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Despite fast-changing customer expectations, shortened product and retail life cycles and rapid technological advancements, many retailers have not taken advantage of opportunities to innovate.
By applying new perspectives to established ways of doing business, a retailer can strengthen its competitive and financial position, improve the customer experience and create a new life cycle of growth, according to Retail Forward, a global management consulting, market research and executive development firm specializing in retail intelligence and strategies..
In a new report, "Retail Innovation: Ten Opportunities for 2010," sponsored by American Express, Retail Forward contends that there has never been a greater need for retail innovation than in today’s cluttered marketplace, nor a period of greater opportunity. Significant and rapid demographic, economic, social and technological shifts are creating a fertile environment for new ideas to better serve customers, steal market share and re-invent entire industries.
"For retailers in the maturity phase of their life cycle, innovation will be more important for growth than organic expansion in the years ahead," states Tom Rubel, Retail Forward President. "Looking back, retail innovators such as Woolworth, Sears, JCPenney, 7-Eleven, and Wal-Mart evolutionized the retail industry. Their innovations changed the rules of the game. They brought about drastic changes in the behavior of competitors, reinvented the industry’s economic model and improved the customer experience."
Retail Innovation Opportunities: Ten for 2010
Retail Forward identified 10 innovation opportunity areas with tremendous potential for creating new consumer benefits and stakeholder economic value:
• Catch a Wave. Retailers that apply innovative thinking to a growth market opportunity created by demographic, societal, economic and technological trends can generate significant growth and financial performance. The needs of an aging population, ethnic consumers and the pursuit of a healthy lifestyle provide fertile ground for innovative solutions.
• Solve My Problem. A consumer-centric approach creates opportunities to add value to the shopping experience. This requires adding services, information and support to the product mix to provide a complete solution for task-oriented shoppers. Presenting products in context and bundling products and services retailers create consumer value and competitive differentiation.
• Do It for Me. Demographic shifts and lifestyle changes are driving former do-it-yourself (DIY) consumers into the do-it-for-me (DIFM) market. Retailers are responding to consumers’ increasing demands with innovative services and conveniences. Installation services from home improvement and consumer electronics retailers and home meal replacement options are fast-growing examples of do-it-for-me innovations.
• Help Me Choose. Information overload, too many choices, more complex products and a lack of knowledgeable sales assistance create opportunities for retailers to develop innovative solutions for consumers. Allowing shoppers to sample the merchandise before buying, utilizing on-demand information kiosks, partnering with celebrities to provide a seal of approval and creating online communities provide consumers the help they need.
• Come to Me. New distribution models are allowing retailers to connect with consumers wherever they are -- at home, at work or in the car. Mobile retailing and target marketing are gaining in popularity as time-pressed consumers seek greater convenience. New-style direct-to-consumer rental concepts also are serving an important consumer niche.
• Enhance the Experience. Retailers increasingly will differentiate themselves by using experiences to sell the dream -- as well as the product -- and bring the brand to life. By making stores “super-immersive” and integrating branding into entertainment and other customer experiences, retailers are exploring ways to create memorable brand interactions that resonate with their target consumer.
• Make It Easy. Innovative process, service and design solutions that are simple, intuitive and in tune with shoppers’ needs -- along with new technology tools -- can save consumers time and effort. Retailers that implement easier and more rewarding customer experiences will realize sales growth and enhance customer satisfaction and loyalty.
• Do It My Way. As shopping becomes increasingly individualistic, innovative retailers will seek ways to provide more unexpected gratification to shoppers and allow them to express themselves in unique ways. In addition to mass customization and personalization, retailers are offering opportunities for customers to participate in the development of new products and services.
• Help Me Connect. Social networking fosters community among consumers who share a common interest. Retailers are forging stronger relationships with consumers and earning their patronage by helping them to connect in ways that are important to them and by responding to their emotional and physical needs.
• Speed It Up. Consumers want it fast; they want it now; and, they want it first. The need for speed in the shopping process will continue to drive changes in store concepts, design, location, merchandising, transaction processing and payment.
In the past few decades, most retail innovations focused primarily on efficiency in response to mass market opportunities, according to Retail Forward. While ongoing innovations in technology and operating strategies will continue to improve efficiency, future retail innovations will be more customer-facing.
"Going forward, retailers will address the unique needs and desires of individual consumers and provide a more rewarding and memorable shopping experience," Rubel said. "They will innovate around new formats and distribution models, product and service offers, marketing and customer communications and other components of the retail business model."