This post is part of our Big Ideas series, a column highlighting the innovative thinking and thought leadership at IIeX events around the world. Georgina Nelson will be speaking at IIeX Europe 2019 in Amsterdam. If you liked this article, you’ll LOVE IIeX Europe. Click here to learn more.
Innovation or Distraction?
There is an increasing tendency, in our tech-oriented world, to conflate innovation with chasing the newest and shiniest gadgets on the marketplace. The retail industry is certainly not immune to this ‘shiny bauble’ syndrome – head to the floor of any retail show and you’ll find a sensory overload of technological solutions. From augmented reality, to drone-drop deliveries, smart changing rooms to virtual assistants, it’s a Brave New World indeed. Yet unless these new technologies meet a genuine need or solve a real issue – are they anything more than a distraction?
‘Tech for the sake of tech’ is surely a red-flag strategy, and unless retailers are getting the basics right, no number of new toys will make up for the deeper issues your business may be struggling with.
While the rules may have been updated, many tried and tested fundamentals remain the same as they always have. No matter what type of business you’re in, you need to be focused on:
- Driving increased value from your existing customers
- Creating experiences that will bring them back again and again
Yet for many retailers, understanding the needs and wants of the core customer base remains a perpetual challenge. Which begs the question. How can you expect to provide exceptional experiences, if you struggle to understand what it is about your business that your customers actually value? How do you set your strategic direction, if you’re not clear where you’re currently failing?
It’s all too easy for commentators to look back and plot a clear path connecting the challenges of brick & mortar retailers today with a failure to take the rise of digital seriously. Yet in 2012, when Walmart’s sales were 16 times greater than Amazon’s, such a world was not so clearly foreseeable.
This is the background to Doug Stephens’ Reengineering Retail, a contemporary call for retailers to place innovation at the heart of their strategy. For Stephens, the businesses that are willing to place innovation at the heart of their strategy are the ones that will survive. If the lessons of recent history have taught us anything, it’s that, “in the future, the only real certainty is that someone is going to completely reinvent what you do.”
Although he delves into a wide variety of the economic and sociological factors behind the current retail climate, Stephens’ fundamental argument is a familiar one – if retailers are to survive in today’s environment they must ‘evolve or die’. For a ‘futurist’ like Stephens “if your strategy doesn’t make you a little queasy, it’s probably not that innovative.”
While there’s much to be said for a bold vision of the future, where shop-floors provide immersive entertainment experiences, for those with a shorter runway are there not more direct measures that could be taken?
Getting the Basics Right
In our experience, we’ve found that the retailers who are able to listen to their customers, and quickly apply these learnings, are the ones who get it right. Innovation doesn’t always have to take the form of a giant leap, sometimes the ‘small steps’ can matter just as much.
Working with one retailer, we discovered that something as a simple as a smile has a significant impact on customer satisfaction and spend. By implementing a basic training program around greeting the customer, the retailer saw immediate improvements in both loyalty and basket spend. Revolutionary? Perhaps not. Impactful? Without a doubt.
A sports retailer who was struggling with the perception of value and missed conversions, found that a new KPI requiring staff to recommend up to three options when a customer entered the store had dramatic results. Over the course of four-week pilot, the stores which implemented the new program saw a huge 30% increase in spend vs. their test stores.
Of course, this isn’t to say that retailers should ignore technological developments – indeed, we agree with Stephens that the businesses that thrive are those that innovate and evolve at a pace that outstrips their closest competition. But it’s how a retailer tests and measures their innovations to be sure that they’re evolving in the right direction that’s vital. If you can ask your customers and get fast responses from the majority, you can be confident that you’re heading in the right direction.
While we know that retailers are feeling the strain of a fast-moving environment, there is absolutely some post-Christmas cheer to be enjoyed. At the NRF annual retail show in New York in January, it was announced that in spite of doom and gloom predictions, the US retail sector saw a year-on-year increase in consumer spend of 5%.
The appetite for traditional retail is very much alive. And why is that?
Listen to what your customers are telling you – you might just find the answers are less complicated than you’d been led to believe.