know they have challenges in keeping up with all innovation opportunities in this hyper-economy, and are eager to learn how others can help them
- they focus on providing solutions: innovative companies no longer sell products: they sell entire solutions to customers
- they refuse to "lay flat" : it might be a flat world, but upside down innovators go to the next step by putting a ripple into the flatness, by approaching innovation in a new way
More information
- Creativity, trends and innovation in retail, packaging and consumer goods
- Read What do you do after the world gets flat? Put a ripple in it!
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Innovating locally in a global economy
I spent the day yesterday with management executives and store owners of DoItBest, one of the largest US hardware retailers. It's a fascinating organization, because in the midst of the current economic challenges in the US, it's managed to grow its profit at the same time that it saw a dramatic revenue decline.
As with all the keynotes that I do, I undertook an extensive amount of research into the company and industry before I took to the stage; this is combined with the fact that I have keynoted dozens of retail oriented conferences through the years.
What I found was a really cool, and extremely innovative organization. Their online Web site has seen a sales increase of 60%; they've included an option where shoppers can have orders sent to their local DoItBest store (of which there are 4,000+). The site is price competitive with Target and Amazon. They are doing a lot in terms of supply-chain, online store portals and rebates. They've rolled out three different store designs, and are discovering new micro-markets. All this, while they've seen sales fall to $2.81 billion from $3 billion from the year before -- and yet, they also achieved record profitability.
In my mind, there are a number of innovative strategies that the organization has pursued that any organization can learn from:
- rapidly transition challenged product lines: lumber saw price declines of 25%, and panel prices dropped 60% according to an article in Home Channel News. Do It Best stores responded by focusing on all kinds of other lines in hardware and new market opportunities such as home-decord
- be relentless on customer service: a search of news articles shows any number of articles in which customers rave about the knowledge that a staff member in a Do It Best store has when it comes to hardware, tools, home renovation and just about everything else. They've maintained a relentless focus on customer service, even as the big-box chains have lost site of its importance. If you need a power tool: these folks know power tools.
- recognize that micro-branding works: the new store format design has three components: one for those fully within the DoItBest brand, one that is sort of halfway, and one for those stores that want to maintain a distinct, local, "general store" type of image. The fact is, in this era of homogenized big-box brands, some folks like the feeling they get from a small, local hardware store brand. "Do It Best owners understand the micro-economy" -- that's what Jeff Prupis, of Pomona Paint & Hardware, a Do It Best store in Pomona, NY, stated in another Home Channel News article.
- when markets commoditize, specialize: at their trade show yesterday, they were featuring a "Christmas in January" theme; with various vendors showing the unique Christmas offerings they might be thinking about. Everywhere you look, you can see some of their stores learning about and experimenting with new premium markets and service opportunities.
- make life easy for customers: We're time compressed. We're in a hurry. We need solutions. We want "fast." That's why the comment from Joe Talor, CEO, Taylor's Do It Center, Virginia Beach, is so appropriate. "We're like the 7-11 of the hardware industry. You can get in, get out, and get back home to enjoy your weekend."
All in all, a tremendous amount of fun, and a wonderful organization to spend some time with!
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Making generations work - Cardboard people and plasma people
Can you innovate across the generations? If you can't -- then you've got a big problem to fix!
I do a tremendous number of keynotes that focus on the issue of "managing millenials," and the complexities of change occurring in the workplace. See, for example, my blog post, "Don't Mess with my Powder, Dude." (below)
Yet organizations need to move beyond the staffing issues that come with new generations: they must also ensure that they can innovate at the rapid rates demanded in our new world, and they need to do that by keeping up with the new ideas and innovations occuring with younger staff.
In this video clip, I take a look at the story of the "plasma people" and the "carboard people." Innovation occurs when different generations -- with different attitudes to change -- can cooperate and see eye to eye, and take advantage of different strengths. In this clip, I tell tjhe story where this clearly wasn't the case!
This is a video clip from a recent keynote that I gave for hundreds of executives from the grocery and consumer products industries, titled Faster is the New Fast: Innovating for the New. High Velocity Customer . This story also became the opening chapter in my book, Ready, Set, Done: How to Innovate When Faster is the New Fast.
Watch the video clip
Related postings:
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Faster is the new fast: innovating for the new. high velocity customer
In the fast paced world of instant obsolsolescence and rapid innovation, time-to-market is becoming a key factor for success.
This is a video clip from a recent keynote that I gave for hundreds of executives from the grocery and consumer products industries, titled Faster is the New Fast: Innovating for the New. High Velocity Customer . I take a look at what innovative retail, packaging and consumer goods companies do differently.
This is the third retail presentation that I've done for a major retail conference this year; earlier, I spoke to several hundred convenience store owners and their franchisees; as well as to a group of executives involved in health care retail.
There are a few key themes that I wove through this keynote that retailers, consumer goods and packaging companies need to be thinking about, as well as their advertising agencies:
- velocity: i.e. collapsing product lifecycles
- instantaneity: faster trends; I have a wonderful story about dive-in movies, that I use to describe how the new global idea sharing machine results in faster product to market!
- spontaneity: social networking, rapid emergence of new "hits"; there's a new suddenness with consumer choice!
- intensity: business operational excellence is critical; I have a story of a video game distributor -- 45% to 60% of profit of a new video game occurs in the first FOUR TO FIVE days. I explained similar short, sharp shocks of revenue are coming to consumer goods
- unpredictability: sudden, rapid shift of consumer choice, with nicheing, impact of new packaging, etc.
- simplicity: the new consumer wants nice, simple solutions that fit into their life; there's a great story here from the work I did with the American Nursery Landscape Assn, that spins directly into consumer products, beverages etc, in that simplicity is the new branding.
- volatility: great unknowns; water on planes, melamine/pet food; we have to be prepared for unforeseen risks!
- attractability: there's another video that I'll post soon that involves a story of the plasma people and the cardboard people. suffice it to say, the new consumer will be more highly interactive, sooner than we think
- unfocusability: short attention spans, consumers scan 50 feet of shelf space per second; we're seeing collapsing newspaper/magazine spend, rapid growth of online spend, etc.
- virtuality: Screen Digest, a media consultancy firm, predicts that 80% of active Internet users will become involved in a virtual world by 2012.
Watch the video clip
Related postings:
- Next big home entertainment trend? Dive-in movies!
- Can you run your business at video game intensity?
- High velocity retail innovation
- Creativity, trends and innovation in retail, packaging & consumer goods
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High velocity retail innovation
Back in October 2005, I identified the major trends that would sweep the retail and consumer products industries, and some of the key innovation methods that organizations should pursue in order to avoid product and service commoditization. You can read the original post here.
Since then, we've seen continued massive rates of change in these sectors. Three weeks ago, I keynoted a major convenience store conference, speaking both to store and franchise owners, as well as dozens of executives from major consumer product companies.
The retail industry today is now driven by hyper-innovation, rapid technological advance, increased customer expectations, rapidly evolving product trends, and increasingly fickle consumers driven by the rapidity of instant trends.
How can people turn these trends into opportunity? It comes from innovation -- not just with new products, but with business process, store design and layout, rapid adoption of new products, format mix, and partnerships between the retailers, consumer goods companies and packaging companies.
Some of the trends I highlighted in my talk included:
- the rapidity of change: The retailer of today is drowning in new product innovations. According to the Washington Post, some 33,679 new products were introduced into the consumer products sector in 2004, up 53% from 10 years earlier. With room for only so many new SKU's, it can be pretty difficult to keep up.
- constant format change: There's a lot of innovation with in-store formats and display technology : constant experimentation with store formats, brand partnering promo innovation, new in-store displays, logistics and tracking studies, and countless other new ways of doing things within the store are all critical.
- zero-attention span customers: The average consumer now scans 12 feet of shelf space per second. News becomes old news within 36 hours. The average age of a video game player is now 37 years old. Today's consumer has precious little attention, and you've got to work extra hard to get them interested in a product while in the store.
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Is your brand from the olden days?
"A brand today can go from hero to zero in a matter of months...."
As the news media gears up for the release of the Sony Playstation 3, one wonders whether they are capturing an increasingly important aspect of the story: has Sony managed to keep any of the brand luster that it once had, or is already irretrievably lost?
That's an important question in this world of instant obsolescence. I often tell the story on stage of how my sons -- now 11 and 13 -- perceive many of the things which were once a part of my life as being from the "olden days." We've actually come up with a pretty long list; just the other day, when looking at a Web site, my youngest asked me with all innocence, "what's a cassette player?"
Sony once had a really cool brand name, and the Walkman had deep, deep brand value. Yet Sony seemed to lose its innovative spirit, and started going wrong in a big way. It ended up destroying a good chunk of the brand value behind the Sony name -- when I think of Sony now, I think of a company that is slow, behind the times, ponderous.
Which begs the question : are you operating with enough agility and rapidity in order to ensure that your own brand doesn't become a "brand from the olden days?"
The rate at which the Sony brand lost its value is nothing short of stunning -- and was due to a series of well known missteps (among others):
- they failed to keep up with the rapid growth and demand for flat panel TV's and other hot new technologies: they failed with market agility.
- they decided that going to war with their customers (by slipping destructive software onto their music CD's) was more important than developing great technology that caught the next wave of consumer electronics.
- they dropped the ball on the necessity for continuous operational excellence , as evidenced by a disastrous recall of laptop batteries.
Are you making similar mistakes that is costing you brand image? You certainly are, if:
- Your brand looks tired, because it is tired : Case in point -- many companies in the automobile industry missed out on the revolution in the passenger compartment, because they weren't watching what their customers were doing. They were busy releasing automobiles that were some five years behind the living rooms of their customers -- and that certainly brought the brand sheen off of some of the biggest auto companies.
- Customers see a lack of innovation: Consumers today are immersed in a global cloud of new ideas. They're witnessing constant, relentless, awe-inspiring forms of innovation all around them, as they deal with a flood of new consumer technologies, packaging based product innovation, and ongoing advancements in retail environments, both offline and online. They've come to expect that the brands they deal with are at the leading edge, in design, functionality, message and purpose.
- Lousy, ineffective customer service: Guess what - when it comes to interaction with your customers, they measure you up against the world's best. If you don't add up, you are doing some significant damage to your brand equity right there. Customer support is no longer good enough -- fanatical support is better.
- You don't know that you customers know more about your brand than you do: Your customers today are immersed in the global innovation idea feedback loop. They busy sharing ideas on what's really cool, and they are even busier taking apart the folly of those who have been left behind. In doing so, they are rapidly reinventing products, services, brands and image. If you aren't listening, you are guaranteeing that you'll fall behind.
- A lack of purpose or urgency: I've studied many organizations who still don't have the key information they need for market agility. They don't have instant feedback mechanisms which tell them of rapid developments in specific markets. They don't know how to regroup quickly "when bad things happen." They still operate blind, as if it's 1990: their sales force goes into a customer meeting, oblivious as to what that customer has been thinking about them. They approach every day as if it were the same as yesterday; meanwhile, their market and their customers have run away from them!
- A lack of market and competitive intelligence: It's the information-age, get it? There's no shortage of information to be had. Yet I see companies who seem shocked when a competitor drops a 'bombshell' announcement -- only to realize that they were the only one who thought it was a bombshell. Everybody else knew what the competition was up to, because in this new hyper-connected world, everyone knows what everyone else is doing!
- A regular series of fumbling missteps: The saddest thing is that Sony has messed up in so many ways, that some customers now look at as if it has a "L" on its forehead. Today, small mistakes can be instantly compounded. Take the concept of compounded financial interest. Now realize that a small PR mistake, a lousy executive decision, or poor execution, can lead to the same type of instant, global brand devaluation -- that can compound on itself at an extremely high interest rate!
A brand today can go from hero to zero in a matter of months. How do you avoid such a fate?
- Recognize that brand longevity is now a critical issue
- Ensure your sales, marketing, development and customer support team are relentlessly focused on the currency of the brand
- Make sure that continuous brand innovation is part of your corporate mantra
- When confronted with the new and challenging customer, learn from them rather than running away
- Be incessantly focused on the likely innovations that will come to impact your brand
- Learn to think five to six product lifecycles in advance -- and plan to do them all within six months.
- Make forward oriented intelligence a critical aspect of what you do.
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Denmark TV interview -- Brand image in a low cost economy
Wow! Where did May go?
I had keynotes for a huge number of different companies and associations, ranging from appraisers to broadcasters to motor vehicle dealers ....
Somewhere along the way, I did an interview on the national news for Denmarks's TV2 on the issue of how companies might survive the global low cost economy.
There's a short snippet of the interview you can watch online ; just click the picture above!
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Creativity, trends and innovation in retail, packaging and consumer goods ….
According to the Washington Post, some 33,679 new products were introduced into the consumer products sector in 2004, up 53% from 10 years earlier. Since the typical store has only 40,000 SKU’s, it can be pretty difficult for a consumer products company to succeed today!
Clearly the world of retail has become extremely challenging – and I’ve been doing a number of keynotes helping consumer products, packaging and other companies and industry associations think about how innovation and creativity can spark success.
Creativity and innovation with retail, packaging and consumer products companies involves understanding the reality of the challenge that exists, and the key strategies that you can use to take your organization team and forward into the world of hyper-change that now surrounds us.
Think about the depth of the challenges that exist:
- Compelling customers….customers expectations and needs are changing rapidly, and yet they are more demanding than ever before
- Loyalty disappears....at the same time they expect creative perfection from you, they are more fickle, and far less loyal …. I’m not even sure the concept of loyalty exists any more for many brands!
- The China price....if that’s not enough, the impact of the “China Price” is such that consumers are coming to view all products as commodities. Without successful value positioning, many brands are quickly losing their distinctive brand image
- Costs increase....all this is happening in a world in which producers and retailers are faced with a rapid increase in uncontrollable costs…. energy, plastics, you name it! Margins are being squeezed and pressured as a result.
- Focus on collaborative relationships The key to innovation in retail today can be found in collaborative relationships and partnerships between packaging companies, consumer products and brands, and retailers. ! Noted Paul Moss, British Bakeries Divisional Marketing Director, “We have more to talk about than price.” No one wants to fight in a brand sector that is involved in a race to the bottom, but that’s what happens when everyone focuses on price. Shift the equation with your partners, and you’ll find a way out.
- Remember -- the package is the brand. Heinz, StarKist and other industry leaders have learned that packaging innovation, driven by new methodologies, ideas and technologies, has become the secret to brand image in many sectors, because it permits a shift of value and customer perception in ways that haven’t previously been seen. Think upside-down-Ketchup. If you aren’t innovating with packaging, you aren’t in the game
- Hyper-innovation is key. Throughout the consumer products world, we are witnessing faster time to market in every single sector. The concept of a product lifecycle is disappearing as products come to market and thrive for but short micro-bursts of time. Make sure you’ve got the agility on your team you need to cope with this reality, and you might survive
- Get used to contentious consumers. Desires, needs and demands will continue change at an ever more furious pace, often in ways that won’t make sense. Don’t despair from it: learn from it. Take low-carb: sure, it was a disaster, a fad, and you should have known better! Yet don’t focus on the morning after quarterbacking – focus instead on your agility instead. Did you respond quickly enough? What organizations sclerosis blocked your ability for quick change? And what should you do to fix it?
- Capture the insight of creatively new competitors – constantly. Admit this: there are likely going to be a lot of folks out there who are a lot more creative than you are. They’ll beat the pants off you all the time with quick short bursts of tactical success, while you are still busy marshalling your forces. Rather than losing sleep over their success, study them! Learn from them! And then capitalize by doing what they do – and do it better. Rapid creativity in a time of constant change is the name of the game, and you’d do best to work to obtain the same skills and insight that your best competitors have developed.
- Ride the wave of continuous business model innovation. In retail, we are seeing constant experimentation with store formats, brand partnering, in-store displays, logistics and tracking studies, and countless other new ways of doing things. Get on board the tornado of change in retail and ride it for all it is worth. You should develop a team that has a finely-tuned radar for unique trends, experiments, success stories and innovations. They’re swirling around you continuously, they are constantly reinventing the world of retail on a minute by minute basis – and you’ve got to understand them and capitalize upon them.
I’ve given presentations in the last year to Nestle, PrintPack, TetraPack, an association of chain drug retailers, and lots more. Want to think about creativity, innovation and trends in the world of retail, packaging and consumer products? Contact me….
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Back in January, the Chairman of Nestle observed that "private label is for me the expression of the industry's failure to create value." There's certainly a lot of huge trends hammering the retail sector today -- the continuous appearance of new competitors being just one of them -- and so I'm off to keynote a leadership meeting for the organization.
I'll be taking a look at the key trends that will 'rock the retail world,' and put into perspective how forward-oriented organizations are developing collaborative cultures that helps them respond to the rapid change swirling around them.
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