A continuous battle for limited shelf space rages between new products and the products they displace. This battle is especially fierce in convenience stores and results in short life cycle spans and a very high turnover of product. For example, in the candy category there are about 450 items carried in a store but there is a 60% change in items over one year. This means about 30 items are cut every week as 30 new items are introduced. As a result, only 40% of products are long-run items (+5 years) versus trend items with only a 3-month popularity life cycle.
3,000 new cake (pastry) products are introduced in 1 year in Japan, but only 300 items remain at year's end. This means a 10% success rate.
Stores currently stock 22 sandwich items, but over 100 items are introduced over a one year period = always changing (new product may just be an improved version).
The Japanese convenience store industry has induced upon itself a self-fulfilling dilemma whereby it has trained customers to expect new and exciting products, yet the challenge of meeting this promise is becoming increasingly more difficult. Younger consumers patronize convenience stores at times only to see what new products have been introduced. Conversely, the same consumers express frustration at having a product they have just adjusted to cut from the assortment. A tough balance.
The focus on new products has thus turned to 'renewal' products. These are revised versions of previously introduced items and are due to the realization that there are fewer and fewer real 'new' products and even fewer big 'hit' products in the market these days.
Canadian products, such as bagels and wrap tortillas, have been successful due to their uniqueness. Other mainstay products, such as beef/pork hamburger patties and potato french-fries have also had extended success. However, hamburger patties could experience price competition from Australian producers, while frequent quality claims in french-fry products could open the door for aggressive competitors in Idaho. Competitive Idaho products do not offer price or quality advantages, yet Canadian products which are not unique must work hard at continuous improvements where weak points exist in order to keep a step ahead of the competition. It's not a market to stand still in.
The rapid changes in product assortment make product planning difficult not only for promotion, but also for producers. Whether the new product is a hit or a miss has big repercussions on quantities producers must prepare for and squeezes profit margins. This hit/miss production flux is further complicated by weekly production fluctuations, seasonal flux and weather flux. Producing for the convenience store industry is a tough business.
Product development is also difficult because of the time required for testing new products and creating new specifications, control measures and production processes for safety control - all of which cost money.
For new rice products with contract private brand producers, weekly assemblies are held with all regional producers in order to ensure standardized products are presented nationwide. These weekly assemblies meet to conduct product visual and taste tests, discuss new products, and assess new production methods.
From these discussions, product development teams make new product prototypes. The producers take the prototypes and produce their own version. If the new versions pass inspection, they are put into production. Beyond this, a special rice team is working on continuous rice development since rice makes up 50% of a bento product.
This information is maintained by: Gail Atkinson
Last Revised/Reviewed September 22, 1999
