Getting to the roots of what digital innovation means
What does digital innovation actually mean and why is it important? We asked leading retailers to tell us.
Innovation. It’s a simple word that means so much but is so important for retailers to stay on top of in today’s digital world if they are to stay one step ahead of both their competitors and customers in order to stay relevant to their market.
And it seems retailers realise its value with an overwhelming 92% of retail businesses saying it was either vital or very important to them in
Indeed nearly two thirds (64%) rated digital innovation as vital to their business and more than a quarter (28%) said it was very important to them. 6% said it was important. Only 2% said that it wasn't important to them at all.
But it’s a loose term which often gets defined simply as the latest, greatest new online or instore technology. Jack Smith, digital director at New Look, says that for him digital innovation is close to the dictionary definition: innovation “It’s around rethinking what we do today but in a way that works better and is smarter – it’s not necessarily about introducing new things,” he says.
Jodie Fox, co-founder and chief creative officer of Shoes of Prey.com, -- an international online retailer that allows customers to design their perfect shoes and get them delivered within four weeks – says that it helps to deliver on customer needs that the customer may not even know they have. “Digital innovation is currently one of the most powerful tools we have in being able to learn about what our customers need but cannot or do not articulate to us,” she says.
Tom Murrell, web development manager at online tile retailer Walls and Floors, says it’s about delivering something different for your market. “It’s something that sets you apart from the crowd online, captivates your audience and makes them stick around or come back wanting more,” he says.
This doesn’t necessarily have to be something brand new, Murrell argues. “It could be taking something that works well in another industry online and tailoring it to work even better in ours,” he says.
Ben Robert Richardson, cofounder and marketing director of skates retailer FreestyleXtreme, says this can be highly effective. “Bring ideas that have worked in other sectors and add your own spin to your particular sector. That way you can always back a winner – an innovation with a proven track record,” he says.
The customer experience focus is a philosophy that Annabel Kilner, UK country manager for online furniture retailer Made.com, shares: “For me innovation is really about providing a new experience for the customer and making a better connection with the customer,” she says.
A focus on digital innovation allows the retailer to keep up with change, keep delivering something new and ensures they don’t take their eye off their ball. “It’s about making sure we don’t become complacent and think that customers will continue to operate in the way they have,” says New Look’s Smith.
It also allows retailer to reinvent and re-imagine the customer journey. “Innovation is identifying friction points in a product or service and then developing the best possible solution,” says Shoes of Prey’s Fox. “Digital or technology is one of the best tools we can use at the moment to solve these friction points really well,” she says.
Sean McKee, head of ecommerce and customer services at Schuh, agrees saying it’s about “finding and pushing the boundaries of customer experience and convenience in a way that’s enabled by technology.” However he says some retailers are just catching up rather than truly innovating. “It’s impossible to be unaware of innovation but there are still huge numbers of retailers defining innovation as ‘when will we have click and collect live,’” he says.
The aim of digital innovation of course is ultimately to benefit the business, points out Richardson. “Digital innovation for me is finding pockets of untapped value in the digital space. This could be in revenue, customer experience or efficiency,” he says.
His views were shared by retailers in our survey, where we asked what factors were affecting retailers’ digital innovation drives. The most popular reason given by respondents was revenue growth for 71% of those surveyed. Customer demand was the second most popular at 60% followed by competitive pressure from existing competitors at 43%, and then potential disruption from new markets, new entrants or new technology – both at 36%.
Innovation is about the old adage of not being afraid to try something new – which means the ability to test and optimise throughout the business is vital. Retailers need flexibility to be able to react quickly and to try new things before the market moves on without them which means that retailers also need the right mindset and culture in their businesses to encourage innovation.
Many retailers refuse to even give innovation a label in their business. “We don’t really talk about innovation as a topic but just a way of working,” says New Look’s Smith. “For instance we rebuilt our checkout last year and there are a number of innovations in there but the fact that we reinvented the checkout itself was enough for me. I’m really keen that innovation is a part of our DNA rather than a project so I don’t want to split to off separately,” he says. It’s a view that many other retailers share – saying that innovation is an embedded set of processes and values within their businesses rather than a separate project.
Digital innovation is something retailers simply can’t afford not to do. “You can lose business by not being a digital innovator,” says Murrell. “People like to be wowed online just like I do when I am shopping online. Users want a quick and seamless multi-channel experience. If you’re researching online you want the most relevant product and you want to find it quickly at the best price and within a few clicks you want it ordered,” he says. “If you can provide that and wow your audience along the way you've got a good chance they’ll come back. Digital is so fast paced you need to keep innovating and testing otherwise you are behind before you know it,” says Murrell.
This doesn’t mean that retailers should be constantly chasing innovation but looking at what is appropriate to their business model. “If someone comes up with a new method of acquiring customers and you don’t keep up you’re going to miss out but from an SME perspective you can’t do everything,” says Richardson.
Schuh’s McKee says retailers need to assess where digital innovation will bring benefit. “It’s about knowing your business. It’s perfectly possible to be a busy fool chasing every possible innovation but you have to chase the ones that have a fit to your business and where there are volume/value gains to be made. It has to be where that innovation is likely to deliver a benefit and succeed,” he says.
Ian Cranna, vice president of marketing and category at Starbucks EMEA says it is retailers’ own customers who will tell them where ideas and change needs to be focused. “My best piece of advice would be to listen to customer’s feedback – this will always inform future innovations,”