In the run-up to the future of retail and consumer conference R:evolution, TrueStart explores developments in retail today.
Few retail executives would take issue with the notion that finding a reliable source of innovation is a priority in a competitive landscape, which is changing at an unprecedented pace.
But establishing an innovation pipeline is not like building stores or investing in a supply chain.
By its nature, it is more akin to the hit-and-miss world of pharmaceutical research and development than it is to conventional retail capex or business development.
Moreover, the innovation scene has become increasingly loud, confusing and fraught.
In part, this is a function of the hyperbole that naturally attaches itself to the world of start-ups. Buzzwords abound – it is de rigueur for all new businesses to be described as “disruptors”, talented executives are “rock stars” and the ultimate goal is to join the select band of “unicorns”.
Spectacular success stories provide aspirational fuel for the current generation of entrepreneurs. Facebook, Airbnb and Uber have all exploded into the (global) public consciousness in a timeframe in which, historically, businesses could scarcely have got off the ground.
And there is no question that this is a global phenomenon. Innovation is as likely to be fomented in Delhi as in Derby. Probably more so.
Meanwhile, budding entrepreneurs are, despite reduced bank funding, faced with a plethora of financing opportunities.
The Government is eager to foster an entrepreneurial, technology-led sector because it encourages investment, creates high-skill employment, drives growth and enhances productivity.
New, alternative financing opportunities, such as crowdfunding, are also gaining in popularity.
In this environment the ‘fear of missing out’ among incumbent retailers is prompted both by the excitement of uncovering a competitive edge and a paranoid terror of becoming disintermediated. The spectre of Woolworths stalks every UK retail boardroom.
So how should retailers go about ensuring they have access to a pipeline of innovation?
As things stand, there are three main avenues retailers can pursue to secure new retail developments.
The first is simple: pay someone whose task is to scour the world looking for it. Undoubtedly, this can be effective – it is a full-time job keeping on top of the start-up activities in Silicon Valley, London, Berlin and Tel Aviv.
A second option is for a retailer to develop its own internal innovation centre. As John Lewis’s successful JLab venture demonstrates, this can be a great way of finding solutions to immediate business issues. It also helps to promulgate a culture of innovation within the host organisation.
There are, however, some potential limitations to the approach.
First, large corporations do not always carry appeal to young entrepreneurs with dreams of changing the world.
Second, and related to this, internal innovation centres can fall prey to command and control by head office.
Instead of the centre acting as an unconstrained Petri dish of ideas, the risk is that business challenges are passed down to the ‘hub’ for the ‘tech guys’ to solve. Baby steps, not quantum leaps.
Finally, there is the scope to forge relationships with accelerators, such as TrueStart.
Accelerators provide a launch pad for nascent businesses seeking facilities, mentoring and access to venture funding.
While most accelerators are industry-agnostic and, accordingly, offer a wide breadth of start-up ventures, at TrueStart we are exclusively focused on the retail and consumer sectors.
This specialism, we believe, confers benefits for entrepreneurs, who gain access to a business ecosystem tailored to their activities, and our retail partners gain perpetual, pre-emptive access to retail-relevant innovation.
There is not a single strategy for capturing innovation that will work for all retailers.
Our experience is that a blended approach, encompassing a high level of executive management engagement, the development of a culture that encourages entrepreneurial business development activity and embedded association with external sources of new ideas and technologies, distinguishes the strategies of the most forward-thinking organisations.
- Mike Tattersall is head of retail and strategic partnerships at TrueStart
- On May 11, TrueStart will be hosting its annual future of retail and consumer conference R:evolution, where international influencers, such as Mike Jones (initial backer of Dollar Shave Club) and Allison Johnson (responsible for the launch of the iPhone and iPad as vice president of marketing communications at Apple), will join industry masters such as Ben Lewis (CEO of River Island), Marc Allera (CEO of EE) and Kris Engskov (president of Starbucks EMEA).