“For retailers in the maturity phase of their life cycle, innovation will be more important for growth than organic expansion in the years ahead,” said Tom Rubel, president of Retail Forward, a global management consulting, market research and executive development firm specializing in retail intelligence and strategies. “Looking back, retail innovators such as Woolworth, Sears, JCPenney, 7-Eleven and Wal-Mart revolutionized the retail industry. Their innovations changed the rules of the game. They brought about drastic changes in the behavior of competitors, reinvented the industry’s economic model and improved the customer experience.”

“Retail Innovation: 10 Opportunities for 2010” identifies 10 areas with tremendous potential for creating new consumer benefits and stakeholder value:

• Catch a wave. Retailers who apply innovative thinking to a growth market opportunity created by demographic, societal, economic or technological trends can generate significant growth and financial performance. The needs of an aging population, ethnic consumers and the pursuit of healthy lifestyles provide fertile ground for innovative solutions.
• Solve my problem. A consumer-centric approach creates opportunities to add value to the shopping experience. This requires adding services, information and support to the product mix to provide a complete solution for task-oriented shoppers. Presenting products in context and bundling products and services creates consumer value and helps differentiate retailers from competition.
• Do it for me. Demographic shifts and lifestyle changes are driving former do-it-yourself consumers into the do-it-for-me market. Retailers are responding to consumers’ increasing demands with innovative services and conveniences. Installation services from home improvement and consumer electronics retailers and home meal replacement options are fast-growing examples of do-it-for-me innovations.
• Help me choose. Information overload, too many choices, more complex products and a lack of knowledgeable sales assistance create opportunities for retailers to develop innovative solutions for consumers. Allowing shoppers to sample the merchandise before buying, using on-demand information kiosks, partnering with celebrities to provide a seal of approval and creating online communities provide consumers the help they need.
• Come to me. New distribution models are allowing retailers to connect with consumers wherever they are—at home, at work or in the car. Mobile retailing and target marketing are gaining in popularity as time-pressed consumers seek greater convenience. New-style direct-to-consumer rental concepts also are serving an important consumer niche.
• Enhance the experience. Retailers increasingly will differentiate themselves by using experiences to sell the dream—as well as the product—and bring the brand to life. By making stores “super-immersive” and integrating branding into entertainment and other customer experiences, retailers are exploring ways to create memorable brand interactions that resonate with their target consumer.
• Make it easy. Innovative process, service and design solutions that are simple, intuitive and in tune with shoppers’ needs—along with new technology tools—can save consumers time and effort. Retailers who implement easier and more rewarding customer experiences will realize sales growth and enhance customer satisfaction and loyalty.
• Do it my way. As shopping becomes increasingly individualistic, innovative retailers will seek ways to provide more unexpected gratification to shoppers and allow them to express themselves in unique ways. In addition to mass customization and personalization, retailers are offering opportunities for customers to participate in the development of new products and services.
• Help me connect. Social networking fosters community among consumers who share a common interest. Retailers are forging stronger relationships with consumers and earning their patronage by helping them to connect in ways that are important to them and by responding to their emotional and physical needs.
• Speed it up. Consumers want it fast, they want it now and they want it first. The need for speed in the shopping process will continue to drive changes in store concepts, design, location, merchandising, transaction processing and payment.

According to Retail Forward, most retail innovations to date have focused on efficiency in response to mass-market opportunities. While ongoing innovations in technology and operating strategies will continue to improve efficiency, future retail innovations will be more customer-oriented.

“Going forward, retailers will address the unique needs and desires of individual consumers and provide a more rewarding and memorable shopping experience,” Rubel said. “They will innovate around new formats and distribution models, product and service offers, marketing and customer communications, and other components of the retail business model.” [September 2005 PET AGE]