We recently completed a study to benchmark the state of innovation in retail, aptly named, “Ramping up Retail Innovation”. Symphony RetailAI then asked that we take a look at these findings through the lens of retailers in the fast-moving consumer goods (grocery, drug and convenience stores), general merchandise and hard goods verticals. What we found in “How FMCG retailers are responding to the Innovation Imperative” led us to the following 9 bootstrap recommendations:
1. Information is the new coin of the realm
Information has really been about record-keeping for generations, and information management has strictly been a back-office function. Now, companies like Facebook, Google, and Amazon have broken through that mindset. Today, information about the customer, products and services, available inventory, a company’s own internal processes, the competition, and market-environmental factors all play an important part in getting the right offer in front of the right consumer at the right time and in the right way. Retailers must embrace the strategic value of information in driving their brand’s value to consumers.
The innovation imperative has drawn the attention of the board of directors. But those aren’t the people that will generate the ideas. Over-performing Retail Winners are really good at looking to consumers first, and then synthesizing those ideas with input from the internal team to produce something interesting. Winners are also not afraid to look at adjacent industries for new ideas. But where the over-performers most differ from their lesser-performing competitors is in not waiting for others to demonstrate success before trying a new idea themselves.
3. Don’t be afraid to fail
One of the biggest challenges in piloting new ideas is when success criteria aren’t well established beforehand. But without those criteria, Winners can’t know when an innovation is a good idea or a bad one. The over-performers are adopting a “fail fast” strategy. Average performers and Laggards wait for someone else to succeed with a new idea before trying it on for size. Retailers (and FMCG retailers in particular) have to get past their historical cautiousness and accept that some new ideas aren’t going to pan out – but the ones that do will more than compensate.
4. Build one to throw away
In his seminal 1975 treatise on computer programming, The Mythical Man-Month: Essays on Software Engineering, author Frederick Brooks stated that, “where a new system concept or new technology is used, one has to build a system to throw away, for even the best planning is not so omniscient as to get it right the first time. Hence plan to throw one away; you will, anyhow.” This guidance has been much debated for over 40 years, but the underlying concept is accepted as true. Companies need to prototype new ideas to test their efficacy, select the most promising ones, and then use what has been learned to either develop or acquire the best solution that meets the business need. To facilitate “agile” development, retailers should consider implementing a development platform or environment that facilitates the development and testing of new ideas.
5. Measure every step of the way
Winners expect successful innovations to drive bottom line results. But they pay attention to the means as well as the end result. This becomes important in the context of innovation; the over-performers don’t do things that don’t contribute to the bottom line, and ultimately, the best innovative idea in the world is worthless if the processes that use it aren’t executed with precision. So Winners also focus on the process innovations that go along with new technology adoption, and implement measures so that they can be confident that the ROI will be there.
6. Don’t forget the IT team
The IT organization may not be the driving force for innovation for most retailers, but because innovation today is so information-and-technology driven, IT professionals’ guidance about what’s noise and what is real is essential.
7. Lean on your technology partners
The technology solutions world is innovating quickly, due to the viability of many recent advances in digital technology, including cloud computing, IoT (Internet of Things), agile development methods, APIs (application program interfaces), AI/machine learning, and new user interfaces such as voice recognition. Retail Winners put much more importance to these technological advances than do average and under-performers. The question is, how best to get up to speed on them all? The answer is, ask your technology solutions partner(s) to help you get going. After all, they are betting their futures on these advances; they can help retailers get there too. The largest retailers understand this, and trust their partners to deliver “focused, practical innovations.” There is no reason why retailers across the spectrum shouldn’t take the same approach.
8. Turn customers into advocates
The truest value of any advance in the retail business model is if customers like it enough to come back, shop more, and tell their friends about what a great experience it is. That’s as true today as it ever was, and retailers cannot lose sight of the fact that if consumers don’t care about some shiny new object, if it doesn’t add some magic to the brand experience, then retailers shouldn’t adopt it.
9. Get going on retail innovation
Granting that it’s still relatively “early days” for retailers to embrace the innovation imperative, it’s time to get going. We can’t say it more simply than that. Traditional retailers like Walmart, Target, and Krogers have figured out how to use innovative ideas to compete successfully with market aggregators like Amazon and Alibaba, who have huge “innovation” budgets. Two years ago, Walmart even took the unusual step of warning investment analysts that short term earnings would be impacted while the company invested in new digital innovations. Now in 2018, the company is reaping the rewards – much earlier than anyone expected.
Retailers should take that lesson the heart. Every retailer can, and should, proactively discover how innovative ideas can add new value to the brand promise. That’s the key to 21st century success.
So don’t wait – get going. Retailers have historically been technology spending laggards, and while that’s somewhat understandable, it’s now counterproductive. Consumers are adopting innovative technologies to make their daily lives – including shopping – easier and more satisfying. Competitors are using innovative technologies to “change the game.”
- Read the full report How FMCG, Grocery and Hardgoods retailers are responding to the innovation imperative, by RSR Research
- Discover how retailers are driving opportunities from artificial intelligence in this whitepaper
- Some talk about innovation, Symphony RetailAI is doing. Learn how we are leading the way on innovations such as CINDE, the Alexa of FMCG Retail, AI-enabled marketing as well as AI-enabled Demand Forecasting