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News : EU Economy Last Updated: Apr 13, 2015 - 9:21 AM


Two-thirds of new consumer products flop within 2 years in Germany
By Michael Hennigan, editor and founder of Finfacts
Apr 1, 2015 - 8:51 AM

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Two-thirds of new products flop in the market place within 2 years according to Germany's leading market research firm while over a third do not survive three months.

GfK published a report this week which shows that two-thirds of new consumer products in key segments - including processed foods, clothing, cosmetics, and cleaning products - are withdrawn from German supermarket shelves within two years of their first launch. Forty percent of them disappear after just three months.

The findings were reported in GfK's February 2015 Consumer Index report, under the title "Reise nach Jerusalem" (Voyage to Jerusalem) which is an allusion to the German-language phrase for the game of musical chairs.

In the clothing sector, rapid 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.

The GfK report is 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.

Deutsche Welle reports that 40% of the new products disappeared from shelves after just one quarter (three months), and 64% were gone after 24 months. In the cosmetics and body-care segment, the attrition was even greater, at 70%. 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.

However 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.

Deutsche Welle says that more than a third of the new products brought onto consumer retail shelves in 2012 - 35% - 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% of new products were premium brands and 26% 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% of new premium and 61% 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%.

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