When US retail giant Target announced last year that it was partnering up with a well-known start-up accelerator, it was making a claim for embracing technology – not merely as an add-on but as the way forward. While the retail sector in aggregate may have been slow in response to the online commerce phenomenon, some have survived and thrived by working with specialist retail tech suppliers.
Building relationships on technology
When polled by marketing intelligence outfit The Financial Brand, 43% of retailers felt very positive about working with start-ups as business partners, and 41% felt the same way about working with start-ups as suppliers. What do such partnerships look like?
One avenue retailers follow is to create internal incubators. By going the distance to develop in-house technology, the results should be utterly on-brand and the pace of innovation accelerated. This approach has the nice effect of supporting deeper relationships between tech staff and the companies and investors that engage them.
Purchasing a stake in a tech enterprise also has its benefits. It still provides a platform for close cooperation with developers while they address the problems and preferences of their other retail clients. As the tech team is exposed to new consumer challenges, they apply the benefit of that experience to their other projects, i.e. yours. Retailers have been known to acquire entire tech companies once the concept has been proven.
Head of innovation
Forward-looking (or maybe just passably modern) businesses are putting change leaders in positions of authority, but there are pitfalls: it’s simple to hire someone to lead the innovation effort; it’s quite another to let them do it. Writing for Forbes, Mike Maddock laments the demise of a head of innovation who was positively built for his job driving change at a hospital group: ‘You must learn,’ he warns, ‘how to empower the fearful CFO and middle managers who are trained to mitigate risks, not take them.’ Beware both the damp-squib chief innovation officer and your company’s own inertia, both of which can lead you nowhere.
John Lewis: a retail-tech case study
John Lewis, however, is a recognised leader in marrying retail and technology, the latter of which constituted 15% of its capital expenditure between 2009 and 2013, a figure expected to rise to 37% in the following five years.
In line with the department store chain’s aggressive technology vision is its foundation of JLAB, where it joins with tech start-ups, providing them with a three-month retail course at the end of which the budding tech teams make a pitch. Winning snags them £100,000 and a chance to trial their technology with John Lewis’s internet retailing arm. The retailer’s internal incubation function Room Y sees them trial and develop their more futuristic technology like home products ready to take their place in the Internet of Things.