Retail Marketing

Have FMCG brands forgotten how to innovate?

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By Daniel Quinn, Head of innovation

May 29, 2024 | 5 min read

As part of The Drum’s Retail Focus, The Forge’s Daniel Quinn explains why FMCG brands are letting their customers down by playing it safe.

An assortment of chemicals and beakers

When was the last time you walked into a supermarket and saw something genuinely new and exciting that wasn’t from a startup or microbrand? There are few examples, with Liquid Death perhaps being our best current example.

The shelves are laden with the same old products, and what’s touted as new is often merely a minor tweak–a novel flavor here, a limited edition there.

This isn’t to say the UK market lacks FMCG innovation; it’s just that it doesn’t come from established brands.

Take, for example, the Great Taste Awards, brimming with small players who introduce exciting products like matcha ice-cream and plum gin prosecco. Some newcomers, like Ember Snacks, address emerging consumer demands around sustainability with a mission to end factory farming. Others, like the teeth whitening system Hismile, offer creative solutions to existing needs. And then there are brands like Prime Hydration, born from the creator economy, achieving massive sales seemingly out of nowhere. It might end back up at nowhere but the money’s been made.

So, what’s holding the bigger brands back?

Playing it safe

In my work with large FMCG companies, I’ve noticed recurring themes. Many brands cling to their category definitions and the efficiency of their existing business models. They are so dedicated to their heritage and values that they leave little room for new ideas. Moreover, they are constrained by commercial limitations imposed by manufacturing and logistics.

This conservatism is often a response to current economic pressures: budgets are slashed, jobs are at risk, and every expenditure is scrutinized. In such a climate, it’s simpler to innovate tactically for a quick sales boost than to place a risky, long-term bet on the future. This risk aversion manifests in several ways:

  • Strategic ambiguity: Brands struggle to make tough choices and focus their priorities, opting instead to hedge their bets, which dilutes resources and minimizes the chances of success.

  • Culture of ‘No’: In the hierarchical structure of big brands, championing new or unconventional ideas is challenging. It’s easier to adhere to the tried and true, rejecting avant-garde proposals.

  • Data gluttony: An overload of data with too little insight. Teams become paralyzed by an abundance of information, unable to distill it into actionable insights or to trust their intuition.

  • Science-athon: As the innovation process moves from ideation to development, organizations might overdeploy their scientific and technological expertise on every concept, even when there’s no clear indication that it will deliver value.

  • Concept erosion: Known as death by 1,000 cuts. Innovators will recognize this scenario where an original idea is gradually diluted through compromises on formulation, production, and packaging until the final product barely resembles the initial concept.

  • Sink or swim: At launch, companies often impose a uniform set of sales-related KPIs on all new products, regardless of the unique strategic goals of each project. This approach causes potentially brilliant ideas that require time to develop to be prematurely dismissed.

  • Lack of vision: Unlike startups, which are often driven by a desire to address unmet consumer needs or societal issues, large brands are frequently more concerned with meeting immediate financial targets, appeasing shareholders, and maintaining employment.

The long and short of innovation

How can big brands rediscover their innovation mojo? Binet and Field’s seminal work, The Long and the Short of It, showed that while short-term sales activations might deliver rapid ROI, long-term brand building yields greater returns over time.

I argue that a similar paradigm shift needs to happen in innovation. Instead of pursuing safe, short-term wins, brands should focus more on long-term growth and innovation. Deeply engaging with consumer needs and understanding market demand can mitigate risks and make bold new products feel like safer bets. Ultimately, however, brands must be braver if they wish to remain relevant.

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