Sept. 22, 2015—Consumer goods companies aren’t accounting enough for the costs and complexity that new products add to supply chains as businesses seek to drive sales growth with innovation, according to a retail industry report.
Terra Technology, a retail forecasting software provider, said it reached the conclusion after a survey showed the number of new products on shelves has soared by 32 percent since 2010 while overall sales of surveyed companies has expanded only 4 percent.
“Everybody’s looking for next big thing, but I don’t know that people are weighing the added cost and complexity sufficiently when making those trade-offs,” said Robert Byrne, Terra Technology’s chief executive and author of the report.
The report surveyed 14 large multinational consumer-products companies making up $250 billion in annual sales. While companies add new flavors of potato chips, change the wrapping on cookies and seek out seasonal fads—like pumpkin-spice beer—the vast majority of the new items rarely register at store checkout lines. In many cases, sales of a new flavor simply come at the expense of sales for an original product.
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