Time out: Corona puts the brakes on product innovation

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The number of product launches and relaunches in the retail sector fell by 19% in 2020. This particularly affects companies that depend heavily on packaging changes, such as toolmakers, plate manufacturers and repro. The main reason for the decline is the corona pandemic. In the next few years, we will see an increase in product innovation – because history repeats itself.

 

Time out: Corona puts the brakes on product innovation.
The number of product innovations and new product launches in the retail sector fell by 19% in 2020. This particularly affects industry players that rely heavily on new or modified packaging, such as toolmakers, plate manufacturers and repro. In particular, mid-sized companies with annual sales of $100 million to $1 billion are struggling with the consequences of the Corona pandemic and are showing restraint when it comes to launches and relaunches. We saw something similar during the 2008 financial crisis, when new product launches fell by almost 4% – only to recover strongly in the years that followed. In 2009, the number of product launches rose by 12%.

Medium-sized companies vs. big players
There are reasons why the medium-sized companies mentioned above in particular show restraint when it comes to innovation and new products. One of them is that they tend to put their resources into up-sell and cross-sell opportunities in times of crisis. In contrast, they are reluctant to spend money on cultivating new customers.

In contrast, companies reporting revenues greater than $1 billion were most successful in product innovation in 2020. These big players innovated much more aggressively than the midmarket. Not least because they also have the corresponding budgets.

In total, there were 9101 product launches last year. Compared to 11244 new products in 2019, this results in the aforementioned minus of 19%. Despite the lower number of new products, retail in Germany grew by 4.1% compared to the previous year in 2020.

Product innovations ahead
Other crisis situations, such as the financial crisis in 2008, have shown that such innovation dips are only temporary. As the pandemic situation subsides, we should see a significant increase in product innovations over the next few years.

 

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