By Graeme Grant
“If you look at the big tech companies that are innovating – Amazon, Google, eBay, Facebook and Apple – they’re all willing to shut stuff down if it doesn’t work and they understand going in when they build new things that they may not all work. And that’s a very different mindset to how retailers think.” – Michael Scharff, Head of Innovation, Toys“R”Us
I recently came across a video featuring Michael Scharff, the head of innovation at Toys“R”Us, in which he discusses the challenges retailers can encounter when it comes to innovation, “particularly innovations that are disruptive to the business.” This is a critically important topic for any large retailer, especially when you consider the dramatic changes we are seeing in today’s consumers as a result of new technology capabilities.
In the video interview, Scharff talks about the importance of establishing small teams, of being willing to fail and of finding new businesses opportunities before competitors do. But he also admits that while it is easy to set up an innovation team, it is very hard for that team to produce results. Why? Because most retailers aren’t willing to put the resources behind a great idea, stick with it for a few years and give it the chance to blossom.
Unfortunately, I think Scharff is right. Merchandise, not IT systems, is the focus of most retail organizations and, consequently, they have not developed the organizational muscles required for technology-based innovation. But at the same time, technological innovation is vital to their survival! Omni-channel, ecommerce and predictive intelligence, just to name a few, all require advanced technological prowess and rapid innovation.
While I don’t think this was necessarily the point that Scharff was trying to make – he runs the innovations team for a large retailer, after all! – the logical extension of his argument is that retailers can’t spearhead innovative projects on their own. Because limited innovation is clearly not an option, retailers should engage with outside partners that focus on turning technical innovation into value for retailers.
In today’s retail landscape, customer demands are higher than ever for personalized, omni-channel experiences, tailored deals and products, and seamless interactions across any channel in which a shopper decides to engage. And if that wasn’t enough pressure, if a retailer can’t meet customers’ expectations, there are another 20 retailers in the pipeline waiting to capture the attention of each of those shoppers with the same products at better prices.
So why risk failing by trying to implement innovative ideas and programs with only in-house teams and resources? Retailers should take the time to find the right third-party technology partners that, with specialized skills and technology, can bring those ideas to fruition, whether it’s for ecommerce optimization, omni-channel fulfillment solutions or predictive intelligence to deliver personalized messaging at every touch point.
Your future as a retailer depends on it.