To truly innovate in retail today you cannot go it alone; you need a coalition of companies working together to make ideas happen. That was one of my key takeaways from this year’s National Retail Federation (NRF) convention in New York City.
This didn’t happen overnight; 20 years ago retail innovation could be realized by just one company on its own. It is a very different environment today.
Back in the 1990s, I was privileged to work for a ground-breaking company called Manugistics*. 'Manu,' as we called it, provided an innovative solution providing forward supply chain visibility. (Almost 20 years later I am amazed to understand how companies—and retailers in particular—can manage without this capability.)
When I was with Manugistics, everything was run in-house—from sales to implementation and support. The company thus controlled its own projects and with it had absolute control over customer satisfaction—it had only “one throat to choke” so to speak!
Over time companies like Manugistics realized that, in order to grow, it needed to work with system integration partners. Although this meant someone else would take care of the implementation and would not have software licence sales limited by internal implementation capacity, it also meant a loss of control. Suddenly the software vendor was sharing responsibility to customer satisfaction with a system integration partner.
This bipartisan model has been adopted by pretty much all of the large software companies— IBM, SAP, Oracle, JDA....the list goes on. However, many would argue that what they are delivering is not highly innovative.
Innovation is out there, though, and it is taking a different path from this bipartisan yet “loner” business model. While at NRF in New York last week I saw some amazing innovation based on a “coalition of the willing” model.
On a fashion store tour I was shown RFID technology whereby each in-store item’s location is monitored to within an inch every second. Movement of each individual item is tracked around the store so items taken into the fitting rooms, for example, can be observed.
Using this technology, real-time sales across multiple stores is monitored so that the store can redeploy stock that is selling badly to another branch, rather than mark it down. Stock accuracy has improved massively—helping the store with online sales as well. The RFID tags eliminate the need for security tags—saving time at the point of service and reducing queue time.
This is innovative, cutting edge technology, the same way that Manugistics and i2 were in the late 1990's. The difference is that to deliver these capabilities across seven franchisee stores required three different companies working together. This “coalition of the willing” consisted of a RFID tag provider, a RFID reader provider and an analytics software provider. I believe that to roll this out to a larger store network would require yet another partner, such as a system integrator, to be able to scale to the implementation challenge.
This was not the only example of a willing coalition that I saw at NRF. Software AG was displaying its Smart Store Monitoring solution at wireless mobility solutions provider Aruba Networks' booth —this requires technology from Software AG and Aruba, and also an implementation provider. Again, to increase the value of the solution by providing more inputs – such as real-time POS data, further providers would need to join the coalition. The coalition would need to work both commercially but also technologically. It is for this reason Software AG launched the Digital Marketplace to allow vendors to collaborate to produce joint solutions to take to market.
Connected Digital Retail requires cooperation—between retailers and technology partners—as well as coordination. Things have moved on – and retailers are moving on too.