‘Consumers now expect retail entirely on their terms’

In the 16th Century, artisans evolved from selling their own goods to setting up shops that also sold items from other producers. Roll forward to the industrial revolution and factory production ushered in the era of mass consumption. Now, we’re in the middle of what the Economist has dubbed the ’third retail revolution’. 

Like all revolutions, the key to understanding it is from the perspective of power. The third retail revolution has shifted power decisively from retailers and their partner manufacturers to the consumer, who now reigns supreme. We have gone from a push model to one where consumers’ pull is the driving force. 

Consumers now expect retail entirely on their terms. They want the channels they use to work seamlessly together, online and in-store combining to deliver the best, most personalised and distinctive experiences. 

It’s a direction of travel that Covid has accelerated and consolidated and there’s no going back. So the destination for retailers is clear. But like all epic journeys, how to get there is the real question. The answer is customer-centric innovation. 

Innovation – hard to do, impossible to ignore

But innovation can be daunting, especially at scale and speed. 

In many cases, the innovation does not ‘land’ in the business because of people and culture.  Many retailers will recognise this challenge all too well. It’s far from unusual to see multi-year transformational projects failing to make any real impact or gain any traction in the business. One of the main causes? There’s a misconception about what innovation is and how it gets done. 

From eureka to execution

Overall – and not just by retailers – ‘innovation’ is too readily associated with ‘eureka’ moments from solitary geniuses beavering away in creative isolation. But that’s ‘invention’ – coming up with a new idea. 

Innovation is how those ideas are put into practice and made real. By overemphasising ideation, the value of executing those ideas is underplayed. But the hard yards of turning an idea into reality is what really makes the difference. 

And that’s not a solitary pursuit. It’s a team game where success depends on the collective’s ability to feed off one another and combine their efforts and abilities through sharing, exchanging and collaboration. 

But that includes not just formally defined teams with structured lines of reporting and so on. Crucially, informal teams made up of like-minded people are just as important. These people share a common vision for innovation and transformation and are able to work across the organisation to achieve their goals. Shared enthusiasm and purpose bring them together. The organisation empowers them to own their own efforts, connect and share their work with others.

Of course, those teams don’t exist in a vacuum. They are a result of an organisation’s culture that enables innovation to flourish. Google is famous for its culture of innovation and I think there are some lessons from our approach that all retailers can take on board as they set about building their own culture of innovation.  

How does Google foster and enable individuals and teams to innovate? Here are three aspects of working here that create an environment where innovation can flourish.

20% projects

The first is giving people the freedom - and crucially the time - to work on projects that matter to them. 

20% of someone’s time can be devoted to something that is outside their formal remit. For example, my 20% project is helping a brand become a direct-to-consumer retailer by building a customer intelligence platform, or control tower, that will enable one-to-one omnichannel commerce and consumer engagement, allowing this brand to build a life-long relationship with its consumers. It’s not part of my ‘day job’ but it is something that I – and the brand I’m working with – are passionate about. 

Failing fast

There’s a clear recognition that all great innovations were built on trial and error.  It’s understood that mistakes will be made. But design sprints, minimum viable products and prototypes are all designed to surface mistakes and problems as quickly as possible. Failure is embraced as part of the process and critical to learning and improving. All project post-mortems are carried out as no-blame exercises, so there’s no fear of failure – just a willingness to learn and go again.  

Psychological safety

That absence of fear is very much part of the final key tenet I want to focus on: psychological safety. 

If people are going to propose bold and innovative ideas they need to be able to put them forward without any risk to themselves- whether that’s self-image, career or status. In teams and corporate cultures that embody psychological safety, members feel accepted and respected. 

That means they can fearlessly suggest ideas that they might think are ‘out there’ but which could spark valuable conversations or interactions. Bottom line? No-one is made to feel stupid and mistakes are embraced as part of what makes innovation successful.  

By sticking to these principles Google has created, and maintained, a thriving culture of innovation. Retailers can do the same. 

It’s a big challenge, no doubt. But retailers have no choice. In the third retail revolution, innovating around consumers is the only option for survival and success.