Advantage Solutions is out with a new "Advantage Outlook" survey, including 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."
Other key findings:
"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."
- KC's View:
It is interesting that while manufacturers are not innovating in the value segment, at least according to this survey, other findings suggest that price really is important, which is why manufacturers are not raising prices and are focusing more on promotions. Am I right to see some inconsistency here?