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Consumer products and retail companies struggling to innovate

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Consumer products and retail companies struggling to innovate

New report suggests that collaboration with smaller, more agile companies is key.

According to a recent survey by professional services firm EY, the vast majority of consumer products and retail executives say that collaboration with smaller entrepreneurial firms has become increasingly important to drive innovation and achieve their strategic goals. Yet only one in 10 deem their companies very effective at both sourcing potential collaborators and aligning incentives between the two partners.

Nearly one in five respondents say they are very effective at achieving revenue increases, 16% are very effective at achieving margin increases and only 10% are very effective at generating intellectual property from these partnerships.

"Companies must collaborate with external partners, particularly smaller entrepreneurs, to identify, develop and scale up promising new product and process ideas."

Andrew Cosgrove, EY's Global Consumer Products Lead Analyst, says: ''Traditional approaches to innovation are no longer fit for purpose. Consumer products companies and retailers must innovate both their products and their business models. Growth is challenging, margins are stressed and the rapid evolution of technology and data has fundamentally changed consumer behavior."

David Jensen, EY's Global Innovation and Digital Strategy Leader, agreed. "Succeeding in the age of innovation requires companies to rethink their approach to new product and process development. Companies must collaborate with external partners, particularly smaller entrepreneurs, to identify, develop and scale up promising new product and process ideas. Additionally, companies need to look at innovation opportunities beyond just products and processes, and consider business models, consumer experiences and brand engagement as part of an overall innovation portfolio.

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"It is smaller entrepreneurial firms that can offer the agility and creative thinking that larger organizations need to unplug innovation bottlenecks. Overcoming the difficulties of collaborating with entrepreneurs will be critical if companies in the sector are to thrive in the long term."

 

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