Why Innovations in Retail Fail or How to Remain Innovators in any Conditions
In this Article
"Any innovation must have some business purpose and cover business needs."
I once heard it from one of my colleagues and realized how accurately it explains the failure of different projects.
For several years, the storm of events has tested the retail industry for strength. First - the pandemic and global lockdown, now - the war and global supply chain collapse; what's next? All these difficulties force businesses to look for a lifeline on the go. It seems that only innovations can save companies.
Well, digital transformation is always innovation. Changing routes to optimize the supply chain is also a sort of innovation. But sometimes, this very lifeline can lead to a severe crisis within the company.
Here I suggest considering the top 4 reasons innovation may become your headache rather than a desirable solution. Scroll down to discover them and find ways to remain innovative enthusiasts in any condition.
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The Four Horsemen of the Apocalypse or Top Reasons Why Innovations in Retail Fail
The primary litmus test for all your ideas is your customer's reaction. Any innovation should be demanded and accepted by the audience because it affects buyers in one way or another. Sometimes, companies start chasing trends and try to outplay competitors, completely forgetting about their customers.
For example, a company installed smart shelves in its convenience stores because Walmart or Kroger did it. Sure, intelligent shelves are innovative and valuable, but not in the corner store. Your customers just don't need them there.
They are used to make significant purchases in supermarkets. People want to buy a morning newspaper or snacks from convenience stores. Smart shelves don't help them because the assortment is limited, and the trading floor area is small. On the contrary, they will prevent customers from moving around in the store. The audience will not be delighted with such an innovation.
So if your customers don't get direct or indirect benefits from the innovation, your business won't get it. It means that results can't justify the investment, and innovation fails.
A successful company is ahead of the customer demand. But an enterprise that does this regardless of current client behavior and preferences still has a lot to learn.
This problem is related to the first one; the superficial knowledge of the audience is to blame. Let's say it's futile to open a store with high-tech fitting rooms in a village because people don't know how to use them. Yes, Amazon did it, but the company targeted the relevant audience. The buyers living in distant areas are not ready for this innovation. It is ahead of its time. It means people will bypass the store not to look stupid trying to figure out this unique technology.
The solution to the first two issues lies in understanding the audience and its needs. The task of innovation is to make the shopping process pleasant and convenient. Don't make your customers feel uncomfortable by implementing things they don't understand and don't need.
Let's go back to the start. Every innovation should have the ultimate goal: to increase sales, streamline business processes, or improve customer experience -whatever like these. Anyway, companies should use innovations to solve their business issues.
A process for process's sake will never be fruitful. If an idea does not meet the company's or customers' needs, it is useless because no one can benefit from it.
For example, IoT is a hot topic now. Any-sized retailers implement it to boost operation or customer experience. But some companies move in this direction because one of the competitors did (or did not) do so. What can they get out of it? What about their buyers? They don't think about purpose from the very beginning. Therefore, they will never receive the cherry on the cake from IoT.
To avoid zero ROI on investment in innovation, you need to dive into your current situation and answer the question: Is this idea the solution to my problem? If the answer is no, look for the solution that is able to accelerate your business growth.
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Recently, I became a participant in a curious discussion of the principles and basis for a real-time campaign management system (RTCM) implementation. It is software that allows marketers to set up and run hundreds of marketing campaigns simultaneously without IT department involvement.
Large retailers lack this tool. They strive to receive it, hoping the product will change everything around. The truth is that the RTCM system can't operate based on poorly organized business processes. It requires an agile and modern basis. If you didn't build it, you wouldn't receive desirable results.
Any business operates like a human's body. Try to transplant a 70-year-old person with the heart of a 20-year-old one. Will you expect a magical rejuvenation? Of course not; this process will only keep the older person alive for some time. The same goes for innovation. Each solution can't cope with the existing problems if it works in a legacy environment. For many managers, it seems clear in theory, but there is no limit to surprise when it comes to practice.
Innovations require time-consuming prior preparation. You should upgrade processes, educate your employees, and listen to your clients before jumping into a project. Only an end-to-end approach can ensure success in the implementation of any innovation.
The Bottom Line
You became aware of several reasons why retailers face the unsuccessful implementation of innovations. But the list could go on and on: lack of communication between the business and tech sides, poor project management, etc.
The solution to most of these troubles is a profound discovery. Discover the audience, your business, market, and various solutions. Only an understanding of the situation and needs can become your support in building an innovative and successful company.
Do you want to refresh your retail business with innovations but are unsure about the results? Let us know! Our specialists can advise you on what ideas will be efficient and how to implement them in the right way.