When it comes to innovation, retailers need to focus on the critical few versus the trivial many. I recently heard the CEO of a major chain say, “we literally get pitched hundreds of solutions a year … we’d love to do a lot of them, but we simply don’t have the time and resources to evaluate them all.” Herein lies the challenge that retailers face: there are so many solutions available that determining which solutions to evaluate let alone implement is a problem. Retail executives need to be clear about their business objectives, set priorities and then narrow their focus to explore the solutions that can help them achieve these.

Senior leadership is the key to creating a culture of innovation and change. The retailers I have seen do this best formally allocate people/budget to help establish priorities and oversee the testing of potential solutions.

Innovation is dictated by a combination of imagination, perceived return, trends, culture and the personality of individuals making those decisions. Executives are exposed to some innovative approach and some get it immediately. Others can’t see past their nose. Some are daring and will try a bunch of things and some lack the imagination to try much. As soon as we say “leading edge” we narrow the number of executives we can include in the mix. Most follow, few lead.

It all starts with culture. Historically, retailers have demonstrated a shared culture that is risk-averse, favors proprietary solutions, uses retail industry benchmarking as a primary metric for success and has shown a disdain for people who haven’t grown up in the business themselves. This is a losing culture for anyone interested in getting serious about innovation. Retailers also need to understand the difference between “new” and “new to us.” Much of what retail accepts as leading edge technology is a decade or two old if you go back to beta forms. So how do you fix this? Start by making certain strategic hires outside the industry — from areas like high technology, anthropology, design thinking, etc. Next give them a full voice at the table. There’s no point in hiring somebody for show and then not listening to them. Then you want to develop a true customer-centric culture, thinking through the business on the basis of customer desire, need and expectation rather than force-feeding everything through a logistics and efficiency model. And finally retailers should… Read more »

Generally it’s competition that moves the needle. Capitalist factor number one. There’s an old expression in retail that it’s better to be a fast second than a bleeding first.

However, in the age of Amazon, I believe that’s all out the window now. The speed of retail is such that being second is tantamount to losing a LOT of money and loyalty. Today, innovation has to be part of your life blood and culture, not just something you do “or else.”

And therein lies the problem with most “old school” retailers today: they’re stuck in the fast-second world and are not actually capable of innovative thinking.

The first step to saying yes to innovation is to be innovation-ready. No, that does not mean a retailer must get rid of all the legacy software clogging up the computers, but it does mean creating an infrastructure based on a core. A core is established by looking at mission-critical processes — processes focused around customers, suppliers and employees. Once this is in place and with the right culture, retailers are better prepared to say yes to innovation and to even know what innovation best suits their brand.

I also agree with other posts here that retail needs to bring in some fresh blood in order to accomplish this. It is too easy for the long-term staff to become inundated with the chicken wire and duct tape that is holding it all together today.

But that’s just my 2 cents.

The one-word answer is — TEST. Or probe, or explore. Listen and learn, as one of my early bosses encouraged. Last year’s data used to be a good starting point. Now it’s last week’s and yesterday’s. What’s trending and what’s next? You can guess or you can test. Testing is replacing opinions with data in real-time.

It might not be possible to operate an entire retail entity on this premise, but you can operate enough of it to make the whole business reflect a patina of fresh and forward. Needless to say, merchandising, design and the supply chain have to have the mentality and infrastructure to execute this kind of strategy. I am reminded of a conversation I had last week about Fall ’17. To paraphrase, “It’s done. We are starting to look at Spring ’18.” Change happens. You either create it and manage it or constantly play catch up.

The problem is that most retailers operate in a CFO-centric world where IT budgets based on a “hard savings” perspective and the annual planning processes are based on a goal to reduce IT and business spending by X percent. This hard savings approach is short-sighted and lacks the ability to consider innovative projects and investments in the future. Retailers need to consider the “soft benefits” of investments in innovative technology that drive increased satisfaction and so-called soft sales benefits. Retailers that will be successful in the long-run will use soft analysis to help drive investment decisions and will invest in the infrastructure that enables innovative technology that drives a better customer experience. Innovation is powered by the “soft” approach. Some of the key areas that should be focus areas for innovation relate to real-time retail capabilities. The truly innovative companies are moving as much technology and as many applications as possible to the cloud (or hybrid-cloud) to enable real-time visibility and access to customer information and products. Real-time retail improves the efficiency of operations, such… Read more »

Why innovate? Is it declining sales, competition, old/outdated business models? Yes to all. What brought retailers to where they are today may not keep them there without change and innovation. The key is knowing what to innovate. Unfortunately, too many companies are afraid to innovate for fear of investing in something that won’t work or return on the investment. And, with so many ways to innovate they get “analysis paralysis.” That’s why smart leaders get paid what they get paid. As for creating a culture of change … ask all employees to participate in sharing at least one idea that will change something in the company. It can be focused on making money, saving money, safety, a green idea, etc. Every submission is read. Everyone gets feedback. And, the company shares which ideas are going to be implemented. Do this exercise on an ongoing basis — once a quarter or once a month. I have some clients who do this once a week. Some of the best innovation ideas don’t always come from the outside… Read more »

Two thoughts here in addition to what has already been said:

First, decision making around innovation or the adoption of new technologies needs to be grounded in a fundamental understanding of your current and/or target customers. Knowing not only how they shop but what their broader needs are should be a primary filter on where a retailer decides to focus their resources available for innovation.

Second, it’s a lot easier to come up with innovative ideas than it is to put them into practice. Integrating innovative experiences, services or products into an existing business requires a lot of attention to less sexy aspects like governance and project management. I find that a lot of companies struggle with the discipline and attention span required to implement their ideas well. Sam Stern at Forrester has done some great work illustrating the importance of these more difficult and “less fun” aspects of CX and innovation.

Steering a ship in stormy weather takes significantly different set of skills and decision-making than during calm seas. Retailers are like mariners, they need to excel at running the steady state (highly predictable) as well as being adept at dealing with abrupt changes and gut-wrenching storms in real-time (survival). With the onset of the digital economy and its disruptive character in the form of fundamentally changing consumer behavior and technological innovations, retailers are facing unprecedented challenges — and opportunities — to running the business. Playing catch-up is not a viable strategic option and taking comfort that peers are in the “same boat” saves no one from the dangers ahead. So, rather than framing the options in front of the c-suite as a technology issue: “leading edge” versus “bleeding edge,” the focus needs to be on effecting a complete revamp of the fundamental assumptions used to inform the company strategy, its organizational structure, and the relationships among the parts of the business. This requires establishing a fresh mindset that seeks out and embraces change, always brings… Read more »

As the saying goes, “Necessity is the mother of invention.” Retailers need to address many perennial challenges, like in-stock conditions, COGS, etc., while managing emerging issues including e-commerce shipping charges, differentiation, etc. All of these lead to opportunities for innovation. There are some great examples around the world of retailers taking advantage of the newest tools while minimizing the risk of being first-movers. The leadership of these organizations needs to initiate the need and potential for innovation to gain enthusiasm throughout the enterprise.