Advantage Solutions today is unveiling the findings from its Advantage Outlook, a quarterly survey that includes responses from senior-level executives at dozens of the leading retailers and consumer products companies across the U.S.
The report, produced by Jill Blanchard, Advantage’s president of enterprise client solutions, in collaboration with Nielsen IQ, offers unique insights into the top trends at retail. With relationships with more than 4,000 consumer goods companies and most of the largest U.S. retailers, Advantage sits at the intersection of brand and retail with extensive reach and a breadth of services that help convert shoppers into buyers.
Results from the survey, conducted in June and July 2023, reveal that product manufacturers are no longer attempting to innovate on lower-price-point products to compete on value. Instead, nearly all manufacturers — 98% — are investing in innovation on mainstream or premium-priced products with a heavy emphasis on health and wellness, and products that offer in- and at-home indulgences.
The Advantage Outlook details a rapidly evolving retail landscape and a challenging operating environment for consumer goods companies and retailers, as persistent inflation and labor shortages continue to affect business operations. While consumer confidence remains high, challenges with in-store labor and other factors are leading to sweeping changes in retail strategy.
Among the report’s key takeaways:
- Product innovation getting a high-end makeover: Despite persistent inflation and price-sensitive consumers, manufacturers are focusing their innovation investments on premium-priced products with a heavy focus on health and wellness and in- and at-home indulgences. Meanwhile, retailers are hungry for more innovative products to spur sales, with 72% saying they expect to accept more innovation over the next six months and 95% indicating they will accept new item cut-ins outside of traditional reset windows.
- Most manufacturers are no longer raising prices to combat inflation: Sensing increasing price sensitivity among consumers, manufacturers no longer are raising list prices to combat inflation. Instead, they’re focusing efforts on disputing retailer fines and fees. Ninety-six percent of manufacturers say that disputing fines and fees remains their top strategy to address increased costs; less than one-third anticipate raising list prices.
- Labor shortage leading to more self-checkout: Manufacturers and retailers agree that in-store labor is a critical issue that requires a new and immediate approach. Retailers plan to increase self-checkout options to address labor shortages, while manufacturers say those shortages and a lack of planogram oversight are the top two factors affecting on-shelf availability.
- Expect more reliance on promotions to drive sales: Manufacturers and retailers will focus on increased promotions to drive unit sales, with some retailers looking to zero in on major holidays, their rewards programs, club-pack sizes and extended promotion periods.
“Manufacturers and retailers are looking to do more with less in today’s operating environment while holding fast on price and ensuring product availability,” says Blanchard. “Manufacturers are revamping their offerings with a focus on premium products, and retailers are ready to embrace a wave of innovation to meet evolving consumer demand and convert shoppers into buyers.”
For more insights, download the full 2Q 2023 Advantage Outlook here.