Innovation

How A Retail Incubator Could Produce The Next Big Innovation

How Retail Incubator Produce Big Innovations

The myth of the lone (and possibly mad) scientist died out a long time ago, as the industrial age led to teams of researchers working together (or at healthy cross purposes) to enable innovation. Science and invention are collective pursuits. Imagination and epiphany still have their roles, but it’s less about “eureka moments” than the steady, data-focused march of daily progress.

One example in retail and payments is tech incubators — specifically, those run by specific companies and brands, a trend that shows signs of growing even more in the 2020s (which, let us remind you, are only a few months away). Target is among those merchants trying to spark more innovation as it fights for its share of the retail world that is dominated by rivals Amazon and Walmart – and as it aims to appeal to younger consumers coming into their own, shoppers who are devoted to their mobile devices and who grew up in a digital world.

LISNR Case Study

To learn more about how these incubation efforts work and the benefits they can bring, PYMNTS recently caught up with Chris Ostoich, co-founder of LISNR, a company taking part in the METRO Target Retail Accelerator, certified by Techstars. That’s a mouthful, but what it means is that LISNR, which sells ultrasonic sound transmission technology for use in retail and payments, gets an opportunity for an innovation boost via the collective effort of incubation.

The basic idea behind LISNR is to send data securely between devices leveraging ultrasonic audio.

Or, as Ostoich put it during the PYMNTS interview, “LISNR enables merchants to mimic an NFC-like experience but with a potentially more favorable fee structure the QR code, as LISNR continues to be positioned as a card present alternative.” He added that “our customers buy our product because we offer advantages over the technologies mentioned here. For merchants wanting to enable better mobile wallet experiences at POS and throughout the other customer journey areas, they do not have access to NFC so find themselves stuck and substitute using a QR code. This QR code can lead to a more expensive transaction and a less seamless experience compared to NFC.”

Such technology reflects a trend in the wider world of retail and payments in which various types of wireless communication are used to broaden and deepen the customer experience, and to give merchants – inside stores as well as via online and mobile channels – more capability to serve customers on their own terms.

Customer Journey

“Most often, our tech is used to power payments and to enable moments along the customer journey,” Ostoich said. That could mean delivering messages to customers as they browse the aisles in-store, or enabling contactless payments via merchant-owned mobile wallets. A customer could verify buy-online, pick-up-in-store orders and open smart lockers to retrieve eCommerce deliveries, at least as Ostoich imagines it. “For us, it’s always about digging in to understand our customers’ needs and mapping out their customer journey to determine all the touchpoints for our tech to live securely.”

That’s the tech part. For LISNR – as well as for other companies and entrepreneurs going through their own incubator experiences – the collective push toward more innovation is also an important part of the game.

“There is benefit in the experience of getting to know how both Target and METRO discover, test, measure and deploy new technologies across the enterprise,” Ostoich told PYMNTS. “That experience is one that is hard to gain as a vendor with new and exciting retail technology in the market.”

While mentorship and guidance stand as two big benefits to the program, there are no guarantees of any commercial relationships resulting from the program. Nor does the program reveal how many applicants it receives, even though LISNR said part of the honor of the program comes from the fact that it was selective.

Other Efforts

Still, recent developments favor the idea that the future will bring more incubators, not fewer.

For instance, Foot Locker earlier this year became the latest big brand to embrace the concept of retail incubators, joining such companies as Walmart and, of course, Target in hopes of fostering innovation that will translate into more sales and customer loyalty. Called “Greenhouse,” the incubator, which was introduced at Foot Locker’s recent investors’ day, “encompasses three new facets: collaborations, concepts and a think tank – all aimed at feeding new ideas into the organization,” according to Footwear News.

As for Walmart, its tech incubator has given birth to innovations and entrepreneurial efforts, as PYMNTS has covered. Target, via another incubator program – called Target Incubator, plainly enough – is, according to the retail chain, “designed to help Gen Z entrepreneurs-in-the-making nurture and grow their better-for-people or better-for-the-planet businesses, even if they haven’t launched yet.”

As the LISNR example shows, many innovations that could end up in the mainstream of payments and commerce in the 2020s and beyond are likely to get their start in these collective incubation efforts.

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Latest Insights:

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. The September 2019 Mobile Order-Ahead Tracker, serves as a monthly framework for the space. It provides coverage of the most recent news and trends as well as a provider directory that highlights key players across the mobile order-ahead ecosystem.

 

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