In a recent study we conducted, 41 percent of shoppers who buy bacon claimed they didn’t really understand much about what they were buying or what was available. This is quite odd, don’t you think? It’s bacon, right? How hard can it be to understand what’s on offer?
But we actually see a similar picture across a huge number of markets.
Categories we think of as simple, like milk or bread, become very complicated when you look at how people shop. The uncomfortable truth is that a huge proportion of shoppers don’t really understand what we’re trying to sell.
How did things get like this? Well, it has a lot to do with how manufacturers and retailers sought out growth over the past 30 years: innovation. Years of line extensions, packaging developments and new brand launches have created amazingly complicated environments. In 1970, a typical supermarket in North America had about 7,800 items. By 1993, the figure had more than doubled to 17,000 and hit 45,000 in 2006.
We innovate to find growth, but the byproduct of this advancement is a shopping environment most don’t have the capacity—or desire—to navigate.
In Made To Stick, the Heath brothers outline what happens when a number of ‘good options’ are offered: it paralyses us. We put off making decisions, or make irrational bad decisions, because anxiety exists around getting the decision right.
Complexity stops people making good decisions, and can even stop them making a decision at all. So while we’re innovating for growth, we are also limiting the prospects of this actually coming to fruition.
The upshot is that extensions and new products we create via innovation really do have to perform strongly to justify the negative impact they’re having on people’s ability to ‘shop smarter’.
But the problem is they don’t. If you look at the percentage of sales each individual product in a category like bacon contributes, a small number of the products available account for most of the sales. Of the 174 products on offer, 13 of them account for more than half of sales. And at the opposite end, 90 products account for less than five percent of sales.
Rather than generating growth, most innovation ends up generating clutter, often because new products spring from internal ideas rather than genuine human need. They’re ideas in search of a market. So how long can this old model of innovation can last? Do we just keep on ‘innovating’ like this? Do people want to see a supermarket with 90,000 products and 300 varieties of bacon?
The time has come to re-evaluate how future growth will be found in most consumer categories. We’re too far down the line of market development for innovation to continue to be driven out of more stuff. That ship is long overdue to sail. Simplicity will be the new innovation and the new path to growth.
Andrew Lewis is managing director of The Research Agency. Originally published in NZ Marketing magazine