(R)Tech: Navigating Retail’s Path of Disruption
The retail industry is going through an innovation revolution, driven by game-changing technologies such as artificial intelligence, virtual reality and advanced analytics.
As part of this revolution — which we call (R)Tech — we see leading retailers using technology to delight customers in bold new ways. It’s not just about selling smarter and more personalized products; it’s also about embedding new technologies in the back office and adopting innovative business practices. A leading (R)Tech business will balance the dependable customer-centricity of retail with the creative and entrepreneurial spark of Silicon Valley.
But innovation, by its nature, is difficult. Invest in the wrong technology, or roll out a business model that isn’t right for your market, and your profits will suffer. Conversely, if you are too cautious — if you never take a risk on new technology — you face opportunity cost or disruption from a new entrant.
So how can retailers import the best of Silicon Valley into Main Street without becoming a casualty of disruption? It might be best to think first about exactly what (R)Tech can do for your business. From there, you can work backwards to understand which elements you need to focus on in order to navigate the disruption ahead.
Here are five of the most exciting elements of an (R)Tech business:
Efficiency out of sight
(R)Tech is as much about efficiency as it is about innovation on the product level. The opportunities afforded by technology are immense. Driverless vehicles, for example enable you to move goods faster and more cheaply, whether that’s from shore to shelf or from warehouse to consumer. 3D printing also creates a range of new possibilities, allowing retailers to restock without waiting for a new shipment to arrive.
Satisfying the 24/7 consumer
Today’s consumers want to shop anywhere, anytime, and across any channel convenient to them. Primarily this is because Americans are time-poor and are embracing digital shopping, with the clear majority already owning smartphones. Research by UPS suggests that most Americans buy their goods on the Web and more than four in 10 make purchases through their device. As a result, leading (R)Tech retailers innovate their online and mobile shopping platforms so as to enable seamlessness and ease of access for consumers.
Loyalty through new experiences
Across retail, we see consumers increasingly spending as much on experiences and services as they do on physical products. Apps enable them to rent products, share ideas, and leave their own reviews, creating a more interactive and rewarding engagement with the retailer. At the same time, virtual reality is creating completely new and immersive experiences for consumers. For (R)Tech retailers, these experiences can be used to drive loyalty.
Creating trust through connectivity
To meet their high standards around corporate responsibility, healthfulness and transparency, consumers expect retailers to be upfront about their business practices. When it’s time to purchase, consumers are empowered to research and make decisions through social media and Web-based content. How does innovation come into this? (R)Tech businesses can provide the transparency that consumers are looking for by offering unprecedented social connectivity and engaging full time through social.
New horizons for retail talent
As the second largest private sector employer in the US, retail touches the lives of every American each day. The industry supports millions of store employees as well as tens of millions of people in ancillary industries. This is why retailers are not only focusing on improving their customer experience, but also on their teams and on their employee development. In turn, we see innovation creating new ladders of opportunity within the industry. Sales associates can work their way up to innovation officers. Store managers can become retail app developers. And, as retailers focus on (R)Tech, the opportunity for employees is endless.
(R)Tech is the best of technology and the best of retail rolled into one. For good reason, therefore, some significant changes are required if retailers are to make the most of this revolution. Increasingly, they may need to think about how they can work in partnership with innovators in the tech industry — which means engaging in an ecosystem that would have seemed alien to their predecessors. We believe in fostering an environment of creativity and innovation to help move the industry forward. Doing so will take courage, energy and an open mind, but the result is a place at the very forefront of tomorrow’s industry.