Every retailer claims that ‘the customer is at the heart of everything we do’ which is why making sure that customers are excited by the products they discover is a crucial point of differentiation for supermarkets. Indeed, Newton research has found that 62% of shoppers appreciate it when a range evolves – with new flavours, packaging and formats.
So far, so straightforward. But if new product development (NPD) is so vital to retailers and their suppliers, why is an estimated £3bn annually wasted in the process of devising products that make life easier for customers?
At Newton we’ve analysed all this in detail, identifying three steps to help retailers and suppliers get NPD right: better collaboration, production and iteration.
So let’s take collaboration. The reality here is that retailers and suppliers are holding their cards far too close to their chests to come to the optimum solution.
When looking at how internal teams operate, it’s clear there are differing motivations. Frequently, the NPD team’s desire to be as creative as possible collides with the commercial drive to balance price and volume and the operational desire to reduce production costs.
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If both parties are aware of what customers really want, significant time and money could be saved upfront
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What’s more, the commercial game played by retailers and suppliers means they can’t achieve true trust, with “open book” almost never really being open. Crucially, there needs to be a fundamental change in the way NPD terms are negotiated.
The key? Agree a shared goal so both sides can truly show their hand. After all, NPD costs are never really hidden – someone will always end up paying. Both parties need to have visibility of the whole picture to encourage greater levels of trust. Ultimately, this new state of openness will result in an efficient process creating the best product at the best possible price – with both sharing the benefits of healthy sales.
Further still, if both parties are aware of what customers really want, as well as the implications of even the smallest changes to the production process, significant time and money could be saved upfront.
Fundamentally, no retailer or supplier wants to see tweaks to products that hinder production and end up adding no value to their businesses or customers. But by aligning motivations and sharing insight, all parties can pull together to create the right buying environment and remove inefficiencies from the NPD process. The outcome: new ways of working for both, but in pursuit of the same aim – to create products that customers will love.
Our next blog explores in more detail how the next of our three steps, better production insight, can further improve NPD. Click here to download Newton’s report ‘Creating Passionate Shoppers: The Science of Product Development’.
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Fundamentally, no retailer or supplier wants to see tweaks to products that hinder production and end up adding no value to their businesses or customers.
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This article was originally published on Linkedin
