Retail Innovation – 4 Tips to Get It Right

“Innovation is the ability to see change as an opportunity not a threat.” – Steve Jobs

If there’s an industry constantly pressured to innovate, it’s retail. 

Look at fashion, for example. Every season has to bring in something de rigeur to capture the consumer’s eye—a new pantone color, puffier puffer jackets, or work-from-home loungewear.   

But innovation is about more than creative clout; it’s a competitive advantage. Being nimble and responsive is more than a trend: it’s a baseline requirement for staying relevant and keeping up with the rapidly changing needs of consumers. 

At the same time, retail’s razor-thin margins and constant fear of store closures make it challenging to embrace new, unproven ideas. That’s why Sophelle takes a “No Surprises” approach when it comes to innovating. While retailers must embrace change, they can’t let it become a financial liability.

Here are four tips from years of experience on how to strike the right balance between innovation and fiscal responsibility:

  1. Allocate an Innovation Budget. Companies like Google, Amazon, and Netflix keep coming up with new ideas because they have the resources to do so. Build in a dedicated innovation budget that’s completely separate from your operating budget. You’ll never be comfortable taking a risk on the funds you need to keep your company going. Get key decision-makers together and set aside money solely used for testing and experimentation. 
  2. Allow Room for Failure. Once you have an innovation budget in place, get ready to lose 90% of it. If the thought makes you squeamish, that means your company isn’t comfortable with failure. And if you can’t fail— you can’t innovate. The inability to fail is what kills most retailers. An innovative company expects 90% of their innovations to fail. Keep in mind that learning what doesn’t work can be as valuable as learning what does. 
  3. Build a Culture of Creativity. A single innovation is not the same thing as having an innovative culture. Apple didn’t just build the iPod: they built the iPhone, MacbookAir, and AppleWatch, too. Innovators develop the regular, repeated ability to keep pushing the limits of what can be imagined and created. The commitment to reinventing yourself as a brand needs to be reinforced from the top of the company down. When you give your team permission to share and brainstorm together, you’ll see creativity flow more freely.
  4. Set Clear Expectations and Push for Success. Just because you’re allowing room for failure doesn’t mean you’re encouraging failure. Innovation budgets aren’t just chances to explore creative ventures, you still need a return on the investment. Innovations may fail 90% of the time, but the other 10% of the time, they need to pay off—they should cover 100% of your innovation budget and then some. Everyone should share the expectation that it’s okay to fail when it comes to innovation. But everyone should equally be clear that failure is not accepted in a production environment.

More than ever before, businesses are being challenged to shift perspectives and pivot from traditional practices. The ones that adapt the fastest are the companies that keep pushing themselves forward into the future. In order to survive, we must learn to innovate.

Are you allowed to fail? Can you innovate without failing? One of those two things needs to happen—because not innovating is no longer an option.

Looking to evaluate or improve your company’s investment in innovation? Contact us today.