7 Practices of Highly Innovative Retailers

Success in retail today is about innovation – new channels, new capabilities, new processes, and new business models. Gone are the days when customers sought comfort in the familiar. Customers today demand change, an experience that excites them, and the ability to shop when they want, how they want, and where they want. Retailers need innovation to meet their customers’ needs.

We’ve seen that the most innovative retailers have been the most successful. Those who haven’t innovated have failed. Looking back at hundreds of retailers, ranging from startups to the largest global brands, our research finds that the most successful retailers follow seven practices to drive their innovation.

Highly Innovative

It’s important to differentiate highly innovative retailers. By highly innovative we mean those retailers that have been successful with innovation in terms of both magnitude and repetition. Small innovations are required for retail survival. One-time large innovations make headlines, but don’t ensure ongoing success. What is needed is for retailers to develop the ability to innovate materially and repeatedly.


Our research finds that highly innovative retailers routinely follow seven practices. By “practice” we mean repeated exercise so as to acquire, then maintain proficiency, then excellence. These practices are developed and refined. They are repeated so often that they become ingrained in the company culture. Not following a practice would be a notable occurrence. It’s just the way things are done – the way innovation is done.

Plan – For their organizations, partners, and customers

Highly innovative retailers plan for innovation. They plan in order to prepare their organizations. More and more retailers have executives with “Innovation” in their title. They plan, in order to prepare their partners. Suppliers and fulfillment partners, for example, are often critical to innovation’s success. And they plan in order to prepare their customers for change. Innovation must be part of the brand.

Partner – Don’t do it alone

Most retailers don’t have the financial resources to do it alone. Even if they do, highly innovative retailers realize the benefits of partnering. They partner with other companies to increase their ability to learn what’s available, what’s worked, and what hasn’t. Highly innovative retailers share the financial burden and the rewards. Partners are a tremendous resource for innovation, but like any resource, they require investment and management.

Test – They’re great at it or partner with those who are

One of the single most consistent practices we’ve identified is the practice of testing. Highly innovative retailers test a lot and they test well. They test, measure, and adjust to the findings. By well, we mean that they understand how to test both accurately and fairly. They’re not just out to prove a case – they’re out to win by understanding the cause and effect of their innovation. This takes a level of sophisticated analysis to understand the correlation; and it also takes a willingness to let the facts speak for themselves. Highly innovative retailers listen just as well if the facts indicate something isn’t working as when things are working.

Invest – In the people, tools, and process that support innovation

Of course, investments are required – and in several areas. But we’ve identified three key areas where successful innovators have invested more than others: testing, innovation management, and analysis. A/B testing is a bedrock of innovation in digital commerce. Multi-dimensional customer segmentation is as important for direct marketers. And a robust store pilot processes is required for brick and mortar retailers to properly manage an innovation roll out. Innovation often requires new types of analysis. We’ve seen that highly innovative retailers across the board have invested in new business intelligence solutions that allow their analysis to be as dynamic as their innovation.

Pivot – Don’t get locked in to a solution or even a goal

The ability to pivot is key. Very few innovation projects go exactly as planned, even successful ones. We’ve seen this time, and time again. For one retailer, they started a ship-from-store project, but through pivoting, they ended up with a new workforce management solution. For another retailer, migrating to a new ecommerce platform opened the door to innovation in their customer call center. The innovation road has many road blocks. Highly innovative retailers figure out ways to work around them and find new opportunities along the way.

Fail fast and cheap – Factor in the cost of failure

You’ve probably heard the innovation mantra, “Failure is an option” – actually, it’s closer to a certainty. This is a cultural hurdle as much as anything else. But it is also is the balance to the pivot rule. There’s no magic bullet, but striking the balance between failing cheap and succeeding big is the definition of success.

Learn – Innovation is a marathon, not a sprint

For highly innovative retailers, innovation is a continual process and learning is an integral part. Successful initiatives build on one another, repeating what worked. Because failure will occur, team members also capture and share those lessons, changing course on what didn’t work. Learning is ingrained in the culture and facilitated by enterprise systems.

Doug Weich is the Vice Chairman of the NRF Associate Member Council and the Founder and CEO of Sophelle.

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