This article is for the Professionals
Sign up to Inside Retail Professional now for only $5+GST for your first three months.
That's an 85% discount plus you’ll get FREE access to all Masterclasses during Retail Week. 5 retail industry leaders like you’ve never seen them before.Already a professional? Log in
Unlike other industry buzzwords, such as omnichannel or digital-first, innovation is a means not an end. It is not a trend in and of itself, but rather it enables businesses to react quickly to new trends in consumer behaviour, or even set trends by coming up with creative solutions to problems.
Because of this, innovation has become more commonplace in retail, and not just among tech-savvy startups. Some of the biggest retailers in the world, including, yes, e-commerce giants like Alibaba and Amazon, but also traditional retailers like Walmart, have invested significant funds and resources into innovation labs and teams in recent years.
Nowadays, if you’re not innovating, you’re falling behind. But it’s not too late to catch up. If you want to create a culture of innovation in your retail business, consider the following examples from Walmart, John Lewis and The Iconic.
We spoke to the people responsible for driving innovation in these companies to learn how they actually innovate – from the rooms they work in, to the processes they use – and how this benefits the business.
Walmart: An army of innovators
Headquarters: Bentonville, Arkansas, US
FY19 revenue: US$514.4 billion ($760.6 billion)
Walmart, the world’s biggest retailer by revenue, is constantly exploring new ways to improve the business and keep pace with changing shopping habits. Since 2016, some of the retailer’s best ideas have come from the Walmart Innovation Community, a group of 1600 employees who are helping to build a culture of innovation within the company.
Entirely volunteer-based (members participate on top of their “real” jobs in all different parts of the business), the Walmart Innovation Community is centred on three key pillars: exploration, empowerment and execution.
They regularly bring in startup founders, industry leaders and other speakers to talk about their work, and host workshops where employees can learn how to code, build a business case and tell a good story. They also organise an annual pitch-fest, modelled on the popular television series Shark Tank, where employees can pitch their ideas to Walmart executives.
Beyond this, they have developed their own brainstorming methodology to help different business units solve problems and are working on the best way for Walmart to collaborate with external companies.
In 2016, for instance, Walmart Canada partnered with a local 3D printing company called Intersect to allow customers to print customised Christmas ornaments in-store. While the experiment failed from a sales perspective, the Walmart Innovation Community gained valuable insights about the challenges of working with external companies and how to overcome them.
Walmart Canada later used these learnings when it partnered with Shyft, a workforce management tool, to make it easier for workers in its distribution centres to swap shifts. After a successful trial, the app is now being rolled out across Walmart Canada.
The head of the Walmart Innovation Community, Fareena Contractor, says there are three key takeaways for retailers that want to create a culture of innovation within their own business.
First, understand the problem you’re trying to solve.
“I know we sometimes get pulled in by the next shiny thing but start by understanding what the underlying problem is you’re trying to solve and [whether] that specific technology is the right one to solve the problem,” she says.
Second, focus on progress not perfection: “This is important because you want to start delivering value early. Our industry is changing so fast, this is the only way we can ensure that we’re surviving,” Contractor says.
And third, create a safe space for team members to test their ideas, make mistakes and then learn from them.
John Lewis: Thinking through making
Headquarters: London, UK
FY19 revenue: £10.3 billion ($18.7 billion)
At the John Lewis Partnership, the parent company of British department store chain John Lewis & Partners and supermarket chain Waitrose & Partners, some of the most unique and creative ideas originate in Room Y, a literal cupboard in the company’s headquarters that the partnership’s futurologist, John Vary, turned into a “skunkworks” – a sort of bare-bones laboratory – in 2014.
The room itself is an important part of the company’s approach to innovation, since Vary believes people need freedom and space from ordinary routines and procedures to be able to imagine future scenarios. He also believes in “thinking through making”, so the team are constantly building prototypes of potential solutions.
“The physical space of Room Y helps keep us together as a team but the one thing that truly fosters our creativity and innovation is human connection and interaction,” Vary tells Inside Retail.
“People create things and therefore people influence change – and so recruiting the right talent is so, so important.”
Like many innovation teams, John Lewis’ is interdisciplinary, made up of a designer, an architect and a futurologist, who each bring different skills and mindsets to the task. Unlike many other innovation teams, however, they don’t use a particular methodology, such as design thinking, to problem solve.
“Rightly or wrongly, I have never been one to employ any specific, or official, methodology. I have always believed that if I can mobilise the right types of people with the right types of mindsets then magic will happen,” Vary explains. “I think too much can be lost when there is relentless jargon, acronyms and processes to follow.”
The team in Room Y is tasked with exploring long-term future scenarios and helping identify new opportunities in a fast-changing world. Vary says he stays away from specific timelines, focusing instead on the horizons of “now”, “near” and “far”.
This is useful, he says, because human behaviour and expectations are changing so rapidly, many businesses end up innovating to solve historical problems, such as how to sell more, drive more foot traffic and meet short-term customer needs.
“The challenge businesses face … is that they end up competing with one another to solve the same, or very similar, problems from the exact same pool of ideas and innovations as everyone else,” Vary says. “I’m here to create new pools of ideas for the John Lewis Partnership.”
The Iconic: Striking the right balance
Headquarters: Sydney, Australia
FY19 revenue: $370.5 million
Stores: Online only
Online fashion site The Iconic has one of the biggest in-house technology teams of any retailer in Australia, with more than 100 developers working on its e-commerce site and mobile app.
Like many technology companies, The Iconic works in “sprints”, where small teams tackle bite-size projects and iterate until they have a product that’s suitable for customers.
Roughly a year ago, the company took this one step further and started letting developers self-select the teams and projects they work on.
“It creates a lot of autonomy within the teams,” says Manuel Silva, director of technology and customer products.
This is a key factor in fostering a culture of innovation. For instance, The Iconic also has pet project days, where once a month, the tech team can work on whatever they want, as long as it benefits the customer or the company in some way. Some of these projects have turned into real-life features, such as the snap-to-shop tool.
“Sometimes the projects are super complex, and there’s very little chance of them seeing the light of day; other projects are just little things, but they spark ideas,” Silva says. “They’re all good seeds.”
The retailer recently introduced a similar concept companywide, where employees from different parts of the business can give talks on their areas of expertise, such as machine learning and sustainability, or even how to provide feedback, play guitar or sew.
“We look at innovation as everyone’s job,” Silva says. “No matter where you are in the company, you have a responsibility to innovate and think outside the box.”
While The Iconic is naturally very data-driven, the company has learned that data alone isn’t a good driver of innovation.
“If you innovate just based on logic, you’ll probably end up optimising everything and pushing buttons from right to left to see what performs better,” Silva says. “If you innovate just based on intuition, you’re just going to end up with some super cool features.”
Striking the right balance is important.
At the same time, The Iconic ascribes to a “lean” development approach, which means teams develop an idea just enough to be able to test it with users and decide whether to continue building it or not.
“It’s really hard to put your hand up and say there’s nothing here,” Silva says, “For some people, that feels like failure, so we’re constantly reiterating the message that it’s OK to move on. Not all our ideas can be the right ones.”