With the recent closing of Toys R Us and the even more recent bankruptcy filing by Sears, once all-powerful retail giants find themselves facing an uncertain future.
The message, however, couldn’t be clearer: innovate or die.
The last decade has seen a wealth of technological innovations that have the potential to drastically impact the retail sector including IoT devices, AI, Virtual and Augmented Reality, payment solutions and the manufacturing changes of Industry 4.0.
Here is a framework for retailers to follow to make sure they pick up these technologies before it is too late.
Follow the Fashion (Industry)
Within the broader umbrella of retail, the fashion industry has been quick to adapt to these technological trends.The first step to making technological change is acknowledging the necessity of innovation Click To Tweet
Ralph Lauren has transformed their brick and mortar customer experience by getting rid of lines and embracing advanced product management techniques. Likewise, Nike is experimenting with IoT sensors and augmented reality experiences that could significantly change the consumer experience both inside and outside of the store.
Other retail companies need to follow the fashion industry’s lead and wholeheartedly embrace innovation in order to keep pace with the current rate of change and maintain their relevance.
Keep Pace with Consumers
Tech-savvy consumers are no longer the minority. Shoppers are embracing new and disruptive technologies at a rate that would be unheard of even 15 years ago.
What retailers need to avoid is falling into the more-of-the-same trap. While expanding offerings and making slow incremental changes may have worked in the past, consumers today gravitate toward the new and the innovative, and they like their retailers to follow suit.
According to a BCG report, retailers have been slow to embrace new tech options like cloud infrastructure and SaaS solutions that could drastically reduce their IT expenditures.
Less than half of retailers surveyed for BCG’s report have adopted agile software solutions for merchandising, supply chain, HR, Finance, and cyber security.
This hesitation to embrace change is a big problem when your average consumer is looking for faster and more convenient ways to fulfill their shopping needs. It’s no coincidence that online sales growth has outpaced traditional retail five to one in the US and Europe alone.
Innovation should be a priority, and failing to embrace a new and improved way of doing business in favor of older, more familiar processes and practices is a quick way to follow the gigantic footprints of Toys R Us, Sears and others.
How to Embrace Change Without Being Reckless
The first step to making technological change is acknowledging the necessity of innovation.
From a business sense, maintaining a productive and well-funded innovation department can sometimes seem like an expensive endeavor. The truth, however, is that failing to innovate and failing to invest in your company’s future could have catastrophic long-term consequences.
Next, retailers need to understand that every business has room for improvement. They need to take a hard look at their customer experience and corporate processes and recognize pressing issues and passing concerns. Every perceptible problem holds innovation potential.
After the pertinent issues have been identified, retailers should pinpoint which problems would benefit most from innovation.
Once the list of potential innovations has been whittled down, retailers then need to clarify how they would test and evaluate whether a solution provides the innovation value they are looking for, and research software vendors to find technologies that are scalable and that could present solutions to those problems.
Then, they need to run proof-of-concepts (PoCs) so they can test and evaluate those solutions in a technical environment that reflects their company’s specific infrastructure and choose what to implement based on the results.
Choosing the right options may seem daunting at first, but with customized PoC testing environments and evaluation metrics, companies are able to compare solutions and see which perform better within their unique environment and is likely to have the desired impact, whether the innovation is for internal processes or external customer experience.
The Importance of PoCs in the Innovation Process
Sometimes an innovation that works for one company doesn’t work for another.
Amazon’s cashier-less food store, Amazon Go, has wowed consumers and media outlets alike, but Shake Shack’s short-lived experiment with a completely cashier-less restaurant was met with overwhelming complaints.Retailers have more options for innovation now than ever before Click To Tweet
That is one reason why PoCs are a crucial part of the innovation process. In order for innovations to create the change enterprises are looking for, they need to evaluate the options based on factors that matter to their company and make sure they are betting on the right horse. An effective PoC gives retailers the information they need to choose which solutions should be implemented for each innovation challenge.
It’s Not Too Late
Retailers have more options for innovation now than ever before. Unfortunately, the hesitation to abandon old models and processes has been holding back a large chunk of the industry.
Change can be scary in business, especially when it means abandoning tried and true models. Testing and evaluating technologies allows companies to verify innovative solutions before they commit to implementation, and transform those unknowns into quantifiable statistics.