Unsatisfied demand of product world-wide
By Philippe Guinaudeau, CEO BrandTrends
With consumer demand being the driving force behind sales world-wide, both brands & retailers need to ensure that they are fully equipped and well prepared to keep up production, and ultimately supply the products needed to meet demand. World-wide consumers are experiencing their demands for products not being satisfied. This failure to not have adequate inventory is a serious problem and can have a detrimental impact on business.
Why are brands not satisfying product demand?
There are a number of influential factors which can result in companies not meeting their consumer demands. One factor to consider is a point that was raised in a previous article, that retailers are falsely predicting a decline. After a brand experiences its first 2 years of popularity, inevitably new brands will launch, and limited shelf space once dedicated to a product will be taken over by newcomers.
Even though the brand may still be firmly placed in the hearts and minds of the kids and a demand is certainly still there, retailers are instead opting to add new products.
Retailers are placing less orders with the manufacturer, the products are being sold out quickly and thus product demand is unsatisfied.
The predicted decline by retailers in product popularity after two years does not match up with consumer demands. If we consider Paw Patrol as an example, we can see that since its launch in 2013, it has become increasingly popular amongst young children and has grown into one of the largest properties in entertainment.
According to NPD’s Retail Tracking Service, from 2015-2018, Paw Patrol generated close to $1.4 billion in revenue across the categories of DVDs, books, toys, and video games. In 2018 alone, the Paw Patrol brand experienced 148% growth in revenue, compared to 2015.
This example of Paw Patrol’s success demonstrates that once a child had formed an affinity with a brand it can have lasting appeal that sticks far longer than just 2 years. This highlights the importance of producing merchandise and other content in order to engage with an audience and satisfy consumer demand.
As a result of emerging economies and growth of the internet, companies are experiencing an increase of product demand world-wide, which many are unable to keep up with. A prime example of this is Lego’s struggle in 2015.
The company experienced an incredible spike in sales with the success of their new ranges such as Star Wars and the launch of the Lego Movie. The toymaker immediately boosted production around the world in an attempt to fulfil the surging global demand and invested millions of euros to expand factories in Mexico, Hungary and Denmark. However, because of this, Lego failed to keep up with demand in European countries.
It is clear that both brands and retailers have a long way to go in order to satisfy the growing demand for products world-wide. Not only does the failure to meet demand have a negative impact on sales, but it can cause consumers to lose interest. For a buyer, finding out a product is unavailable is frustrating and they may choose to go elsewhere. Both retailers and manufacturers need to monitor the customer demand more effectively and remain diligent with inventory management to ensure that they can always meet demand.