Amazon is the ultimate disruptor of retail. First it was online retailing with faster and faster delivery, then it was subscription models with Amazon Prime, and the internet of things with the dash button.
And now it’s ‘just walk out’ technology with Amazon Go, and a patent for on-demand apparel manufacturing. Its disruption is relentless.
Other retailers are fighting back, playing catch-up and rolling out ‘stores of the future’. Online offerings are being optimised, and in-store experiences enhanced with technology and new services such as coffee shops and beauty treatments.
But, with the rate of technology change, new propositions from Amazon and other new players solving very specific customer problems, the very definition of retail is being challenged.
“Optimising omnichannel retailing is no longer enough. Retailers need to rethink their entire business models, look beyond the obvious and discover the art of the possible”
Optimising omnichannel retailing is no longer enough. Retailers need to rethink their entire business models, look beyond the obvious and discover the art of the possible.
The linear model, where retailers make or buy products and push them to customers who buy and consume them, is no longer the only model that works. Why?
- Customers are playing a more active role across the value chain. They are brands, designers, curators, salespeople and producers themselves.
- AI and machine learning is democratising personal shopping. Very.co.uk has personalised customer journeys and real-time style advice. Amazon Echo and the Walmart-Google partnership are making hundreds of thousands of products available through voice ordering.
- Rentals and subscription models are gaining traction. The emphasis is on experience rather than ownership. Rent the Runway has six million members, $60m in investment and two new stores in New York and LA.
- Retail supply chains are changing shape thanks to technology. In its Boston store, Ministry of Supply can 3D-print a garment on demand in 90 minutes.
There is so much going on out there, it’s understandable that retailers are feeling a bit frozen in the headlights. How can retailers stay on top of all these innovations and defend themselves from potential disruptors?
How do retailers know which ones are here for their long run or what is just hype? Where do retailers even begin? And how much will it cost?
For retailers struggling to keep up with the latest innovations, or (if you’re really honest with yourself), those who are in disruption denial, here are three things you can do:
Acknowledge the need to change
This is the first step to dealing with any form of denial. Stop denying that disruption will continue. It will. So, you must accept that incremental optimisation activities alone are not enough.
Realise you cannot out-innovate the market
Explore what is the art of the possible by looking outside the walls of your own organisation. Consider taking it a step further by deliberately trying to disrupt your own business (before someone else does).
Get out there, scout for the latest innovations and technology, visit Silicon Valley, Silicon Roundabout, and build relationships with incubators, accelerators, venture capital firms and start-ups. The key is to build an ever-evolving ecosystem.
Embed innovation in your culture
How? By encouraging entrepreneurship and fast failure. Rather than stating ‘why we can’t do it’, ask instead ‘how can we make it happen?’.
Apply lean start-up methods, such as design thinking and rapid prototyping, embrace principles such as unconstrained thinking, iterative development, and open innovation.
This is perhaps the most challenging, but it is also the most impactful. It means a cultural mindset shift for everyone, not just a handful of colleagues. It goes without saying that leaders need to walk the talk by embracing and encouraging this entrepreneurial mindset across the business.
“Nobody knows what the future will look like. But retailers cannot afford to wait and see before they react. I firmly believe that if retailers want to survive (and thrive), they need to play an active part in shaping that future”
Nobody knows what the future will look like. But retailers cannot afford to wait and see before they react. I firmly believe that if retailers want to survive (and thrive), they need to play an active part in shaping that future.
And once retailers have decided what to do, it is execution that really matters. Successful execution is flawless, customer-centred, and it never stands still. It requires constant iterations, possible direction changes and not being afraid to fail.
Think big. Then start small (with razor-sharp focus). And then scale fast to make change happen, at pace.
Karina van den Oever is principal at Elixirr