The role and management of product innovation in retailer assortments: evidence from the Italian FMCG market

Abstract

This paper focuses on analysing and measuring the sales and organizational impact of new products' introduction in the assortment of Fast Moving Consumer Goods (FMCG) retailers in Italy. To test these effects, the study uses a multidimensional analysis approach based on scanner data of subcategories in hypermarkets and supermarkets. The results point out that, if correctly managed, product innovation could positively contribute to sales performance of retail outlets, especially in mature subcategories. However, a lot of mistakes and delays in new product selection and adoption by retailers tend to reduce these positive effects. In fact, the share of really successful new products is very small. So the high channel costs connected with the selection process of ‘really new’ products suggest the opportunity to reduce the Stock Keeping Unit (SKU) turnover level within retailer assortments.

Keywords:

• product innovation
• retailer assortments
• listing fee
• slotting fee
• marketing channel
• Italy

Acknowledgements

This work has been funded by the continuous research activity conducted by the authors within CERMES (Centro di Ricerche sui Mercati e i Settori Industriali), Bocconi University, Milan, Italy.

Notes

1. Source: 2006 scanner data provided by IRI – Information Resources.

2. This issue has been deepened within the 45th edition of American Market Competition Guarantee Authority Summit.

3. Comparative international analysis carried out on a sample of about 3000 successful new FMCG product codes carried out in different countries during first 6 months of 2007.