The Need for Retail Innovation
For a number of years, there has been a perpetually negative narrative surrounding the world of retail.
Media reports pronouncing the imminent death of the industry were fuelled by a number of high-profile business failures and reinforced by retailers and their industry bodies who turned to supply-side issues, rather than growth, as their strategy for success.
There was a feeling that established retailers were helpless in the face of online giants such as Amazon and Alibaba, and although there was plenty of advice in the form of research papers, whitepapers and conferences about what retailers should do to adapt, few seemed to be doing anything about it.
The negative narrative was damaging. It discouraged talented young people from choosing retail as a career and stymied investment in good businesses.
Retail was never dead
However, the facts belied the negative narrative. Retail wasn’t dying - it was actually growing - and for every high-profile business failure, there was a retail success story elsewhere.
In every case, the winners were the businesses that had been more adaptable and/or innovative. The perpetual winners like Amazon, Walmart, Nike and Starbucks had innovation woven into the operating fabric of their business.
Retailers who doubled down on traditional tactics like increased marketing spend, cost-cutting or just 'trying harder', were proving to be no match for competitors who brought new value to market.
That is why Netflix was able to usurp Blockbuster, why Walmart dethroned Sears and, in Australia, why Dominos dominated Pizza Hut at the end of the last decade.
Why has retail been slow to innovate?
With so many retail success stories founded on innovation, why are the majority of retailers so slow to innovate?
Having worked in the industry for most of my career, We (my co-author Gareth Jude and I) know first-hand that innovation is not retail’s first language.
The first language of retail is execution.
The people that progress in a retail business are the ones that get the stock out, get it ticketed, balance the till, make sure every customer is served and “do it now”. Retailers believe, quite rightly, that you never get today back, which means management’s focus is primarily on today rather than tomorrow.
While retailers sometimes struggle with innovation, they thrive on process. It is the only way businesses that operate in multiple sites with thousands of transactions and thin operating margins can survive.
We realized that if retail innovation could be reframed as a process, then retailers could become innovation masters.
That is why we wrote Retail Innovation Reframed and introduced the ReFrame process, based on the innovation processes of leading retail innovators, our own experiences as retail operators and established theories of innovation like agile, design thinking and continuous improvement.
Each chapter contains case studies, exercises and all the arguments needed to persuade retailers that adopting innovation as a process is the only viable strategy in a changing world.
Our hope is that once retailers embraced innovation as a process, they would feel empowered to see disruption as an opportunity and leave behind the feelings of helplessness and the negative narrative of the past.
COVID-19 and the future of retail
We finished writing the book in 2020. By which time, during the COVID-19 pandemic, the industry had shown its value to the world.
Retailers have shown that with their backs to the wall they can actually innovate - at speed. The general consensus of many within the industry is that approximately 10 years of digital innovation took place in just 10 months within the industry, leaving many retailers feeling empowered.
2020 was also a year of record sales and profits, and nothing improves morale like beating targets and having money in the bank.
The year has been unusual, but not an aberration. As long as the world keeps changing, retailers will need to innovate.
In 2021, economists are predicting a “K” shaped recovery in which the employed and well off prosper while the unemployed and poor get poorer. Discretionary spend will move away from retail back to categories like travel. Consumers will re-assess their buying habits having experienced new ways of shopping during the pandemic. Technology keeps developing and offering new ways to serve customers better and run businesses more efficiently.
Retailers that survived 2020 should be congratulated - but they cannot take a break from innovation in 2021.
It would be tragic if after the pride, empowerment, and profits of 2020, the retail industry reverted to its old habits and the negative narrative returned.
Retailers have the prerogative to innovate. When they do, they win customers, increase opportunities for their team and partners and ultimately increase sales and profits.
Now is the time for retailers to capitalize on the achievements of 2020 and make innovation systemic and perpetual and change the narrative about the industry permanently.
Retail Innovation Reframed is a step-by-step guide to help you achieve this, at a time when its message is more relevant than ever.