Photo: IRCE
Innovation: Are retailers trying to do too much?
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
One of the best bits of advice I ever got was delivered to me when I was a newly-minted IT project manager: “You need to focus on doing what you do well so that the things you don’t do so well aren’t as obvious.”
That tidbit came to mind when I heard Morten Hansen, a management professor at U.C. Berkeley and author of “Great At Work,” at the NRF Tech meeting in June. His talk was about “How top performers do less, work better, and achieve more.”
What does this have to do with innovation in retail? The industry is under tremendous pressure to innovate. Not long ago, one speaker at an industry event stated, “The new model for retail is ‘platform plus’ … It’s all about more, more, more. Retailers cannot focus on their core; they need to add pieces to their platform, to their core, to their foundation.”
Here’s the thing though; all the innovation in the world isn’t going to help if you don’t know what that one special thing is that consumers want from you. Sometimes, retailers need to go back to look at the value proposition.
Our recent survey about the state of innovation in retail (full report due in September) shows retailers are in a hurry to do more. Few choose “to do less (but better).”
Source: RSR Research, August 2019
Professor Hansen advises against trying to do too much in his book, but instead “do less, then obsess.” I think he’s right. While keeping up with consumer adoption of technology is really important, it’s not innovative — other retailers have managed to do that. Same with merging digital and physical shopping environments and creating hyper-responsive supply chains.
Ultimately, retailers need to answer, “What’s so good about our experience that consumers will pass up our competition and experience it with us?,” and then nail it. Ironically, executing to the nth level of precision with a laser-like focus on that one special value proposition might even seem innovative.
Discussion Questions
DISCUSSION QUESTIONS: Have retailers tended to lose focus on their core value propositions as they invested more in innovation in recent years? What advice would you have around balancing priorities toward the new versus the core?
Poll
BrainTrust
Dave Bruno
Director, Retail Market Insights, Aptos
Michael Terpkosh
President, City Square Partners LLC
It’s not necessarily that retailers are doing too much, it’s that they’re doing things without thinking about what customers want or the true benefit to the organization. There’s too much innovation for the sake of innovating!
I 100 percent agree. Too many retailers today have lost the plot. The frenetic pace of change is causing so many retailers to distract themselves, often launching too many new initiatives that overlap without a full understanding of what any of it is actually accomplishing. While there are certainly core services that every retailer must provide to compete, ultimately executing the basics and focusing on the true value the retailer actually delivers to customers is key. Retailers need to get back to basics – focus on serving the shoppers in your stores and delivering great service.
Today’s retail environment is tricky. Retailers are trying “new things” to stay relevant and successful. The danger is expanding beyond the core of what the retailer is known for. My advice is simple: Don’t forget who took you to the dance – and why. Our customers can tell us a lot about what’s working, what’s not and where we need to go. Take a look at the customer’s journey with you. Look even deeper to find out what got them to you in the first place. The “why” behind the reason a customer chooses a retailer is every bit as important as their actual experience. That will help retailers decide what path to take in the future.
The short answer is a quote from Rowan and Martin’s Laugh-In: “You bet your bippy!”
It is amusing how many retailers believe the latest soundbite, cool thing, etc. applies to them when it doesn’t. Pre-owned clothing, rentals, additions to a product assortment that do not fit the basic story, etc., are all too obvious. Other retailers measure what they want to do and add to their repertoire – whether in technology, service, or product – and then stick to it with laser-like focus. Continue to watch this phenomenon as you will see retailers pulling back on some of these square pegs in round holes, or they will lose market share.
There is lots of research showing that “innovate or die” is not true and, indeed, the opposite may be true. When was the last time you heard a shopper say, “I shop at this chain because they are so innovative”? Brian is right — do what you do that makes you, you — and do it really well.
It’s called being brilliant on the basics. Unfortunately many retailers are throwing the basics out in an attempt to bolt on Frankenstein concepts and boneheaded ideas that have no impact on why someone would choose to shop with them over someone else.
These days, the core is no more. The good news is that even the most insular retailers have learned how to walk and chew gum at the same time. Target and Walmart are examples of retailers that have fully embraced the power of strategic partnerships and in Walmart’s case, acquisitions, to accelerate innovation. Bottom line, retailers aren’t having to go it alone or rely solely on their (former) core capabilities. My advice remains to buy (acquire), build (internally) and bridge (partner) simultaneously based on an honest assessment of competence and opportunity. Flexing between these options is the future. Retailers don’t have to juggle all the pins.
Beware of S.O.S: “Shiny Object Syndrome.” Testing new ideas which, if successful, would add value and reduce friction for customers is a great idea. Rearranging deck chairs, not so much. Too often industry leaders chase new “shiny” ideas without considering the long-term value to their customers. Are you fixing something that is broken (long checkout lines, missing inventory), or providing added convenience (faster delivery, curb-side pick up, digital payments)? Most importantly, do you have the fundamentals of product assortment, inventory, and ease of shopping optimized? Which products and services are of most value to YOUR distinct customers?
The article is spot on because one of the biggest problems today with too many retailers is their desire to be everything to everyone. It just doesn’t work, and lack of sales prove it, especially when customers have no idea what the brand stands for and why they should shop them. Could you imagine walking into an Apple store, which has tremendous brand value, and see it selling clothes, food, and other items? Of course not, but you can walk into many retailers who at one time stood for something only to now see them cluttered with all the items everyone is else selling. It’s ridiculous and no doubt why so many retailers who at one time were successful are struggling. The adage “less is more” applies here because as the article states, it’s always smart to focus on what you do and do it better than anyone else. That’s how an individual succeeds, and that’s how a business succeeds. Unfortunately, these days, there is a lot of pressure to make money today and not worry about tomorrow. As a result, there is too much short term thinking with retail leaders scrambling, trying this or that to make short term sales. It’s not wise and it works against you. Stay focused, go with what you do best, know who you are, and let your customer shop you for those reasons. That’s how you’ll win every time!
Retail can not survive by investing in innovation for innovation’s sake. Short-lived bursts of innovation-driven PR that do not deliver long-term value to the customer (or the bottom line) are a distraction and can lead to significant damage to the long-term prospects. Focus on what will impact the customer, and invest in innovation accordingly.
I think a more fundamental problem is that the core value proposition of most retailers has been destroyed by online shopping. At its heart, retail used to be about bringing multiple brands together to make it easier to shop. A grocery store means I don’t have to go to a baker, a butcher, a dry goods shop, a cosmetics shop, etc. A department store means I don’t have to go to multiple brands to get an outfit. But when all of those brands are merely a tab away on a browser, then that calls into question the purpose that retail actually serves.
So I think the short answer to the question is yes, retailers are trying to do too much, but it’s because they have no idea what they *should* be doing. Because everything they ever did to make themselves successful is suddenly in doubt and unreliable.
Which means that the other half of the answer to this question is, “but they shouldn’t stop trying,” because I don’t think it’s really about going back to their “core.” I think it’s about discovering for themselves what the new core needs to be. That does require knowing shopper needs and wants and focusing on those (rather than “spray and pray”). But it also means a concerted effort on experimenting – experimenting with purpose.
I couldn’t help but to rephrase the question as “Have retailers tended to lose focus on their core brand promise as they invested more in innovation in recent years?” Brand promise. Is there clarity? Focus? Consistency? (And yes, consistency allows for evolving the promise.) Consider Lululemon. I actually find Lululemon stores to be boring, but that doesn’t mean I recommend any big changes. Why would I? They are totally focused on their core brand promise and they execute that promise with clarity, focus, and consistency. AND they have evolutionary and growth strategies in place. I am not even a little confused. Same for American Eagle Outfitters, but with the fun and freshness of constantly flowing new product. Whether it’s called core value proposition or brand promise, a huge part of delivering on the promise is storytelling. And the healthy retailers of the moment continue to be good to great storytellers. Stand in the middle of the floor of most mid-tier department stores today and tell me what the story is. I’ll wait.
Too many retailers are frantically adding new things – and dropping them just as quickly – for the sake of keeping current. Will the Millennials like it? Will it attract Gen Z? This frantic search for new at the expense of your core customers is dangerous.
Retailers, in search of what’s new and shiny, aren’t helping the in-store experience. Shoppers of all ages still expect good service and a solid assortment of whatever the store is known for, and in many cases that’s not happening. If you don’t nail the basics you won’t be around to showcase the next big thing.
At RSR we call this BSOD – bright shiny object disorder. As Neil says: think about what the customer wants, and ways to provide it without spending a fortune.
Right on Paula! I was thinking about the same concept, “shiny objects.” The media starts to latch onto some key phrases or technologies and companies think they need to jump on board. Unfortunately, many of these technologies don’t make the customer experience better and in some cases they make the process cumbersome for associates and/or consumers.
It is amazing, but we all fall into this: we allow the competition to run our business. When a business starts a movement (which may be perfect for them, and well thought out), many competitors jump onto the strategy to stay, in their mind, on the competitive edge. There are times I don’t think that is the wrong thing to do. However, we have always stressed the importance of running your own business, and being great and unyielding at what you do and who you are. Never let the competition run your business; keep your eyes on your customers, their actions, purchases and what they say. Simply ask customers: “What one thing could we do to make your shopping experience here better, easier, etc.?” You will be amazed at what you hear, and this is certainly what you must change or offer.
Brian’s closing sentence nails the obvious answer: retailers have lost focus not only on their core value propositions but have, more importantly, lost focus on their customers. Shopping most chains is painful in terms of the customer experience, especially when compared with emerging leaders who know exactly what they are, who their customers are and why their brand, CX and merchandise (oh, that!) are relevant.
There is so much relentless pressure for retailers to drive new ideas, concepts and innovations. However, even if we are in the digital age, the “age of the customer” has to remain the most critical priority to drive outstanding customer experiences. Innovation for the sake of innovating is a zero-sum game.
The core company principles have to be the foundation to build upon. Purpose led innovations should enhance and optimize an already solid relationship between the retailer, brand and consumers.
Based on the past in retail, here is what happens way too often. A retailer opens stores, becomes successful and then starts to fine-tune the retail format. Before you know it, the retail store has changed and the customers stop coming.
I totally agree retailers must stick to their core value proposition FIRST. Know the consumer, give them compelling reasons to shop your store, turn them into customers and then stay focused on how best to keep them coming back for more. Nothing wrong with innovation, but it does not replace knowing the customer and excellent customer service.
Retailers dismantled the specialized core of their business years ago, by replacing human buyers with computerized buying. Centralized buying turned great regional assortments into seas of sameness at the store level. True innovation, innovation able to touch the hearts and minds of a specific retailer’s customers lies in the product and product assortments. Which is why Target, who reinvented itself back to Target of the past is one of the best-performing retailers today. Great products merchandised to excite and inspire their customers to buy, buy, and buy. Sure Target has leveraged a number of technologies for customer convenience, but not at the expense of their core, the product. Retailers tend to flip and flop chasing the newest, next big thing. This is unfortunate for many retailers who are now experiencing a slow death, as a result of losing sight of what was their core business — product, not technology.
At various times in my career I would have a very frustrating conversation with my father. He would ask me how work was going and I would begin telling him a complicated story. He would interrupt me, forcefully and repeatedly, with a single question until I could answer it in one simple, succinct sentence (often shouting it out of frustration). The question was “what are they payin’ you to do?” Of course, as soon as I said it my whole world simplified, my to-do list and my worries shrank. I call it “the one sentence job description.” The retail equivalent is “why are my customers coming to me?”
Ask it and then – as the author recommends – nail it.
The commentators before me make the pertinent point well — Yes! But here’s the thing — this is a battle against organizational momentum and the pace of business as much as anything else. I grew up in the brand management world and the Holy Grail was “new products.” So much so that we regularly launched mundane line extensions to satisfy the clamor from retailers, our own sales team and senior management for “something new and exciting!” Later as a senior manager and then consultant I regularly railed against the wasted energy and investment in chasing meaningless change for change’s sake. I was so successful in my crusade that the entire industry has stopped talking about “new product introductions” — now they call it “innovation.” Good grief, Charlie Brown! So why should we expect retailers to be any different? There is an undeniable inertia driving the quest for innovation — whether what we are doing is truly innovative or actually meaningful is completely lost in the frenzy.
Over the last year or two we have read about so many innovations that just plain don’t make sense. There doesn’t seem to be a thought about “why” do it. The retailers are looking for a silver bullet that will turn things around. Business doesn’t work that way.
You have to start at the top, know who you are and know who you want to be. Innovation is a total business concept, it is not a one-up idea.
Disruption is the new goal; move fast and break things is the new mantra. But practical, meaningful solutions don’t necessarily require bleeding edge tech. The winning strategy will focus on the outcome – a workable solution that serves customers more effectively — and will utilize technology only if it serves that outcome.
You can solve problems or you can see possibilities. Those are quite different intentions. Another way to put it is you can fix yesterday or you can create your future. Truth is we have all been conditioned and rewarded to solve problems. That’s kind of like taking classes on how to tread water. What we’re slowly realizing is that doing so might keep you solvent but not differentiated. Far too much time is spent throwing spaghetti at the wall when the only question retailers should be asking is, “what is possible?”
And please stop looking for “best practice!” You’ll only find “current practice” because the highest possibilities are still out in the ether. It’s not about doing too much, it’s about doing it too wrong.
There are three varieties of innovations or possibilities. Adjacent ones refer to the minor tweaks in what you currently do. This is what you get from an employee suggestion program because it’s safe. Non-adjacent ones show the courage to stretch a little and challenge the status quo. Usually this will get you a pat on the head and a hint that you should get back to doing your basic job. Transformational innovations or possibilities are out on the fringe, the game-changers, a redefinition of retail. Unless it comes from the CEO or owner, these are not usually tolerated resulting in the transformational thinker leaving and starting her/his own business.
This outer ring is where we find da Vinci, Curie, Einstein, Lamarr, Walton, Jobs and Bezos. You and I can be there too but we need to learn to see and think differently and stay out of board rooms. As we all know, no one has ever had a good idea in the middle of a meeting.
Interesting one. For me there is not enough innovation. It seems that too frequently clever ideas come from new “upstarts.” I worry if part of the problem is the perception of failure – you have to fail fast and recognize the learnings, but often this is perceived as BAD both for the individual team members personally and for those looking in.
Avoiding this demands cultural change – admitting that not everything is going to be a success.
Back to the future! I agree with a lot of comments above. If innovation doesn’t make the customer experience better or operations more efficient, then don’t do it. As Ken Morris always says, “just because you can, doesn’t mean you should.”
Many retailers have current issues that need to be addressed first. Going back to the basics of great customer service may be more important than innovation.
That said; if innovation can makes the experience “better,” then do it!
Despite claiming to focus on the customer, it’s true that too many retailers are losing this focus in the name of innovation. There are really two important factors here. First, is that new shiny innovation doing something the customer values that makes their overall shopping experience better and easier? Or is it just improving an operational process for the retailer? If the latter, then the retailer should consider if there is an additional impact to the customer that is favorable. Otherwise, they run the risk of innovating for the sake of innovating and investing in something that risks hurting the customer experience.
Second and equally important – has the retailer asked themselves how this innovation will scale across all of their stores in a way that consistently delivers what the customer wants? That question of scale is so often overlooked. Just because you make it work once doesn’t mean you will make it work at 100 stores! If you can’t define how you will scale, then that might not be the best innovation to invest in!
Regardless of product category sold (e.g., TVs, apparel, food, etc.), 90 percent of retailers’ core competency is literally “pile it high and [hope] it flies.” And that competency hasn’t changed much in the past 100 years. Innovative retailers are leveraging technologies that augment the human capabilities of inventory management, merchandising and other key business functions. The risk of pulling back from “trying to do too much” is not doing enough with the basics.
Innovation is a significant positive change — could be technological, but it could also be in team performance, financials or customer service. It comes from thinking and then doing things in a new way (vs. how we’ve already done it.
Brian is right on here — keeping up with consumer adoption isn’t innovation. Merging online and offline isn’t in and of itself innovation. Having a “innovation group” isn’t actually innovation. But they’re all mediums to potentially innovate.
We have lost our way as an industry. This isn’t about the technology. It’s about using technology and developing our businesses to meet the needs of human beings. The only assurance we have about the future is that it will be different. The best thing a retailer can do is to develop their teams, their culture to be one that can support change over time to meet those customer needs ever more efficiently and effectively.
I think as many retailers have reached saturation in their traditional areas, they’ve looked around at related concepts, e.g. Walmart’s foray into “neighborhood markets” or, as the case with JCP’s foray into appliances, the core wasn’t saturated as much as just not performing well. Whatever the motivation, in either case the result was similar: tacked-on efforts that ended up more of a distraction than an expansion. That having been said, I wouldn’t necessarily call the efforts a mistake: many times valuable information is gained … even if it’s only “don’t do this again.”
Doing more is important if it is coherent. The problem some retailers face is that they have lost sight of their core value and simply innovating to imitate the competition. Can’t innovate just to be different, you have to innovate to improve the core value to your defined customers.