Croissants, coffee, candles… and the Future of Retail

By Julia Christensen,

February 26, 2015    6 mins

I confess we are slightly obsessed with retail at WAE right now. In particular helping to innovate a better shopping experience across both physical and digital channels. Also having previously spent two years at Burberry, where a lot of this experience is being pioneered, and actively championing such innovation at WAE I have a personal passion in helping to shape the future of retail.

So I decided to fire up the conversation by inviting a potent mix of retailers over for breakfast, to get their take on the future direction and possibilities of the sector. Hosting the session, with support from Gabrielle Hase, a respected retail consultant, we were joined by representatives from the Post Office, Sainsbury’s, Westfield, Tate, V&A, Priestley and Priestley, Fitch and Action Agile. This broad cross-section of retail and design brought us diverse insights from consumer retail, business-to-business, large, small and retail destination (in the case of Westfield).

Gabrielle and I had put together a packed agenda, way more than we imagined we could possibly cover in two hours, but as it happened the session flowed naturally…
Omnichannel is happening — What are you doing about it?

For me this behavioural trend is the single biggest cause of shift in the retail customer experience, and it affects every multichannel retailer in profound ways, as evidenced by J.C Penney’s experiences Customers now carry the digital channel in their pockets and increasingly they are expecting to be able to interact with their physical environments using their devices. It’s changing the way they shop and retailers aren’t currently responding adequately. I wanted to get perspectives on whether our participants recognised this trend and what they were doing to tackle it.

There seemed to be a broad consensus, echoed by other retailers we’ve met recently, that the task of joining up the channels is almost too daunting to contemplate and that it requires bold commitment from a senior leadership that doesn’t yet see the value in customer experience.

What’s more the underlying technical and operational challenges mean that to achieve it requires broad cross-functional co-operation. IT systems need connecting. Stock needs consolidating. But if the aforementioned J.C Penney example — and my own experiences at Burberry — are to be believed, the value is real.

Do you have a Single Customer View? How much do you really know about your customers?

The battle for customers is being waged on thinner and thinner margins and data is forming the heart of that battle. Knowledge is power and data is knowledge. Yet most multichannel retailers still have a disjointed approach to the capturing and dimensioning of customer insights. According to research from KPMG, 72% of organisations claim to use data and analytics for customer insight yet most organisations consider themselves only ‘average’ when it comes to describing their own data and analytics maturity.

Most of our participants felt that they didn’t know enough about their customers, yet all completely believe in the value of data insights. Many businesses are fairly sophisticated in demographic understandings of their customers, however when it comes to behavioural insights it appears there is a significant gap and it could be costly.

And finally, to the crux: Innovation

Through these discussions we also wanted to gauge how daunting this future seemed to everyone. Is there a perception of it being too complex and therefore only within the realm of the really large retailers? As it transpires, the limitations on progress seem to be caused less by the complexity of the technology and more by the organisation.

What was of critical importance to me, and of course WAE, was to get a sense of everyone’s attitudes towards innovation. As a service design consultancy we sell innovation. We believe that it’s an attainable, cost effective method of implementing customer experience transformation and — as we playfully call it — brand defibrillation, meaning innovation gets people talking about you and recognising you in a different, more progressive light.

Our CEO Chris Averill recounted a good analogy for innovation in business, which was echoed by much of the sentiment expressed about the way senior stakeholders approach retail innovation. He said: “There are two types of innovation — horizontal and vertical. Horizontal is doing more of the same in the way that when one person gets a candle everyone wants one. Until we then start worrying that we might run out of wax. Then came the oil lamp — vertical innovation — and the same thing happened, suddenly there were loads of oil lamps and an oil crisis. So vertical invitation then created the light bulb, and so on”.

This story resonated with everyone with recognition that risk-averse business leaders try to de-risk innovation by simply ‘keeping up’ with the competitors, rather than taking bold, ‘vertical’ approaches to innovation, and initiating step changes.

It’s true that much innovation only occurs in times of adversity. The events of the 20th century support that. Conflict brought us aviation, space travel, the microwave oven and the internet. So the conversation naturally turned to the question of how to innovate in a risk-averse business-as-usual (BAU) world? For us designers innovation isn’t as risky as all that. We champion a ‘fail-fast’ mentality, but fail-fast doesn’t mean ‘fail-hard’. It felt like we’d reached the crux of the challenge and it seemed to arrive as something of an epiphany.

The enduring question is, how can we bring about culture change in retail organisations — and indeed businesses in general — from the top down, where men in suits with chauffeured cars are dodging risk for fear of not keeping up? One of our participants spoke of an interesting scheme at a former employer in which everyone throughout the business was coached on innovation. It was a conscious attempt to breed a culture of innovative thinking, rather than taking a more common approach to innovation in which it becomes an activity decoupled from BAU.

In some instances that decoupling is necessary, particularly in businesses where stakeholder management is complex to the point of stifling any development. However it is clear that there needs to be a top-down education of innovation. Because by adopting a fail-fast approach to proving some of the bigger platform challenges, retailers will be able to de-risk these big changes ahead of making the major investment in satisfying the needs of contemporary consumer.

So this was my overriding take-away from the Breakfast Briefing. At WAE we champion Design Thinking as a philosophy that doesn’t necessarily presuppose an education in design. It’s simply an approach to problem solving that promotes enquiry, understanding and creativity. If we can spread this gospel into the stuffy board rooms of organisations big and small, we might stop making so many candles.