Converting Shelf-Based Scarcity into Innovation by Adopting Customer-Focused Innovation Approach

Innovation, nowadays, is increasingly motivated by bottom-line considerations. Customers' desires, needs, and preferences drive company innovativeness, even in a slow growth industry such as the food sector. In the analysis of the introduction of new (or improved) private label products in this sector, desirability and scarcity have been identified as the main elements of leverage in customer behaviour. However, product is considered desirable and scarce only if other individuals are buying it. Customer behaviour is not just affected by a direct observation of other customers, it is also influenced by traces that other customers "leave behind" such as empty shelf space (van Herpen et al. inJournal of Consumer Psychology,19(3), 302-312,2009, 303). This phenomenon, known as shelf-based scarcity, has attracted previous research that, in the main, refers to customer behaviour but not to the performance and innovativeness of firms. In fact, shelf-based scarcity can stimulate four categories of innovation: new uses (positioning), new ingredient (formulation), new packaging (packaging), and new production processes (technology). Therefore, through the lens of a customer-focused innovation approach (CFI), this research seeks to bridge this gap and offers a qualitative analysis of one of the largest food retail chains in Italy. The scope is to present the positive aspects of shelf-based scarcity in the innovation process and encourage food retailers to leverage outcomes which stem from this phenomenon in order to enhance their innovativeness.