Retail innovation

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).

Advantages of Retail innovation

Retail Innovation offers a variety of advantages to the retail industry:

• Increased consumer engagement and satisfaction: Retail Innovation can help businesses stay ahead of consumer trends and preferences, leading to enhanced customer experience and loyalty.
• Enhanced operational efficiency: New technologies can help streamline operations, reducing overhead costs and increasing profits.
• Improved product visibility and accessibility: Innovations such as augmented reality and virtual stores can help create a more immersive shopping experience, boosting product visibility and accessibility.
• Increased omnichannel presence: Retail Innovation can help businesses expand their reach and presence across multiple channels, allowing them to reach more customers in more locations.
• Increased market share: By leveraging the latest technologies, businesses can gain a competitive edge and increase their market share.

Limitations of Retail innovation

Retail Innovation can be a powerful tool for any organization, however, there are some limitations that should be taken into consideration. These limitations include:

• Lacking customer insight: Without understanding the customer’s needs, wants, and preferences, it can be difficult to launch successful innovation initiatives.
• Short-term focus: Companies may focus too heavily on short-term goals, such as increasing sales, rather than developing long-term strategies that can help the business remain competitive.
• Limited resources: Smaller businesses in particular may have limited resources to support retail innovation initiatives.
• Difficulty with implementation: Introducing new products and services can be disruptive and costly. It can also be difficult to ensure that all employees are properly trained and that the new technology and processes are adopted smoothly.
• Cost: Implementing new technology and processes can be expensive, and there is no guarantee that the investment will pay off.
• Risk: There is always the risk that the new innovation will not be successful, resulting in wasted time and resources.

Other approaches related to Retail innovation

Retail innovation is a specific type of innovation focused on the retail industry. Other approaches related to retail innovation focus on improving the customer experience, driving efficiency, and developing new products. These include:

• Digital Transformation - This is the process of leveraging technology to optimize processes, increase customer engagement, and increase efficiency. This includes the use of digital solutions such as ecommerce, mobile apps, artificial intelligence, and analytics.
• Omnichannel - In omnichannel, retailers focus on creating a unified experience across channels, making it easier for customers to shop. This includes creating consistent pricing, product availability, and promotions across channels.
• Experiential Shopping - This is the use of technology and design to create a more immersive shopping experience. This includes the use of virtual and augmented reality, interactive displays, and immersive environments.
• Automation - Retailers are leveraging automation to increase efficiency and reduce costs. This includes the use of robotic process automation, machine learning, and the Internet of Things.

In summary, retail innovation is focused on improving the customer experience, driving efficiency, and developing new products. Digital transformation, omnichannel, experiential shopping, and automation are some of the approaches used to achieve these goals.

Conclusion

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.

Retail innovation — recommended articles

Brand innovation — Radical innovation — Technological environment — Business model innovation — Example of radical innovation — Customer driven — Value innovation — Disruptive innovation — Disruptive business model

References

• 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