Getting to 2010: Innovation Required
By George Anderson
A press release put out earlier this week by the research and consulting firm Retail Forward begins: “Despite fast-changing customer expectations, shortened product and retail life cycles and rapid technological advancements, many retailers have not taken advantage of opportunities to innovate.”
A newly released report from the group, Retail Innovation: Ten Opportunities for 2010, sponsored by American Express identifies areas of consumer need that offer retailers the best prospects for achieving a competitive point of difference and business growth in the future.
- Catch a wave – Address market opportunities presented by changes in society such as demographics, technology, etc.
- Solve my problem – Bundle products and services to focus on providing solutions for “task-oriented shoppers.”
- Do it for me – For all those consumers who ask, “Why DIY?”
- Help me choose – Too many choices, too much work, too little time, too, too, too – consumers want help deciding what to buy. Try sampling, in-store kiosks and other
means to help shoppers make choices they will be happy with after they’ve left the store or Web site. - Come to me – As the saying goes, “If Mohammed won’t go to the mountain…”
- Enhance the experience – Creating a point where entertainment and retailing meet.
- Make it easy – ‘Nuf said.
- Do it my way – Going beyond personalization to let consumers in on the development process.
- Help me connect – “All the lonely people, where do they all belong.”
- I want it now – Fast is good. Faster is better. Fastest is best.
Moderator’s Comment: Where do you see opportunities for retailers to innovate and grow their business? If you had to choose one, what area do you think
holds particular promise?
The President of Retail Forward, Tom Rubel, said in a released statement, “For retailers in the maturity phase of their life cycle, innovation will be more
important for growth than organic expansion in the years ahead. Looking back, retail innovators such as Woolworth, Sears, JCPenney, 7-Eleven, and Wal-Mart revolutionized the retail
industry. Their innovations changed the rules of the game. They brought about drastic changes in the behavior of competitors, reinvented the industry’s economic model and improved
the customer experience.” –
George Anderson – Moderator
I’ll go with number 7 – “Make it Easy.” As the population ages, the number of product choices continues to grow along with the options on many of those products, and as consumers continue to be bombarded with ever new forms of advertising, many want SIMPLE solutions. Witness the disconnect between the number of camera offerings in a Best Buy or other electronics stores and the popularity of disposable cameras. And now, they are coming out with disposable VIDEO cameras. Point being, life is ever more complicated. Help consumers simplify it by making products easier to use, providing education for more complex items, and give them programs like Staples E-Z Rebates, and you’re on the right track.
These were great comments and a look into the future. The Bloom Store is a great example of a format looking to adapt to the customer rather than the reverse. Stew Leonard’s learned a look time ago that assortment is never a competitor to fun and quality.
I am a believer in the principles of innovation outlined in the book, “Innovators Dilemma.” Essentially, you can either innovate around existing consumer needs (continuous innovation), or you can innovate around emerging or poorly defined consumer needs (disruptive innovation). Existing needs inevitably involve offering “more for less” in some way, shape or form.
Based on the list provided, I’d rather focus on a combination of “catch a wave” and “solve my problem.” More, I’d rather be working on “problems” before the consumer is even fully cognizant of the problem itself. Yes, this is possible.
My take on retail innovation is straightforward. The skills, organization, infrastructure and personnel necessary to “win” in continuous innovation are very different than those to “win” in disruptive innovation. It is categorically impossible to do both effectively without separate and distinct resource groups, operating structures, systems, metrics, and reward methods.
Online retail is an excellent example. No superior brick and mortar operations have excelled in the online space.
Retail executives seeking to sustain their growth 5 – 10 years out should be looking at emerging demographic and lifestyle trend elements today — not trends themselves, but trend elements. If the “need” is clear today, it’s a low profit option 5 years from now. What you want are needs that will become “conscious” within 5 years.
This is a good, if conservative, list. I have always leaned toward the “solve my problem” approach:
“Don’t just sell me groceries; help me manage my pantry.”
“Don’t just sell me lumber; help me succeed with my home projects.”
“Don’t just sell me a suit; advise me on building and maintaining my wardrobe.”
“Don’t just provide me with a checking account; help me manage my finances.”
Product/service bundles can be a good counter strategy to EDLP. They are not necessarily luxury offerings, although they can be. Thoughtful bundling can lead to “co-invested” loyalty between marketer and consumer – the best kind.
As always, you have to know your consumer and your category. The retailer that can make it easy, fun and exciting to shop with will be the big winner. The list of ideas was excellent and should give any retailer a lot of food for thought. Demographics and time pressures stand out for me as some of the most important on the list.
It will probably be “Other.” The rest of the list involves refinements of known themes. Who could have forecast Wal-Mart in 1957 or Starbucks in 1966? However, if any of you are planning to become the next Sam Walton, please give me a call.
I want to say demographics, but it’s not exactly; it’s more psychographics. The biggest changes are in how people view shopping, possessions, experiences and consumables.
Aging baby boomers are changing their attitudes. Younger people have grown up in a dramatically different world than we have and have entirely different attitudes about their possessions and the ways in which they choose to live. I believe these factors make the most difference in how people shop and what they buy.
Sorry, I have to pick two, but they go together – “Help me choose” and “Make it easy.” Now let me get back on the Packaging Soap Box. The importance of packaging, and both shelf impact and performance, are going to make a bigger and bigger difference in the future. Consumers need to be able to make quick choices from the shelf; and they need to be sure the product/package performs or they won’t be back. Making the product opening/usage/closing/etc intuitive is key, so it has to be easy and simple and not take much time. In fact, as you look at the top 10 for 2010, packaging will be a major player across most if not all 10 trends. I just don’t understand why so few get the importance and value packaging.
From the consumer/shopper side, demographic changes (e.g.: 1 in 7 who live in U.S. are Hispanic), knowing your consumer and their needs, and entertainment value/theater are the keys to retailing in the future. Requirements to business and the key to gross profit margin aren’t all operational anymore. Hmmmmmm