Historically the retail industry has been excellent at innovation; but you might argue that some have lost the knack.
Examples of past technology-driven retail innovations include:
- When booksellers needed to make sense of their stock they created the ISBN code book identifier system.
- When food and catering company J. Lyons & Co. saw what early computers could do, it developed its own - LEO (Lyons Electronic Office). It was the first computer used for commercial business applications.
- The now-ubiquitous bar code, the Uniform Product Code, was invented in the 1940’s but did not go into use for scanning items until 1974 after it was embraced, defined and refined by a group of grocers.
- The Electronic Data Interchange (EDI), now a de facto method of providing a conversation between two entities, is widely used to help drive down inventory levels. It was inspired by military logistics.
But aside from obvious innovator Amazon, what else are we seeing? If we were to measure innovation by the number of patents a company has then it looks like Amazon is out-innovating everyone. Whereas Amazon has licensed nearly 5000 patents since 1994, its closest innovator is Target with just over 1,100 patents. Walmart, Home Depot, Walgreens, Lowes, Starbucks and CVS Pharmacy together have lodged 756.
But, yet, I see lots of innovative ideas going on in retail – from retailers themselves but also technology providers and system integrators.
There are smart stores using IoT and connecting it to the entire enterprise to improve staff productivity and customer engagement. Some retailers are trying to streamline and automate processes to remove non-value added steps.
There is a lot of innovation around delivery, from wheeled robotic delivery vehicles to location-based services where you can buy online and collect in-store – and the order is ready for you when you get near the collection point.
Yet Amazon remains the top innovator in most areas. So what can other retailers do about it? As I have said before, to truly innovate in retail today you cannot do it alone; you need a coalition of companies working together to make ideas happen. But many retailers seek a single supplier approach - “one throat to choke” so to speak.
Either way they need to have a clear framework to support innovation and this should cover three key elements: people, process and technology. I will discuss this in depth in my next article.