Retailer brands and the impact on innovativeness in the grocery market

The purpose of the paper is to examine the degree of innovation in the grocery category and analyse to what extent the presence and growth of retailer brands influence innovativeness in different grocery categories from a customer perspective. Using the Swedish grocery market, 34 grocery categories were studied from 2000 to 2004. Data from Gfk household panel data, Mintel database of product releases and face-to-face interviews with consumers are used. The paper uses four alternative measures of category innovativeness capturing different levels of consumer orientation. The study is limited to one geographic market over a four-year time period. Although the panel data are based on the purchase data of 300 households, one of the four alternative models is in part only based on a sample of 59 respondents. The study shows that there is no empirical support for the suggestion that retailer brands have a negative impact on the overall innovativeness in the grocery categories. However, there was a significant positive relationship between growth in the retailer market share in a category and level of innovativeness in the category. Prevalent innovative behaviour - line extensions - does not rank high with consumers in terms of innovativeness. Companies could allocate resources for more creative products although it might mean fewer new product releases.