"Steady Sellers Instead of New Products: How US Companies Survive the Inflation Era"

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"New products from the US have disappeared."

As concerns over rising prices and economic recession grow, the number of new product launches by US companies noticeably decreased last year. With consumers tightening their wallets amid a frozen economy, companies are focusing more on increasing the sales proportion of steady sellers rather than launching new products.

On the 2nd (local time), The Wall Street Journal (WSJ) reported, citing market research firm Sercana, that new product launches in US general merchandise decreased by 13% last year compared to 2020, when the COVID-19 pandemic occurred.

Among general merchandise, new product launches in beauty, footwear, IT, small appliances, and toys sectors significantly declined. The share of IT products among new general merchandise launched in retail stores dropped from 23% in 2020 to 19.1% in 2022. Footwear decreased from 20.1% to 19.5%, beauty from 17.3% to 14.6%, and small appliances from 15.9% to 11.5%.

Basic Fun, a US toy company, typically launches four new products annually but released only one last year. The new collectible figure "Little Pet Shop," originally scheduled for release this fall, has been postponed by more than six months and will now be introduced in spring next year.

Reluctance to launch new products is not limited to consumer goods companies. Robert Iger, CEO of Walt Disney, recently told investors, "We need to be cautious about developing comic book characters and stories into TV shows or Marvel movies to showcase something new," adding, "Generally, sequels work well for us."

The background to companies' avoidance of new products can be attributed to the COVID-19 pandemic. At the beginning of the pandemic, supply chain instability caused product shortages in the market, leading to explosive demand. After supply chains stabilized, companies increased production, but this resulted in oversupply. Inventory, especially of electronics such as PCs and TVs, increased significantly. Meanwhile, Russia's invasion of Ukraine in February last year caused global inflation to surge and heightened concerns about economic slowdown. This economic trend reduced consumers' purchasing power and emerged as the biggest factor in shrinking corporate sales. Jay Foreman, CEO of Basic Fun, predicted, "Supply chain instability is expected to normalize by mid-year, but inflation and slowing consumer spending remain concerns."

In this situation, companies are focusing on a stable management strategy of "steady sellers over risks." Amid increasing economic uncertainty, rather than investing time and cost in developing new products, the trend is to concentrate on selling steady sellers that consistently remain popular with consumers without following trends.

American Fashion Network, a clothing company, has increased the display proportion of basic products such as T-shirts, tank tops, and hoodies in medium to large stores from the low 50% range before COVID-19 in 2019 to 60% currently. Instead of launching new products, they have focused on diversifying colors and fabrics of existing popular products. Bob Martin, CEO of clothing company Gap, stated, "Inventory hinders a company's innovation momentum," adding, "It stops the expression of our strength in creativity and causes us to miss betting opportunities to lead trends by playing it safe."

WSJ reported, "From PCs to skirts, all manufacturers and retailers have relied on popular products amid pandemic disruptions over the past few years, halted innovation, and consumer demand changes and recession outlooks have had significant impacts," adding, "With only the same styles being sold, shopping for Americans is becoming boring."

In this regard, Nordstrom, a major US department store chain, forecasted that since inventory sales have increased by more than 10% compared to last year, the capacity for new product arrivals and sales will grow going forward.

This content was produced with the assistance of AI translation services.