Retail Stars Blog Series - Innovation

Walmart’s founder said over 50 years ago that ‘to succeed in this world, you have to change all the time’. We have all seen that the rise of digital technology has forced retail to undergo a period of major change. Retailers are having to rethink their future strategy and work hard to be innovative in order to differentiate themselves from their competitors and achieve growth.

A number of the blogs within this #retailstar series have already highlighted the changes to the consumer landscape, and here I will focus on the concept of retail innovation around three key themes that many retailers should consider;

1. Shaping and enhancing the customer experience through retail architecture 
2. Applying new approaches to product manufacture
3. Supporting strategy direction with new product development (NPD)

Shaping and enhancing the customer experience through retail architecture 

Burberry has long been regarded a #retailstar for ‘innovation’; with their Chief Creative Officer, Riccardo Tisci, recently winning the WSJ’s Fashion Innovator Award. Burberry’s history of innovation stems from the creation of the original gabardine fabric in the 19th Century to the experiential retailing they have applied to their stores. In 2012, Burberry opened an iconic Chicago store with a stainless steel facade system to mimic the iconic check and the brand has been an early adopter of applying technology to the store experience - employing RFID tags to communicate product information with shoppers as they walk up to a mirror - bringing together the physical and digital worlds. From Burberrys recently announced partnership with Chinese internet giant Tencent Holdings Ltd. to Farfetch’s Store of the Future, retailers are aiming to capture online/offline customer data and experiment with it to enhance interactions between shoppers, store staff and products, creating personalised and unique shopping experiences with a view to drive loyalty.

Harrods have announced that they will extend their recently renovated ‘Beauty Halls’ to standalone stores in the UK - a significant step for the retailer that has largely kept to its Knightsbridge, London, footprint. Attempting to set themselves apart from other department stores and beauty brands, their aim is to create an ‘immersive and inspiring’ experience through “magic mirrors”. Powered by AI (a technology employed from L’Oreal to Zara), Harrods shoppers can virtually try-on makeup without opening a tester. 

Ralph Lauren is synonymous with the concept of lifestyle branding and by introducing Ralph’s Coffee shops and Ralphs bars to selected stores, they take the customer journey beyond a fashion experience and into lifestyle. By aligning their strategic approach to the customer’s lifestyle, the brand are encouraging existing shoppers to stay in store for longer but also attract a new demographic through a wider range of merchandise. From Ralph’s Coffee to Dover Street Market’s artistic fervour, these experiential stores present a sensory experience for shoppers and an opportunity to build relationships with their shoppers in new ways.

Applying new approaches to product manufacture

With the importance of ethical and sustainable considerations within fashion and beyond, there is increasing investment in R&D to apply new approaches to product manufacture. Some brands are built on the concept of alternative fabrics (such as BAM Bamboo Clothing) while others seek out innovative fibres to include in existing ranges. From the use of pineapple leaves (seen at Hugo Boss) to the microscopic spores produced by mushrooms to create Mycelium “leather” (the basis of Stella McCartney’s infamous Falabella bag). H&M is my #retailstar in this area for their focus on supporting small businesses with their Global Change Award, which provides funding and encourages innovation through sustainability. Their notable 2019 winner was Sustainable Sting; a company that grows nettles to create fashion. In the space of conscious consumerism, shouldn’t all companies be taking note?

Innovation in manufacturing is not limited to fabrics and fibres, but also in production processes themselves. 3D technology isn’t necessarily new, but footwear manufacturers have been investing in this technology in force (Nike, Adidas and New Balance to name a few), with a focus on optimising production at scale, developing new designs, eliminating labour costs and improving speed to shelf. As these examples show, innovation through manufacture is not simply about meeting customer expectations, but about creating opportunities to improve brand strength, optimal operations and sustainable growth. 

Supporting strategy direction with NPD

It is a well known fact that retailers can utilise NPD to diversify their range and target new audiences. The purpose of a retailer is to provide products or services that customers want at a price point that they are comfortable with and ultimately, the key feedback is through the till point. NPD can be challenging, facing into ambiguity and risk but it doesn’t have to be done alone; with a rise of brand partnerships from H&M x Giambattista Valli or the recently announced Prada x Adidas collaboration. Dyson is my #retailstar in this area - moving beyond their well-known household electricals to haircare, tapping into the burgeoning health and beauty industry. 

Retail is becoming data rich as more of the business goes digital. From assessing the impact price elasticity to understanding the customer journey, retailers can access an accurate view of business performance and their customers using advanced data analytics. If utilised effectively, they can use this source to test and refine their innovation strategy and align it closely to their business strategy. 

What can retailers learn from this?

Innovation is not one dimensional and I think that retailers should assess where it can be applied to be most impactful for their business, allowing them to grow and differentiate themselves. Using the example of Burberry discussed earlier in this blog, innovation has spread across the breadth of their business from retail architecture, through to their fabrics and finally the customer experience. Innovation is not done just to say that the retailer is innovative, but it is for a purpose; it is all for the customer. Retailers are using innovative techniques to win the customer over and to keep them coming back, product after product. What a #retailstar!

How do you make this work in practice?

To effectively manage the innovation journey, retailers need to have a clearly defined strategy and direction of travel, but to also invest in the right places such as R&D teams or data analytics, to inform decision making and minimising risk. I think that by looking at what others are doing in the industry and also further afield will provide great ideas but retailers need to do what’s right for them and their customers. I believe that by putting the customer first, retailers can identify how they want to be innovative to improve the customer journey and then the planning can get underway.

I’d be interested to know who your Retail Stars are! Join the conversation with #whoareyourretailstars and #retailstars