Retailers that come up with new ideas and approaches leave the competition standing. But those that are slower to innovate can still set the pace in the industry by following quickly where others have led. Here are 12 ideas that work for leading UK retailers
1. Set the standard
Being first to offer a service gives an in-built advantage. True innovation means there’s no rush to catch up, while competitors must build their services from scratch. But it’s important to maintain that advantage by continuing to improve services and products, while also thinking of new angles for related services. Amazon set the pace when it first started selling books online and it’s maintained its competitive advantage over the years by continuing to trial fresh ideas and approaches.
2. Watch the competition
When competitors are providing a clearly more convenient or desirable service, even leaders in the sector consider following suit. Tesco recently jumped ahead of fellow grocery retailers when it introduced same-day click and collect for grocery orders at 297 locations, including 36 outside its own stores. This overtook the 250 already offered by Asda while Sainsbury’s was still trialling its own service. The highly strategic move came as Amazon continues to expand its own grocery service, AmazonFresh. This offers fast deliveries but doesn’t have the advantage of click and collect, which enables shoppers to pick up at the moment that works for them rather than waiting in for a delivery time slot. Beyond groceries, general merchandiser Argos innovated within fulfilment when it introduced its FastTrack service to offer same-day deliveries and collection.
3. Think what the customer really wants…
Starting with what the shopper wants is a smart approach to designing services that meet genuine needs. M&S , for example, questioned its shoppers in depth when it launched its Sparks loyalty card, which uses gamification approaches to encourage repeat business from customers, both online and offline.
More recently, sofa manufacturer Sofa Brands International (SBI) launched its multichannel retail business The Lounge Co after deciding that what customers want most when buying sofas is the chance to try them out first. One initiative is that it’s showing its products in galleries and concessions around the country. At launch, Julian Neal, director of SBI and CEO of The Lounge Co, said he had seen the furniture market go through “significant structural change” but that at heart, consumer behaviour had not changed at all.
“People use the internet to research our products and expect speed, ease of use and extremely high-quality content,” he said. “However, customers who are investing significantly in an item of furniture that they’ll own for a decade or more want to experience that product first. It’s critical to us that customers have a gallery nearby because they need to see the products, touch them and assess their comfort. The business model was designed entirely around these needs.”
4…and imagine the services they haven’t
Robots and drones are now emerging as potential players of the future in multichannel retailing and related industries. Some forward-thinking retailers are working out how these might work for them. For Ocado, it’s a robotic warehouse assistant. For online takeaway marketplace Just Eat , it’s robotic delivery robots. The company is now trialling robot deliveries in the UK using self-driving robots developed by Starship Technologies. Speaking when the robots first went into action, David Buttress, chief executive of Just Eat, said: “We are continuously looking for ways to use technology to make our customers’ lives easier, whether that’s how people order or pay for their food or how the food is delivered.”
Robotics are set to take to the skies for Amazon, which is currently working with the Civil Aviation Authority to trial safe deliveries using drones. The retailer wants to use drones to deliver parcels weighing up to 2.3kg within half an hour or ordering. Paul Misener, Amazon vice president of global innovation policy and communications, describes the advantages of drones thus:
“Using small drones for the delivery of parcels will improve customer experience, create new jobs in a rapidly growing industry and pioneer new sustainable delivery methods to meet future demand.”
5. Develop services that tackle unmet needs
When they design new services, smart retailers consider how they could improve their customers’ lives. Traders that fit in with customers’ lives position themselves to win sales from time-pressed consumers.
Asos has worked with delivery company DPD on a number of delivery innovations that fit in with busy schedules. The latest, the Precise service, was launched in July 2016 and enables shoppers to choose the hour they want a parcel to be delivered. When DPD notifies a customer that an Asos parcel is on its way and informs the shopper of the next-day one-hour delivery slot, the customer can choose either to accept that slot or to nominate an exact day and hour to receive it over the next seven days – between 11am and 5pm. At the time of launch, Asos’ Matt Rogers, said:
“Precise is another first for ASOS and a huge leap forward on our customer-focused delivery proposition. Our customers love getting their deliveries quickly and tell us they want control and choice over when their parcels arrive. Precise gives them exactly that.”
The development was the latest innovation for an established partnership that has worked to make delivery as convenient as possible, which is particularly important for a pureplay retailer such as Asos.
6. Communicate with shoppers where they are
Reach across and beyond the website to talk to existing and potential shoppers. Shoppers read about products they are considering buying from website reviews, getting a sense of product features and capabilities by aggregating views from numerous sources. They also ask for advice when they are on social media. Leading UK retailers ensure they are on the sites that their customers use and that they respond quickly to questions and complaints.
That’s reflected in InternetRetailing IRUK Top500 research, which shows Holland & Barrett responded to a Facebook query in 16 minutes, while House of Fraser responded to a Facebook query in 13 minutes and an email in 24 minutes. Those figures are well ahead of the average for the index: a near-52 hour response time to emails, and a 26h 30m response time on Facebook.
7. Organise around innovation
Innovation is a top priority for retailers looking to stay ahead of the curve in a highly competitive industry. Constant improvements to the customer experience allow traders to stay well ahead of the competition as well as being able to cater to fast-evolving shopper expectations. To that end, a number of leading retailers, from Argos to Boots and Shop Direct , have set up in-house labs.
In these, developers can quickly develop and test new ideas in a retail environment, rolling out the ideas that work best across their store estates. Argos’ lab above its Victoria Street store in London allows developers to test out their prototypes in the shop below. Successful technologies pioneered here include Argos’ gift finder and wishlist apps, while Shop Direct tests the user experience in its lab.
The annual John Lewis JLAB sees the retailer mentor startups. At the time of writing, JLAB was working with Digital Bridge, a company with technology that enables customers to visualise new home furnishings, and Wedding Planner, which helps couples plan their big day online and via their mobile phones. Other JLAB projects include Instagram checkout technology from Link Big and Robotical, whose walking, talking Marty the Robot (pictured above) enables children to learn about coding, 3D printing and robotics.
8. Connect across channels
By linking the store and online, retailers move towards offering shoppers a seamless service that allows them a consistent view of the brand, no matter how customers choose to access it. That happens through wishlists and baskets that are accessible and up-to-date no matter how the customer chooses to view them. It also happens when click and collect (and in-store returns) work, and when mobile is used to bridge the gap between the store and digital.
9. Consider how shoppers want to buy
Cutting-edge strategies reflect the way that shoppers buy, making it no surprise that many retailers are now designing and planning for mobile first. Mobile has consistently provided one of the few sources of sales growth in recent months, so making it ever-easier for shoppers to buy using their smartphone is a top priority for many ecommerce directors.
Mothercare has focused on mobile developments, such as an app aimed at new parents, and is reaping the rewards as more sales move to that channel. In a first quarter 2016 trading update, the retailer showed how mobile was fast becoming the main online channel for its sales, with 84% of online sales coming via mobile, which also sees 61% of online traffic. To put that into context, 35.5%
of Mothercare’s sales took place online during the period. Department store Debenhams said that almost 50% of its sales came from mobile in the six months to February 2016. That reflects a mobile-first strategy that drove 70% growth in sales over smartphones in that period.10. Look to new markets
Selling to new international markets has been a source of fast growth for many in recent years. By tapping into the appetite of shoppers to shop online in markets where ecommerce is less mature, retailers such as Asos have outperformed the UK market exponentially. As an example of one innovation, zonal pricing has enabled the fast-fashion retailer to offer clothes at prices that can flex with the conditions in the other markets that they’re targeting. It’s work that’s put retailers such as Asos, alongside fashion retailers including Boohoo.com and Next , into a strong position following the UK vote to leave the European Union.
The subsequent fall in value of the pound has prompted a surge of interest in UK retailers. This may be a short term phenomenon if the cost of raw materials rises when new stock is produced. Nonetheless it illustrates the importance of enabling international shoppers to buy. Asos has gained its success through local language and currency websites that reflect the market where they’re selling.
But it’s not just fashion retailers that are making the most of new markets. Electricals retailer AO.com is finding success in selling in Germany and Holland, while grocers Waitrose and Sainsbury’s have more recently kickstarted fledgling international strategies by selling through the Tmall marketplace.
11. Innovate through new technologies
Quickly finding ways to use rapidly emerging technologies in a retail business can spark innovation. Retailers were fast to adopt Apple Pay in order to enable fingerprint payment, and recently Notonthehighstreet added it to its website, having already used it on its Gift Finder app and finding the feature drove a 200% rise in conversions.
The Internet of Things is set to be another major gamechanger and Amazon has been among the first to find ways of using connected devices to boost retail sales. Its Amazon Dash Button enables shoppers to make one-click orders at the touch of a branded single function button given to customers. So an Andrex button positioned next to a toilet roll holder means fast ordering (and customer retention) at the point of need. Meanwhile, an Amazon Dash Replenishment Service enables connected devices, from washing machines to printers, to order refills such as laundry detergent and printer ink as soon as they’re needed.
12. Be prepared to fail, but fail fast!
Knowing when a strategy or new idea isn’t working or meeting customers’ needs is key to success. A testing and failing approach is the foundation of getting things right. That was the philosophy at M&S as it approached the task of relaunching its website on a platform it developed in-house. Patrick Bousquet-Chavanne, director of marketing at the multichannel retailer, described the retailer’s approach to innovation when he delivered a keynote speech to InternetRetailing Conference 2016
“We bring in new ideas and we see the customer response. It is about being very flexible, try them now, fail fast, try at a small scale and move on.”