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Comment: Breaking through the fear factor in retail

With the increasing need to adopt new technology to meet growing customer demands, traditional retailers are being encouraged to act more like pure-plays, be less risk averse and more willing to fail fast.

In the shifting retail landscape, the agility and flexibility provided by technological innovation is paramount to success and the ever-increasing data availability surrounding shopping behaviours presents retailers with a significant opportunity. Despite their differences in DNA, for traditional bricks-and-mortar stores, making these changes and incorporating the right technology may not to be as difficult as one might expect.

One of the key success factors for pure-play retailers is team and culture. As Travelocity founder recently stated at NRF in New York, "culture eats strategy for lunch" and culture and team are one of the key pillars for innovation, Pre-play retailers have an in-built advantage here: they have tended to hire younger, tech-savvy individuals, who are more at ease with a culture of innovation, who tend to operate instinctively from a mobile platform, who can quickly create and test apps and who are at home with creating more opportunities for interaction with customers via social media.

There is nothing here that cannot be replicated by a bricks-and-mortar retailer, but for some the adoption of new technology requires a level of bravery and risk alien to the traditional retail space. One reason for this is that traditional retailers tend to have a huge fear factor built into their DNA.

As succinctly put by Scott Weavers-Wright, founder of Kiddicare.com, in an interview with Essential Retail in 2014, "bigger operators who have store infrastructures are just scared of changing anything because they will have to roll it out and face the music".

He added: "Failure is a problem. And that inhibits progress. With traditional retailers, it is more a question of 'am I going to lose my job?' and risk then becomes an issue."

Pat Bakey of SAP hypothesises a greater change in retail business over the next five years than there has been in the last 50, creating an unprecedented need to respond to that change in order to prepare for this emerging volatile environment. Therefore to keep up with the speed at which consumers are embracing new technologies and expecting their retailers to be in sync, there has to be a switch in mentality. This new found proximity to the consumer must be translated into business strategy through simplified customer insight, which can only come to fruition through technological innovation. For the majority of retailers, 2015 is going to have to be the year when they take on board the concept of "fail fast", or they are going to be left behind, the SAP retail boss explained.

Unquestionably, the concept is more advantageous for online players than traditional retailers because they can trial new methods more quickly, allowing them to fail fast to get ahead of the competition. They also benefit from a more streamlined company structure, where the management team is much closer to the end-market consumer. Being able to promptly respond to market changes undoubtedly leads to better strategic business decisions. However these factors do not amount to an excuse – in fact, those traditional retailers who are ahead of the curve are already rethinking the structure of their organisations, alongside changes to the culture and we expect to see more of this as the year progresses.

In fact, some of the largest retailers are more prepared to embrace new ideas and players like John Lewis, Marks & Spencer and Tesco are now investing in incubator hubs and specific technology companies to help develop next generation solutions. Their aim is to benefit from the agile systems they can offer and to provide a long-term strategy in responding swiftly to new emerging digital trends. Many other retailers still need to become bolder and more daring.

Among the retail pioneers that have already embraced the willingness to try new ideas is Clarks. It has looked at digital signage and virtual interactive surfaces, which have not been implemented; and the footwear retailer continues to experiment with other ideas, including a recently adopted iPad foot measuring tool.

Over the last couple of years, Macy's piloted more than a dozen "minimum viable products". These include, in-store beacons which send personalised deals, discounts, recommendations and rewards to a customer's mobile phone; tablets installed in some fitting rooms to help shoppers make decisions about which clothes to buy. Macy's is also integrating with Apple's mobile payment service; testing a mobile wallet function with coupons shoppers can access via smartphones; and allowing consumers to check out via iPod Touch.

Other retailers are trialling a whole host of innovations around mobile and beacon technology. House of Fraser recently introduced VM Beacon-enabled mannequins in some of its store windows, which are able to transmit messages to customers. Once signed up to the app, customer alerts with details of prices or links to items on the retailer's website can be communicated to potential customers, whilst the store also benefits from the information it gathers on its consumer base. For customers it seems to offer the convenience of online shopping combined with the benefits of an in-store experience.

Some traditional retailers must embrace the fact that failure is not necessarily a negative but can result in real learning that will provide further insight into progressive business transformation. This may help their business to shape the technology to deliver a more personalised customer service across all channels.

Retailers are at a difficult juncture, as consumers rapidly continue to adopt new technologies and change their purchase behaviour faster; retailers face the challenge of keeping pace. Typically those that are surviving and thriving have changed their business models and are merging technology with their store estates, creating optimum customer service across all channels. It is imperative that traditional retailers take on board the lessons from e retailer competitors, to leverage their multichannel service proposition. Ultimately in a world where interaction and touch is still an intrinsic value to consumers, offline retailers have a lot to offer, as long as traditional retailers can integrate offline and digital, and beat eCommerce competitors on convenience, they will succeed.

It's probably a good time to adopt the axiom: it is better to have tried and failed then not to have tried at all, recognising that among the tried and tested will be a number of successes.

The Kurt Salmon team writes a regular column on technology in retail for Essential Retail.

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Kurt Salmon