"Over time, we're seeing fewer and fewer new brands come into the marketplace. This has not been a time for innovation in the marketplace overall," said Leon Nicholas, vice president of retail insights and solutions at Smurfit Westrock. However, "something happened last year," he said: The new brands that did launch were smaller companies that have yet to achieve scale, or are worth under $100 million. Citing Circana data, he said that small brands traditionally accounted for 20% of new product launches, but last year they comprised 37%. In 2023, small companies "had a breakout year. They began to capture, all of a sudden, a much bigger proportion, not only of new items, but of new dollars coming into the marketplace," he said.
Emerging brands are bringing more energy and distinctiveness to conventional marketplaces, and retailers therefore want to partner with them to tap into that energy. We're starting to see the retailers prefer those emerging brands to bring that excitement because big-name brands aren't bringing in the same consumer excitement, Nicholas said.
Therefore, those smaller brands are gaining share of space in the store. Smaller brands also are finding consumer needs that large, legacy brands didn't know existed and are taking some risks in the marketplace. These tactics especially help emerging brands connect with Gen Z, a population that retail is still trying to figure out how to best reach, Nicholas said.
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