Retail Leaders According to a recent study by the World Retail Congress and Boston Consulting Group, innovation is essential for gaining a competitive advantage in the retail industry as consumer needs continue to evolve.
Their findings, which came from polling over 400 executives in a variety of international retail industries, indicate a clear link between innovation expenditures and retail success. Even more market share is being gained by upstarts who invest in technology such as artificial intelligence, e-commerce, and operational enhancements. These companies had previously owned a greater portion of the market.
Ian McGarrigle, chairman of the World Retail Leaders Congress, evaluated what makes a high-performing store and stated that the researchers aimed to characterize the new environment. “Retailers won’t be able to drive top-line growth in this scenario due to social and macroeconomic conditions,” he stated. Additionally, the world we live in is changing due to the rapid advancement of technology. Retailers must therefore acknowledge that the traditional guidelines are no longer relevant and that innovative thinking and genuine agility are needed in this day and age in order to function in that environment.
In order to discover the solution, the businesses examined what made high-performing merchants unique and discovered that they were more eager to adopt and use innovation. While top retailers claimed to be investing 13 percent of revenue in innovation and seeing a 21 percent return on investment, the survey claims that those just investing 3 percent get a 9 percent return on investment. The data from the study indicates that this pattern is likely to persist, with these leaders aiming to increase their spending by 38% and trailing shops only wanting to increase their spending by 8% over the next three years.
Even Nevertheless, the report’s authors admitted that true innovation is difficult, despite the fact that evidence shows that investing in it is essential. Executives need to “champion new grassroots ideas, launch multiple initiatives rather than only one or two big ones, invest in innovation-related technology and talent, cultivate a culture that breeds creativity and experimentation, and develop an innovation ecosystem by collaborating with external partners,” according to the statement made by the representatives in order to ensure profitable investments.
Retail Leaders
According to CEO study conducted by the companies, leaders are concentrating their efforts on a select few major areas of investment, such as e-commerce (60 percent), big data/AI/analytics (58 percent), and operational enhancements (71 percent).
The report’s authors stated that Retail Leaders should prioritize operational improvements in the short term to alleviate pressure that supply chain issues and inflation have produced throughout value chains. In the meantime, retailers’ value chains are seeing investments in big data, artificial intelligence, and analytics, along with the creation of roadmaps to promote organized changes for expansion.
Retailers are focusing on retail media, marketplaces, and social commerce with their e-commerce investments. They are trying to address complex demands, increasing gross merchandising value, and boosting profitability. Creative merchants are putting money into retail media networks so that brands and other outside parties can purchase advertising space on the stores’ own media and properties. Three-quarters of suppliers already allocate at least some portion of their marketing expenditures to retail media services, according to the report’s authors, who anticipate potential for retail media networks to rise quickly over the next three to five years.
Of the innovation executives polled, 42% admitted to making investments in marketplaces. Based on BCG’s analysis, marketplaces now account for 67% of worldwide e-commerce sales, making them a common business model in retail e-commerce. Furthermore, BCG discovered that, of all retail business models, marketplaces account for the most proportion in 93% of nations.
Retail Leaders executives are making social commerce investments among their top three e-commerce investment goals as social media and e-commerce continue to converge. Retailers in East Asia have found social commerce to be incredibly successful, and BCG reports that it is also becoming more and more popular in the West. Retailers should act now, since 74 percent of consumers are already influenced by social media content when making purchases.
-quarters of suppliers currently devote at least a portion of their marketing funds to deals in retail media.
BCG and the World Retail Leaders Congress identified five crucial steps that retailers should take into consideration as they seek to increase innovation throughout their organization: align innovation with strategic goals, develop an innovative culture, establish appropriate governance and risk management, enhance your operating model by bringing in outside partners, and evaluate your data and technology stack.
“Managing director and senior partner, global head of retail at Boston Consulting Group, Nate Shenck, said that leaders invest in new business models to drive topline growth and improve margins.” “This report offers insights into how retailers can ignite their own innovation engines and create competitive advantage by sharing the best practices of innovation leaders.”
