Most new consumer products quickly go under | Business| Economy and finance news from a German perspective | DW | 31.03.2015
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Most new consumer products quickly go under

Thousands of new consumer products hit store shelves every year. Market researchers report that most of them are quickly withdrawn again. The battle for shelf space is fierce - and never-ending.

The German consumer research company GfK released a report in Nuremberg on Tuesday revealing that two-thirds of new consumer products in key segments - including processed foods, clothing, cosmetics, and cleaning products - are withdrawn from German store shelves within two years of their first launch. Forty percent of them disappear after just three months.

The startling findings were reported in GfK's February 2015 Consumer Index report, under the title "Reise nach Jerusalem" (Voyage to Jerusalem). That's the German-language phrase for the game of musical chairs, in which the last person standing when the music stops is out of the game.

In the clothing market, fast product turnover is to be expected, the researchers wrote: "In textiles, twice a year, the motto is, 'Everything must go!' That's dictated by the laws of fashion. Who would change their wardrobe every year otherwise?"

Retailers constantly prune and change their product lineup in response to sales statistics. If tens of thousands of new products appear on shelves each year, that means tens of thousands of not-as-new products have to be pushed off those shelves to make room.

Total shelf space in Germany's mature retail market isn't getting larger. That makes the battle for shelf space a zero-sum game. It's an expensive game for consumer products manufacturers to play - but they have no choice.

New product attrition by the numbers

The GfK report was based on an evaluation of retail consumer product statistics beginning in the year 2012. In that year, they found, about one quarter of the products on store shelves were new - i.e. first introduced in 2012.

Forty percent of those new products disappeared from shelves after just one quarter (three months), and 64 percent were gone after 24 months. In the cosmetics and body-care segment, the attrition was even greater, at 70 percent. It's a segment that has a particularly high rate of innovation - the high rate of product turnover was to some degree intentional, the researchers said. Similarly, the discontinuation of special offers and seasonal products was also planned, rather than a consequence of brutal Darwinian selection by browsing shoppers.

But in many cases, products simply flop. Thousands of new products that entered consumer products markets in 2012 simply didn't sell well enough to retain their claim on retail shelf space.

More than a third of the new products brought onto consumer retail shelves in 2012 - 35 percent - were from market-leading brands aimed at mass-market consumers: "These brands try out a lot of new products; they have the money to do that," the researchers reported.

In contrast, 26 percent of new products were brought onto retail shelves by premium brands and 26 percent by mid-range brands. Premium and medium-range brands had a slightly lower rate of new product attrition than the leading mass-market brands that offered lower-priced, higher-volume items: after 24 months, 62 percent of new premium and 61 percent of new mid-range branded products introduced in 2012 were no longer on retail shelves. For mass-market items, the rate of attrition was 68 percent.

The battle continues, with no end in sight. The shelf-space war will presumably last as long as does civilization.