The role and management of product innovation in retailer assortments:evidence from the italian FMCG market

This paper focuses on analysing and measuring the sales and organizational impact of new products’ introduction in the assortment of Fast Moving Consumer Goods (FMCG) retailers in Italy. To test these effects, the study uses a multidimensional analysis approach based on scanner data of subcategories in hypermarkets and supermarkets. The results point out that, if correctly managed, product innovation could positively contribute to sales performance of retail outlets, especially in mature subcategories. However, a lot of mistakes and delays in new product selection and adoption by retailers tend to reduce these positive effects. In fact, the share of really successful new products is very small. So the high channel costs connected with the selection process of ‘really new’ products suggest the opportunity to reduce the Stock Keeping Unit (SKU) turnover level within retailer assortments.