Innovation

Why Does The Path To Retail Innovation Go Through So Many Labs?

Retail innovation

It’s not enough to be a retailer these days, not if a merchant intends to survive in a world of commerce dominated by the likes of Amazon and other tech-focused competitors. Innovation is one of the keys to advancement — and that increasingly means opening tech hubs, incubators and other such operations.

Those efforts have certainly led to significant advances in product and revenue, and the enablement of what’s come to be called the “consumer experience.” But not all innovation labs or tech hubs give rise to seamless tech progression. Building new retail tech and processes is not the easiest thing in the world — to state the obvious — but the wrong mindset or approach can derail even the best efforts, those with ample funding and purpose.

New Efforts

PYMNTS readers can be forgiven if they view innovation labs (no matter the label) as something that verges on retail fad. Retailers and brands regularly announced their intention to up their game — and provide those treasured consumer experiences instead of mere transactions. Foot Locker stands as one of the freshest examples of that. The athletic shoe and apparel brand has announced its “Greenhouse” incubator initiative, a vaguely-defined concept that will include a think tank and collaborations — and, ideally, will lead to new brands, among other gains.

Take just a superficial look at the literature that has developed about such efforts and you’ll easily find grumbling and skepticism about tech hubs, incubators and the like. They are often derided as expensive PR and marketing pushes, or criticized for lack of a mission focused enough to produce real results. And when it comes to experimentation in general, investors often have limited patience. Kroger’s ongoing effort to develop more omnichannel power in the rapidly developing area of grocery store tech, for example, has left some investors recently wondering when that push will really start to pay off.

Still, such labs have given birth to some significant products and retail gains.

Amazon’s Lab 126 — which as of Tuesday (April 2) was hiring for 313 full-time jobs — stands as one of the classic examples, and one of the tech hub models to imitate even if few other organizations can replicate the scale. Amazon’s innovation lab effort, launched in 2004, is where employees developed such products as the first Kindle eReader in 2007, followed by Amazon Fire TV and Amazon Echo.

Lab Changes

Just as not all technology projects pan out, nor do all attempts at running a dedicated retail tech hub or innovation lab. That truth is reportedly playing out with Neiman Marcus, a venerable retail chain that is trying to build “retail experiences” around luxury and brick-and-mortar stores. In fact, the retailer recently appointed two executives to lead its customer and store strategies as part of the effort to build a luxury platform. Part of the goal is to create creating personalized experiences for customers within the soon-to-be-overhauled 43 stores.

Those ongoing moves have reportedly shifted the main responsibility for Neiman Marcus innovation efforts from a dedicated lab organization — in place since 2012 — to top executives. “The retailer, under the discretion of new leadership, is pursuing innovation at the top rather than in a lab,” reads one recent account of the changes.

That just shows that even in this age of retail-specific innovation labs, there is more than one path to better products and consumer experiences.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our April 2019 Unattended Retail Report. 

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