Successful retailers have learned not to take their foot off the gas pedal when it comes to driving innovation, especially with Amazon tailgating and happy to overtake them at any time.
Over 80% of retail winners said that one of the biggest challenges they face is Amazon and other competitors behaving like road hogs and muscling in on their space. This is according to a recent RSR report, Ramping up Retail Innovation, which is sponsored by Software AG.
Retail consultants RSR noted that some of the traditional retailers are coping with Amazon quite well; Home Depot, Best Buy and others are beating expectations and in New York City there is a “a renaissance” of new retailers and stores.
On the other hand, RSR said that non-winners are just not keeping up with their peers and because they have to deliver both top and bottom lines, they have little money left for innovation. This could explain why only 72% of them consider customer-facing innovations very important, while 93% of winners do.
Non-winners are surprisingly unexcited about new product development (38% call it very important), said RSR. “Non-winners need to look at the bigger picture and remember that, at its core, retail really is about selling STUFF. Products.”
Non-winners could learn a lesson from Amazon’s acquisition of Whole Foods, said the consultants, where it turned out the products were the most interesting thing about the deal.
Operational efficiencies are very important to the majority of winners (73%) and non-winners (70%), because they need to cut costs in order to fund their customer initiatives. Process automation was a big part of thism with 88% of winners calling it very important (68% non-winners).
A similar majority of both winners and non-winners said that customer expectations are rising, which is another big challenge. At the same time investors also expect more from them.
The Amazon bar is high, but retailers must innovate for the customer or face failure. In the next article, we will discuss some of the opportunities that can be seen in the marketplace.
Click below to see the report.