Innovation remains key for SMEs as COVID-19 plays into the hands of big brands

Walmart innovation

Innovation has been the driver of change within the retail sector since forever, and it’s the smaller, more agile products and brands that have been at the forefront of this change.

For what it’s worth, big brands are not the driver of innovation, they are the responders, particularly when it starts chipping away at their market share.

Innovation challenges brand loyalties and asks question of traditional brands: to respond to the change or face the reality of shifting consumer loyalties.

But in the face of COVID-19, innovation has stalled, and the products and brands that have dominated the real estate of supermarket shelves have been gifted a grace period that could be telling in the months and years to follow.

So what have been the contributing factors of COVID-19 that have played into the hands of on-shelf brands, and where are the opportunities for SMEs?

The changing consumer

There is no doubt consumer behaviours are changing as a result of the last two years. Some will pass and some will stay with us forever, but in any crisis, humans gravitate to the things that are consistent, offer stability and that we trust.

At the height of the pandemic the supermarket shelves were our only respite from lockdown, so it makes sense that our newfound love affair with the products and brands that we trusted and relied on during this period will remain top of mind. 

An article by McKinsey & Company highlighted that in relation to consumer shopping and consumption, trusted brands are now an important consideration when purchasing, and the explosion of smaller brands underway before the pandemic has given way to the larger global brands.

The shutting down of launch platforms

Been to a trade show lately? Trade shows and expos have largely been the go-to for any new product or brand looking to launch, but in the face of the pandemic these pathways to market have been non-existent. 

While many event organisers pivoted to online and virtual events in an attempt to maintain relevance, nothing can really replace the experience and impact of physical product and that sensory connection. 

In most cases whole industries are now in their second year of the trade show hiatus, and while we look forward to their return in the next 12 months, how they will come back and who will be attending is largely unknown at this stage.

In the absence of these launch platforms, new products and brands have been robbed of the opportunity to connect with retailers and have had to pivot and find new pathways to market their products, outside of traditional retail and media channels.

It’s a battle for survival

Let’s be real here: for most businesses, big and small, the pandemic has put a strain on resources and resourcing. 

Unless you were in the hand sanitiser and face mask business, new product development and innovation has taken a back seat against the more immediate challenges of maintaining business continuity, cutting costs, maintaining supply levels, and driving productivity and efficiencies.

In short, innovation across many sectors has been put on the back burner, until the core business returns. Another report from McKinsey & Company highlighted how, with the exception of pharma and medical products, business executives from every industry surveyed have significantly reduced their focus on innovation during the pandemic.

There is still light at the end of the aisle

Wait! Before you raise the white flag on new product development and innovation, take some comfort in the following: the 2009 financial crisis was a defining moment for many SME businesses. Those businesses that maintained their innovation focus and invested in new product development delivered superior growth post-crisis, while the slower big brands were delayed, or even suffered losses, as they tried unsuccessfully to maintain their status quo at an already late point in time.

For SMEs thinking about the next level of innovation in a post COVID-19 world, there will be new categories ripe for disruption, such as wellness. 

Innovation has always been driven by smaller, more agile brands and products time-and-time again throughout history, because they can react faster than their larger competitors to take advantage of trends before others — something I expect will continue once again soon enough.

COMMENTS

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments