Retail Innovation is the specific type of innovation focused on the retail industry. Due to the current advances in Information and Communication Technologies and consumers’ increasing interest in entertaining and interactive retail environments, the sector of retailing is forced to pursuit innovation to maintain existing consumers and attract new ones.(Pantano, Laria. 2012) Concerning Retail Innovation, is mostly about: changing the way people are buying and changing the way companies are selling. Customers are more likely to frequent stores that consistently deliver on service expectations and innovations play a major role in customer engagement and retention (Nanda, Kuruvilla, Murty. 2013). Therefor changes caused by innovation come with value for the consumers and for the companies as well.
Role of Innovation in Retail
Innovating in retail can be a game changer card. Innovations in business models are increasingly critical for building sustainable advantage in a marketplace defined by unrelenting change, escalating customer expectations, and intense competition (Sorescu, Alina, Ruud, Jagdip, Arvind, Cheryl. 2011). Retail has been changing for the last years mostly due to innovations. Technology takes a big role in innovation, nowadays, and retail innovation is no exception.
For retail innovation to have a real impact it must follow the lead of value, convenience and unique experience demanded by consumers. Take the example of GPS for instance, it was a big change to automobile industry but for retail too. It allowed companies to track where consumers are in order to make, for example, better strategic plans for where companies need to be.
In order to keep up with the fast-changing consumer needs and optimize the operation efficiency of the system, the retail outlets in various business models need to embrace innovation and use innovative models and services to ensure higher consumer satisfaction. As consumers needs are constantly changing, that causes big discrepancies in business models. The solution to that is consumer data, that allows the creation of sustainable business models that have a more effective impact. Moreover, the innovations that are created alongside with that data result in a bigger impact on the market and for the company itself, since the possibility of being exactly created for today’s needs.
Examples of Retail Innovation
Investment in innovation is core to the operating models of new-economy. Studies show that retailers might shift to more innovation-oriented strategies in order to propose innovative consumer solutions, due to the support of the technology advancements highlighted by the strong patent track record (Pantano, 2017). Let’s take Amazon as an example. The technology retailer is one of the largest investors for research and development. Some examples of Amazon innovations that promoted its growth and that also satisfied consumer needs: The Physical Store Online Shopping Control patent lets Amazon identify when a customer is using its in-store Wi-Fi to access a competitor’s online store, so that then they can block access or redirect the user to its own website. And Amazon Go is a new physical store concept that removes the need for the traditional checkout, making it quicker and easier for customers to shop.
Another innovation that also has a big implication in retail is e-payments. Innovative products for making retail payments have proliferated in the past few years (Allen, 2003.) making the process of buying easiest and fastest.
Future of Retail Innovation
New technologies including cloud computing and storage, sensor and automatic identification, inventory and network optimization, robotics and automation are already widely adopted worldwide as key drivers of innovation. While emerging innovations, technology related, are looking at exponential growth and increasing adoption rate in the coming five years. Those innovation are, for example:
- driverless vehicles,
- wearable technology,
- 3D printing,
- internet of things
- predictive analytics
So, there’s no doubt that innovations in the future depend mostly (if not only) of technology. Today’s innovations are already sustained by the development of technology, in future what is expected is that all innovation in retail will be related to technology and will be data-driven innovations. In conclusion, we can say that innovations in retail led to the expansion of this sector (M. Balasescu. 2013).
With this said, we can conclude that consumers became more value conscious as they reprioritized consumption patterns, buying less, and buying differently (Berry, et al. 2010). The answer to prosper a business with those circunstancies is innovation.
By this, the most important conclusion would be that every company needs to keep innovating, and must not be resistant to the need of innovation, since there’s a direct relation between those who innovate and those who present growth in retail.
- Baregheh, Anahita & Rowley, Jennifer & Sambrook, Sally. (2009). Towards a Multidisciplinary Definition of Innovation. Management Decision. 47. 10.1108/00251740910984578
- Sorescu, Alina & Frambach, Ruud & Singh, Jagdip & Rangaswamy, Arvind & Bridges, Cheryl. (2011). Innovations in Retail Business Models. Journal of Retailing. 87. 3-16. 10.1016/j.jretai.2011.04.005.
- Pantano, Eleonora, Priporas, Constantinos-Vasilios, Sorace, Stefano and Iazzolino, Gianpaolo (2017) Does the innovation-orientation lead to retail industry growth? Empirical evidence from patent analysis. Journal of Retailing and Consumer Services, 34 . pp. 88-94.
- Pantano, Eleonora, & Laria, Giuseppe. (2012). Innovation in Retail Process: From Consumers’ Experience to Immersive Store Design. Journal of technology management & innovation, 7(3), 198-206.
- Leonard L. Berry, Ruth N. Bolton, Cheryl H. Bridges, Jeffrey Meyer, A. Parasuraman & Kathleen Seiders. (2010). Opportunities for Innovation in the Delivery of Interactive Retail Services. Journal of Interactive Marketing 24 (2010) 155–167
- Nanda, Neena; Kuruvilla, Shelja Jose; Murty, B. V. R (2013). Role of Service Innovation in Customer Satisfaction and Customer Loyalty: A Study on Organized Retail in India. Apr-Sep2013, Vol. 6 Issue 2, p53-63. 11p.
- Reinartz, W.J., Dellaert, B.G., Krafft, M., Kumar, V., & Varadarajan, R. (2011). Retailing Innovations in a Globalizing Retail Market Environment.
- M. Balasescu. (2013). The Influence of Innovations and Technology on the Future of Retail Bulletin of the Transilvania University of Braşov • Vol. 6 (55) •No. 2 - 2013
- Allen, Helen, Innovations in Retail Payments: E-Payments. Bank of England Quarterly Bulletin, Winter 2003.
- Kellison, Matt (2004.) The McKinsey Global Institute (4th of December, 2019)
- KPMG (2017.) Disruptive influences (4th of December, 2019)
- PwC, (2016.) Only the innovative survive (4th of December, 2019)
Author: Francisca Santos