Although the holidays are over – it is apropos to still use the phrase, ‘Tis the Season’. The season I’m referring to is the season for predictions on retail in the coming year. I’ve read some very insightful pieces from some very smart people, including those by Dwight Hill & Justin Honaman. Some of the pieces focus on technology, others on format, and still others on changing consumer habits. The overriding message I’ve picked up from all of them, however, is that the pace of change is not going to be slowing down in retail anytime soon and the ‘adapt or die’ mantra is no longer deemed overly dramatic.
Which brings me to the concept of innovation. More often than not, one connotes the word innovation with technology & technological advancement. Obviously the pace of change on the technology front literally defines ‘innovation’ and retailers can benefit from this greatly (more later) but innovation doesn’t necessarily have to come in the form of magic mirrors or BOPIS.
Retailers scrambling to keep up with the industry leaders that are often defined as the ‘most innovative’ need to look at their whole business model on ways to innovate. A few examples:
- Store Format – Wal*Mart started years ago experimenting with smaller format stores and now have over 650 of them. While Macy’s continues to face challenges with the full sized department store format – they are actively pursing the small format discount play. Many retailers can innovate here by experimenting with different formats to determine where they can maximize margins and revenue. It’s expensive, yes, but certainly not more expensive than obsolescence.
- Labor Model – The associate challenge is a major pain point in the industry as retailers grapple with the transition of stores from the brick&mortar channel to hubs of omnichannel commerce. The role of the associate is changing rapidly and retailers can innovate here with new processes that account for more efficient labor and better customer service. Staples, Best Buy and Ralph Lauren are all going about the labor model differently and it’s either helping their bottom line or their customer service.
- Culture - Like athletes or professional singers who, through training, develop muscle memory to better perform – so goes innovation. Retailers who provide opportunities through its culture for its personnel to collaborate & experiment, ultimately will find ways to solve problems more effectively. I know, I know – that is ‘squishy’ but just ask Clayton Christenson – he’ll back me up.
Now, to what I referenced above. Technology will, without a doubt, play a role in these three areas I referenced. But the tip of the spear on the innovation is not purely technology. As the well-known Macy’s story proves out – innovating with the latest technology isn’t always enough. But that’s the topic of my next blog…..