3 ways to succeed at retail tech innovation

An RSR survey of global retailers shows how success is linked to customer experience, business intelligence and fail-fast innovation — not simply a focus on the bottom line.

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Did Steve Jobs kill traditional retail?

Yes, according to a new report on technology innovation in global retail by RSR analysts Brian Kilcourse and Paula Rosenblum.

“Until 2007, when the iPhone gave consumers a power that changed the entire world, retailers often viewed technology as a necessary evil,” they write in the report. “With the launch of the iPhone … the advent of what we now call ‘omnichannel retailing’ became a new reality … [and] retailers had no choice but to respond.”

Eleven years after the iPhone’s debut, how are retailers responding today? To find out, RSR surveyed 103 retailers around the world.

From that research, some clear ‘winners’ emerged. RSR defines them as retailers whose year-over-year growth in comparable store or channel sales exceeds the industry average of 4.5 per cent.

According to the study’s findings, compared with the rest of the retail pack, winners are …

Customer focused

Ninety-three per cent of ‘winners’ say customer-facing innovations are “very important” versus just 72 per cent of average and under-performing retailers. Winners also place more importance than their industry cohorts on improving customer experience and “building lasting loyalty” with customers.

RSR concludes that while most retailers focus on increasing revenue and improving the bottom line, winners focus squarely on customer experience.

Data focused

Winning retailers are data-centric. Kilcourse and Rosenblum point out that 63 per cent of winners cite artificial intelligence and machine learning as important to innovation versus just 32 per cent of other retail players. Specifically, top retail performers view data as customer-based business intelligence rather than just record-keeping metrics.

“[Winners] understand that information has strategic value and realize the need to experiment to improve the shopping experience,” the authors note.

Risk takers

Speaking of experiments, RSR found a correlation between tech experimentation and retail success. Forty-nine per cent of retail winners take a fail-fast approach compared to just 41 per cent of other retailers. Tellingly, the majority of average to below-average merchants polled on this topic (45 per cent) say they “won’t experiment without a reasonable probability of success.”

Similarly, 68 per cent of winners pilot test new ideas versus only 45 per cent of the rest of the pack.


In order to thrive (not merely survive), retailers must focus on customers rather than simply the bottom line, become data-centric and adopt a fail-fast innovation strategy.

And yet … three other key things stand out in this RSR report.

First, although many retailers are moving toward a fast-fail strategy, RSR says that, in the retail industry overall, there’s still way more experimentation happening with new technology than actual deployment.

Second, retail is still more likely than many other industries to hang onto legacy IT than replace it with new core systems.

Could those two things — a reluctance to deploy new tech after testing it, and deferred replacement of core legacy systems — be stifling innovation in the retail sector?

Perhaps. If so, maybe it’s due to our third key point: the IT department is not spearheading innovation within retail organizations. To RSR’s surprise, senior retail execs are leading the charge. Among all surveyed retailers, the bulk of tech innovation (44 per cent) is led by senior management, not tech types like chief innovation officers, chief technology officers or IT teams.

RSR’s report frets that this disconnect between IT and C-suite execs leaves “those who should understand what technology can do, and how it fits together into a comprehensive whole” — such as IT managers — “as mostly supporting players” on tech innovation. (Those italics are RSR’s, not ours.)

To close this gap between IT and senior business leaders, RSR reminds retail’s C-suite to give IT a seat at the table where innovation decisions get made: “Because innovation today is so information-and-technology driven, IT professionals’ guidance about what’s noise and what is real is essential.”

For retail execs who are particularly thrifty with IT spending, RSR suggests tapping into existing tech vendors on innovation projects.

“Ask your technology solutions partners to help you get going. After all, they are betting their futures on these [technological] advances; they can help retailers get there too.”

Image: erhui1979/iStock

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