In addition to our retailer survey we also carried out a number of in-depth interviews with retailers to find out how and why they are innovating. We found that retailers of all sizes are working harder than ever on digital innovation.
SHOES OF PREY
As any self-respecting shoe-lover will tell you the challenge is always on to find a shoe that you adore but not everyone’s taste is the same. The chance for customers to design their own shoes and get exactly what they want and then have them handmade is therefore at the heart of Shoes of Prey, a business founded in Sydney, Australia in 2009.
Today the company is a global, multichannel retail brand that allows shoppers to design their own shoes online and have them delivered within four weeks and is supplementing the online experience with an increasing store presence too. The concept obviously works with five million shoes having been designed on the site and a business that broke even at two months and was making millions of dollars in sales in less than two years.
Jodie Fox, co-founder and chief creative officer at Shoes of Prey, says digital innovation is crucial to the customer experience. “It’s one of the most exciting ways to deliver brand experiences to customers in a very seamless way,”
For Shoes of Prey innovation is at its heart and its concentration is on its interactive 3D shoe designer that allows its customers to create the perfect store. The technology renders a 3D image of the customer’s shoe design as they go about adding fabrics, details and colours to their shoe and is a continually improving focus for the business.
With the company’s store presence launch an iPad app was developed, using the 3D designer, to make the shoe design process an even more straightforward process – removing hardware such as a keyboard and mouse that could distract from the design experience. “We’re constantly working on our 3D designer and instore app to continually improve the user experience,” says Fox.
At John Lewis innovation has always been core. “Innovation is at the heart of John Lewis and has been for 151 years,” says Simon Russell, director of retail operations at John Lewis. “We are constantly innovating to deliver new formats, new experiences, new products and services which allow our instore customers to connect emotionally with the brand and partners,” he says.
Digital innovation is a crucial tool for enabling a better connection between its online and physical stores. “Today the department store is about much more than just completing a transaction. The way in which customers shop with us has changed enormously over the last decade and our challenge has been to continue to deliver the best possible experience however people choose to shop with us,” says Russell.
The company’s continually developed mobile app is, he says, “the glue between our shops and online. From a mobile version of the My John Lewis card to online wish lists and scanning products to check prices the app makes the in-store shopping experience easier and more convenient,” he says.
But Russell says John Lewis focuses on innovation that helps rather than innovation for the sake of it. “Instore technology is great as long as it genuinely makes the shopping experience for our customers easier, faster and more enjoyable. If technology only benefits the retailer then customers are much less likely to embrace it. We intend to keep investing and innovating in our shops so that they remain compelling and hassle-free places for our customers,” says Russell.
For John Lewis’ customers this is about faster payment speeds, digital receipts and an effortless click and collect experience, he says. But the company’s JLAB incubator programme, which is now in its second year, also allows for more blue-sky thinking. The retailer is working with five tech start-up companies. “This initiative looks to develop innovative ideas for the future of retail which align with our core business priorities,” says Russell.
WALLS AND FLOORS
At tile retailer Walls and Floors digital innovation has allowed the retailer to outlast many of its competitors, according to web development manager Tom Murrell. “I’ve seen a lot of tile websites come and go and the ones that fade away are the ones that do not innovate. For me there’s a big difference between having a website and having a good website that people continually want to buy from with a strong online presence,” he says.
The retailer was the first tile website to launch online in the UK and since then has delivered a number of firsts, according to Murrell. This includes the first to offer samples, home delivery, a price beat promise, live chat, customer reviews and eBay and Amazon stores – to name but a few. “We don’t have any plans for that acceleration to stop and we’ll keep innovating for our customers,” says Murrell.
The company has weekly meetings to help foster new ideas where everyone on the team will bring in a new idea of something that has inspired them or that they like. “There are no wrong answers and it keeps fresh ideas coming in all the time. Even a crazy idea around the table can inspire someone else and lead to an innovation,” he says.
The company is focusing on a number of key areas – from user experience to personalisation. “User experience is something we are always looking to improve, optimise and innovate in. A big part of that online is conversion analysis and CRO is something I work on daily,” he says. Learning about customers is vital, he says, but also never-ending. “Learning what makes a user tick is incredibly important for us and it’s important to keep learning. Attributes and behaviour changes online – you need to be on the ball and keep on top of digital trends because it may have worked well in 2013 but what about 2016?” he asks.
The company has also worked hard on segmentation – finding out how certain groups of its users behave and what they want and then serving it up to them. “All users are not the same and so we’re really focussing on innovating a tailored experience – from discovering Walls and Floors to purchase,” he says. This will mean more advanced personalisation for the company next year, too, he says.
Further projects are also under development but – as with all the most innovative of innovations – Murrell says they remain under wraps for now.
At FreestyleXtreme cofounder and marketing director Ben Robert Richardson says in today’s competitive world digital innovation keeps companies in business and a work force enthused. In his company he, like many others interviewed for this report, says that trying to break new ground in delivery is key in the current innovation challenge. “I love working on delivery because it’s so important to the profitability and success of a business,” he says. “It’s easy to hammer a supplier on price but it’s an art to get the right deal so the customer is unaffected – even improved and savings are delivered,” he says. This has led the business to look beyond household names to work on new consolidation and injection models and as such to try to bring new methods of delivery to the table. “This innovation gives us solid foundations to go toe to toe with local retailers across the world,” he says. “We’re working with technology that allows us to dynamically route parcels based on a multitude of factors to deliver the best services in the most cost effective way,” he says.
And the benefit is key, he says. “This allows the company to very much focus on the customer experience and pulling/pushing more customers into the sales funnel – knowing we can deliver the product, make money and keep the customer happy.”
FreestyleXtreme is also looking at how it can deliver further innovation around its marketing. “The automation side of marketing really interests me – how can you use psychology to develop a customer into a brand advocate,” says Richardson. “How do you make the customer feel important on scale? That’s my next big project and I’m really excited to start on it as we have a wealth of data to work with,” he says.
At Starbucks the company’s vice president of marketing and category Ian Cranna, says that digital innovation is vital to be able to maintain the company’s position as an industry leader as the role of the coffee shop changes. He says by offering its customers the latest in digital innovations – from Powermat wireless charging in store which will be built into instore furniture to allow users to charge their phones, to upgrading its Wi-Fi offering – the retailer is able to encourage its customer to spend more time within its stores. It’s estimated the average customer currently spends 40 minutes online per visit.
In 2012 the company launched its bespoke mobile app My Starbucks Rewards in the UK in order to improve speed and convenience for customers and so better the customer experience. He says the results are impressive. “We estimate that customers save an average of 10 seconds per transaction which is good for the customer paying and for everyone in the queue,” says Cranna. He says it also gives the company’s baristas more time to connect with customers.
In the US alone more than 16 million customers are actively using the company’s mobile app and there are more than 8 million mobile transactions in stores each week – representing nearly 19% of total purchases. This is also accompanied by an uplift in repeat footfall, says Cranna.
Starbucks also launched contactless payment the same year, allowing customers to pay with their contactless credit or debit card and introduced Apple Pay this summer to allow customers to pay with their mobile phones too.
Starbucks’ Mobile Order and Pay functionality, essentially the coffee shop equivalent of click and collect, meanwhile is giving customers the chance to place and pay for an order in advance and pick it up in their selected Starbucks store upon arrival. Originally introduced in the US the functionality again aims to improve the customer experience. Cranna says Starbucks is also looking at the possiblity of Starbucks delivery but says we will have to wait and see what that may comprise.
MARKS & SPENCER
Marks & Spencer says that the company’s 130 year history has seen a constant focus on innovation. In fact last year it even developed a course in conjunction with the University of Leeds that explained just how important innovation has been for the company. The free online course, titled Innovation: The Key to Business Success, used the innovations stored in the company’s archive, to feature in the course to illustrate examples of innovation and its critical role in business success.
The retailer says it has devoted huge amounts of time and resources to growing its in-house capabilities and expertise to enable it to stay one step ahead in anticipating consumer trends.
Like many of its larger peers M&S also has its own innovation lab – initially called a digital label but now named the Venture Labs. The team, created in 2013 to experiment and perform digital R&D, uses lean start-up techniques to validate ideas and apply learnings as efficiently and quickly as possible. The division was responsible for M&S’ Cook With M&S app for Apple Watch in April, making M&S one of the first retailers to have an app available for Apple Watch.
The retailer has the largest contactless estate of any UK retailer and also rolled out Apple Pay this year. “Around 12.5% of all M&S transactions are already completed using contactless payment, so being able to pay with a simple swipe of the wrist gives even greater convenience and ease. With contactless technology, and innovations like our recipe app available on Apple Watch, we’ve ensured M&S can cater for customers’ evolving shopping habits,” says a spokeswoman for the retailer.
Furniture retailer Made.com is innovative by its very nature since it is one of the newer furniture retailers in the online space that is rethinking and re-orchestrating how furniture is sold. The business was founded to take on the high street by selling original furniture design direct from its warehouses and grouping orders to reduce costs. It claims its model allows it to save up to 70% off the prices of many of its high street rivals.
But the business has a small showroom presence too – in London and Leeds with a further showroom in Liverpool also planned. The company has been experimenting with the combination of physical and online space to try to understand how to combine the benefits of both through the use of digital innovation. In its Notting Hill showroom that saw customers sign in using an email address to enter and allowing the retailer to track sales increases as a result.
The company has been testing 3D projections in the showrooms, allowing customers in a limited space to understand how furniture may look in the flesh.
NFC tags mean that customers are able to tap their mobile devices to get further information about a product. “Customers just want to come in and browns and are very used to self-service now,” says Made.com UK country manager Annabel Kilner. “We also have NFC enabled tablets that you pick up and a video that explains what to do. You see a product you like and hold the tablet up to a postcard of the product and it gives you all the information, product and colour variations you need,” she says.
As a smaller business she says the retailer is able to react fast in terms of introducing new innovations – such as the instore NFC. “We don’t have the bureaucracy of the decision making process of larger businesses,” she says. However a business case is still required, she stresses. “For us most projects are about making the customer experience better so for something that’s particularly innovative it needs to have a business case,” she says.
The company also launched an online community – Unboxed – where its customers can upload their photographs of Made.com furniture in their own homes. Its next step is to trial customers opening up their homes as showrooms to potential customers with owners then receiving commission if a purchase is made as a result of the Unboxed initiative. “That’s a major area that we are working on,” she says.
Visualisation is also key and although too early currently Kilner says that augmented and virtual reality will have a huge role to play in the business – especially when technology such as Google Cardboard improves. “There’s a massive amount to do around both visualisation and personalisation as well as initiatives such as more dynamic pricing and the gamification of loyalty schemes which are coming and which will be very interesting,” says Kilner.
At footwear retailer Schuh innovation is ingrained into the very DNA of the business but Sean McKee, head of ecommerce and customer service at the brand, says it’s not labelled as such. “We are all of us innovative and innovating but nowhere on the agenda do we talk about innovation – we talk about projects we are doing to enhance conversion,” he says.
For Schuh a number of digital initiatives are currently underway. “The most important remains flipping our remaining sites over to responsive design so that we are best fit for the mobile customer,” he says. The UK site has now been responsive for a year and the Irish and EU sites will become responsive before Christmas.
McKee says the retailer is also working hard on managing inventory to improve availability. “We want to make the store inventory as good as possible and are thinking very hard on how we deliver to the customer,” he says.
The company is also looking at optimising its web content to understand the value of different types of content on its site – such as user generated pictures on social and use of video.
The company has also introduced video chat – an initiative that is replicating the face to face experience of staff instore. The results are impressive since they deliver engagement at up to 15% higher and a fourfold increase in conversion.
“That’s delivering innovation and improving customer experience and delivers great conversion and glowing reviews,” says McKee. The channel is particularly used for pre-shopping decisions and will be extended to mobile following its success on desktop and tablet. “All the evidence over and over shows that if we can help a digital customer interact with a human being as part of the customer journey we have a better conversion rate,” says McKee.
And the retailer is working hard on bringing digital innovation instore too. “It’s about giving the customer the quickest and easiest journey possible so in stores in the last twelve months it about things like having electronic receipts that on the face of it are quite simple but are quite effective for the customer since they do not then have a drawer of receipts,” says McKee.
As a model of a reinvention of a traditional retailer that has become a digital innovator one need look no further than ShopDirect, a company that has undoubtedly been hugely successful in its transformation into digital innovator.
Enabling this transition a clear vision and strategy has been vital, according to Sam Barton, head of user experience at ShopDirect. “We have had a clear ambition to move away from paper to digital and that clear focus has allowed us to understand where we are investing our time, energy and effort,” he says.
Its reinvention as a digital innovator has also helped attract the innovative too. “Lots of start-ups want to work with us because they have seen we are willing to invest in new technologies that allow us to innovate in certain areas,” says Barton.
The retailer is running a number of digital innovation projects within the company but Barton says that there are two main areas of focus — the first one being improving the cross device experience for customers. “It’s about creating an experience that’s consistent across all devices so how can we allow them to browse on one device and then pick that up as the same experience on another device,” says Barton.
Another area of focus is personalisation. “That is absolutely our driver for the next few years because there is so much to go at. One is getting to grips with the data and then looking at how do you execute that in a way that’s right for the customer,” says Barton.
ShopDirect is also working with a number of start-ups in various areas of its business. “The interesting space for us is apps at the moment. We are seeing some interesting behaviours in terms of customers’ use of our sites via mobile apps so we see that as a big space we can take advantage of,” says Barton. The company is already working with Cimagine, an augmented reality specialist, to allow customers to scan the dimensions of a room and place in furniture. “That’s a genuine opportunity to see what that product looks like,” he says.
ShopDirect is also using Cortexica an image recognition scanning feature in the MyVery app that allows customers to take a photo of a pattern or colour and match it against the ShopDirect product database. “These are all new areas where we can be a little bit more disruptive,” says Barton.
Boots is another retailer trying to combine the worlds of offline and online through digital innovation in order to provide a better and more complete shopping experience for its customers. Robin Phillips, director of omnichannel and development for Boots UK, says that much of the focus for the brand is on getting closer to its customers than ever.
With a loyalty scheme that already covers more than 18 million people it’s something Boots has long been good at but Phillips says there is more work to be done. “We are looking at personalisation and the data ecosystem and as part of that we are looking at predictive analytics and cognitive decision making and machine learning to understand how we use that to personalise experiences based on what the customer is doing at that point of time and where they are trying to do it,” he says.
A particular focus is on greater personalisation of the health and community space, taking learnings from Walgreens in the US.
Earlier this year Boots UK also launched its Betalab – a currently multisite facility that will move into dedicated premises in London shortly-that combines a number of partners and Boots staff to try to deliver the products and services of tomorrow. “Although our store portfolio plays an important in of the omnichannel experience what we need to develop quickly is the out of the store digital and technology experiences that allows the brand to extend out from the stores in a way that’s seamless,” says Phillips.
Areas like wearables also provide huge potential for the business, says Phillips. “There is a tremendous amount in the health wearables space such as contact lenses that measure your insulin levels but it’s about how do you connect that all together in a way that’s not intrusive and that makes people comfortable about what you are doing with their data,” he says.
The company is also further developing its apps capability too. “Walgreens has built some really great mobile capability and their app solutions – particularly in the pharmacy space – are really impressive so we can use that to accelerate what we are doing rather than reinvent it,” says Phillips.
At fashion retailer Zalando growth has been rapid – with a concentration on adding new territories and new brands. “That means scaling and making sure the systems were able to deal with more – more consumers and more data,” says Zalando’s head of product management Daniel Schneider.
But the approach wasn’t a sustainable one. “In a lot of cases we rebuilt things on the fly to make sure we could go to the next country but last year when we went to IPO we asked what do we want to do next,” he says. “We wanted to expand what we offer for the fashion industry so we looked at how we work and found a couple of symptoms. They included a business side that was frustrated that they had new ideas but couldn’t get through to technical because they were focused on keeping the engine running,” says Schneider.
A new approach – that of “radical agility” – was conceived. The philosophy not only breaks engineering teams down into smaller groups but gives them ownership for a specific part of the technological platform. “All these teams – of around three to eight people are tasked with focussing on how do to things and we allow the product managers to think about what they want to achieve. It gives the engineers autonomy and the IT product manager has the job to solve problems that someone has – whether that’s a consumer or the brand. It’s their job to figure out what is the problem and the solution and the engineer’s how that will be implemented,” says Schneider.
The strategy focuses on three pillars – autonomy, mastery and trust – which Schneider says are crucial to its success. “A lot of engineers agree with this – they are problem solvers at heart and if it’s just about implementation it doesn’t sit well with them. People like the idea and it makes for a much more motivated group of people,” he says.
Only six months in – and with an 800 plus tech team that is split across locations that include Dublin and Helsinki as well as Germany – Schneider says it’s not easy to prove success but says the change is having a positive effect. “It’s really hard for these organisational changes to link to bottom line numbers but for us it’s a necessary change to be a much more diverse tech company. We need much more flexibility and to be less restrictive,” he says. “We were never short of good ideas but it was harder and harder to get those ideas through. This is breaking the big complex machine apart. If you want to get better and better at getting new ideas in and serving new customers them more flexibility is better,” says Schneider.
HOME RETAIL GROUP
Mention the term digital transformation and it’s Home Retail Group that springs to mind. The retailer has put huge amounts of effort into reinventing itself for the digital age. Last year Argos introduced a number of new digital initiatives ahead of its peak trading period and is promising similar new experiences this year.
One of last year’s digital innovations was its kid’s app which saw 70,000 wish lists created by children. A Christmas gift finder, also introduced last year, was used more than a million times in the run-up to the festive period highlighting just how important such new services can be and the company also introduced further developments in augmented reality through Argos Sales. All these continued to drive the growth of online sales to 46% for the financial year with mobile commerce accounting for 38% of total Argos sales.
The company has rolled out digital into its stores since the launch of its Digital Transformation Plan in October 2012 and now has an extensive portfolio of digital stores, including those that were existing traditional stores transferred to the digital format, as well as more than 50 digital concessions within both Homebase and Sainsbury’s.
At Dawsons Music head of ecommerce Nicola Tibbs says that retailers have to innovate in order to reflect the digital habits of their audience. “Retailers serving digital natives, in particular, must respond to the faster adoption of technology amongst a younger demographic – or face playing catch up,” she says.
But the benefit of the digital world is the ability to learn faster and better than ever before, she says. “Since digital innovation typically delivers a much faster form of consumer feedback, this often helps to shape any new digital products or services in a very agile way.”
Dawson Music, with more than 100 years of history, is one of the longest standing retailers of musical instruments in the UK and sells across stores, online and via mail order. The retailer recently launched GoInStore – a unique customer experience which uses wearable Smart Glasses or Android Handheld devices to connect visitors to the Dawsons Music website directly to the retailer’s specialist in-store advisors. “To activate the service is simple: the customer connects via a button on our website which opens up a video link to the adviser in store. This enables a two way audio link and one way video link, facilitating real time interactions with store staff from the home, workplace, or even whilst on the go,” says Tibbs. As with Schuh’s video link this enables an important face to face interaction for would be customers. “Our specialist advisers can demo products, allowing the customer to hear and see the product – very important when purchasing a musical instrument,” says Tibbs. “The service is especially useful for customers who may not live near a store, or whose movements are restricted by a disability.”
The service is designed to increase conversion rates for online commerce, enabling online customers to access the expertise of instore staff.
In addition to GoInStore Dawsons Music is also using SMART-Media, a personalisation tool which leverages product recommendations on the Dawsons blog. “This is a subtle yet important addition to our website,” says Tibbs. “Buying decisions for a more considered purchase are rarely impulsive and often involve pre-purchase research. Our blog contains a large amount of useful product related content that aims to offer more in-depth content to that held on our product pages. SMART-Media complements this content with product recommendations and as such, we aim to retain the customer on the Dawsons website as they move through the purchase journey,” she says.
Burberry continues to position itself at the forefront of digital innovation in-store with its flagship outlets and the company is also renowned for bringing digital innovation into its fashion shows too.
The brand was the first major fashion retailer to livestream its spring/summer show in 2010 and the first major brand to live broadcast its show into digital out of home screens.
At the company’s recent fashion show in September Burberry created the first ever Snapchat show, inviting users to see the latest Burberry spring/summer 2016 collection the day before the official runway show.
The company also became the first global brand to launch a dedicated channel on Apple Music in September too. Sitting in the curators section of the Apple Music service the channel has been designed to showcase Burberry’s collaborations with emerging and iconic British artists.
Taking further advantage of social media Burberry is also the first British luxury brand to launch on Kakao, the largest social platform in Korea. The company has also become the first official account to launch on Line mall, an in-app social commerce experience on LINE – an Asian based messaging platform. As if that wasn’t enough Burberry was also the first global luxury brand to sell product through a tweet via Twitter’s Buy now technology in September 2014.
And instore the innovation continues with initiatives such as interactive mirrors, digital screens and a digital chandelier was one of the first to pilot true digital interactivity into its Regent Street store in October 2012.
In May of this year the compa