Two articles struck me this week - both interesting independently but scary when put together. They led me to the conclusion that western retail is failing to take the opportunity of the high (or at least the 'not low') of the economic cycle to be innovative and to disrupt itself, and that Chinese retailers that are thinking much more boldly will be better positioned to weather the next global economic cycle.
"It’s time for bold risk taking. The economy will eventually contract in the next 3-7 years (maybe sooner). Budgets will tighten, and the option for taking risks won’t be available."
Here Paul Schrimpf makes the point that the time to take risks and innovate is the top of the economic supercycle. There is clearly never a good time to lose money, but positive and stable macroeconomic conditions are a better time to try new things and inevitably suffer some failures than when you are in the downward part of the cycle.
By being innovative and taking risks you are more likely to be ready for the next wave of disruption - especially if you end up doing the disrupting. These innovations will be completely different in each sector, but analytics, internet of things, machine learning, sharing economy, service over product all seem to be good candidates.
Then this insightful article from Retail week's visit to the orient - highlighting a wave of innovations, some of which are clearly destined for the scrap heap of the future, but some may be game changing.
My favourite is the combination of shop and fulfilment centre - a supermarket with an overhead conveyor that combines retail theatre and operational efficiency in one fell swoop.
"Online orders are picked from the shelves and then attached to an overhead conveyor that serves the dual function of getting the bags to where they need to be while creating a great deal of theatre, making the shopper feel that they are inside a complex machine."
In an time of competing with online, I hugely appreciated the 'smile-o-meter' - there is well documented research on how the act of smiling makes you feel better. What more Pavlovian concept to drive engagement than giving people a voucher when they smile in your store.
So this is a clarion call to western retailers to up their innovation game while the going is good (or at least 'okay') because a few risks now are better than finding you're already behind when the next super-cycle turns.
- Test and learn
- Be bold
- Fail fast
- Celebrate effort, don't criticise failure
Whether you do this with an innovation team or commission support - invest in your future.
It’s time for bold risk taking. The economy will eventually contract in the next 3-7 years (maybe sooner). Budgets will tighten, and the option for taking risks won’t be available. Paul Schrimpf