Now and Next Retail: Experimenting to win
“If you’re competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be pioneering.” Amazon CEO Jeff Bezos’ approach to business has proved to be one of the most disruptive of the 21st century, and it’s one that retailers ignore at their peril.
Consumers are now in control and hungry for new experiences. They want the most up-to-the-minute, idiosyncratic products and they expect to be able to buy and personalize them online, with super-fast delivery and the convenience of returning them on their own terms.
New technologies – particularly social media and eCommerce – have leveled the playing field. Challenger brands have the agility and fresh ideas to steal once loyal customers, and established retailers cannot rely on their heritage alone to be successful.
The problem is that many retailers are much better at “Now” thinking – identifying trends in what (and how) customers are buying, and then taking action to respond – than they are at “Next” thinking. They need to get better at anticipating consumer behavior and making provocative bets on what they will be buying tomorrow.
Experiment with creativity, humility and hunger
Brands should recognize that consumers are embracing digital innovation more quickly than the companies that serve them. This isn’t just a fad: It’s a constant change, which has profound implications for the brand, the store and customer experience as we know it.
In response, brands need creativity and the humility to accept that they are vulnerable in the face of emerging trends. And they need the bravery and hunger to take their consumers on an exciting and evolving journey every day.
Ten years ago, this would have been a fantasy – but today it can be within reach. There’s not a day that goes by when a website algorithm is not updated, or a new product or service isn’t launched. For this new generation, embracing an agile working model is as important as embracing technology. At the heart of this new world is the ability to experiment.
But what does this mean in practice? How can established chain stores find their fearless, forward-looking spark? How can business leaders and their innovation teams become bolder, faster and more successful in the experiments that they run?
In our view, there are three guiding principles to bear in mind.
Experiment to be bolder
If retailers want to grow, they must first think differently. One way is to bring together a portfolio of broad and bold experiments that fall outside their comfort zone – whether that’s personalization based on customer data, or the adoption of a business model pioneered in an adjacent market. Then they need to run through these bets, testing hypotheses, trailing localized experiments and getting behind those with potential.
As in venture capital, the goal of experimentation is to learn at the highest speed and lowest cost. So, designing the right experiments becomes a critical skill. And building an eco-system of enabling partnerships – be it with startups, technology firms or innovation partners that stretch and enhance your capabilities – is critical.
Experiment to pick up speed
Too many businesses are slowed down by layers of bureaucracy. These processes are created for understandable reasons, but many are rooted in models of old business practice and introduce unnecessary hurdles that stifle creativity and slow innovation to a snail’s pace.
Rather than implementing a raft of new processes, it is better to decide on an experiment’s viability by asking a series of fundamental questions. First, you should ask whether the experiment fits within the structure of the existing business and your ecosystem of suppliers, or whether radical change is called for. Then you should consider whether you have people with the passion, skills and entrepreneurial mindset to make it work. You need to ask:
- Are we being bold enough?
- Are we confronting the “big what ifs”?
- Is the consumer at the heart of this idea?
- What is the fastest, most effective way to test and make a reality?
Experiment to stay Relevant
To stay relevant to your customers, you need to adapt your products, services and marketing strategy on a constant basis. Roughly one in four customers would spurn a company that wasn’t relevant to them, which means you need to evolve as they evolve. You need to become what we term, a “living business”.
Becoming a living business is no small undertaking. At a high level, it involves becoming more responsive to new opportunities, scaling alongside an ecosystem of partners, embedding customer-first thinking and design, and building more intelligent marketing and sales experiences. But the alternative is to become irrelevant.
New game, new approach
Today’s retailers need to flex at speed, recognizing what customers value and taking steps to enhance it while always moving forwards.
In this environment, broad, bold, fast experimentation is not an option: it’s a necessity. While some large businesses see their scale as a barrier, claiming it is harder for them than it is for start-ups, they should remember that they have the resources to build the capabilities and infrastructure to run more experiments and drive more learning than smaller brands. In this world, scale becomes your friend.
Dave Allan is co-founder and board member of ?What If! Innovation, part of Accenture; Jill Standish is senior managing director and head of Accenture’s retail practice.
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