Forbes + CommerceNext: How Leading Retailers Innovate In The Age Of Amazon

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NRF Big Show is aptly named—it’s a BIG show. Easy to get lost amongst the myriad of shiny new technology solutions and buzzwords of the day, our CommerceNext co-founder, Veronika Sonsev, tracked down four attendees representing leading direct to consumer retailers (Foot Locker, Party City, Teuful Audio and to find out how they stay focused in the face of all the noise, all while having to compete with the master of ecommerce innovation Amazon. Despite these four retailers’ different product areas, all of them had four common threads throughout their innovation strategies.

First, serving as a tech golden rule of sorts—never innovate just to innovate. Rather, hone in on specific business challenges, then investigate solutions that address that specific problem, and test to your heart’s desire. Modernizing core competencies, increasing revenue and advancing the customer experience are all top priorities for these retailers when evaluating new technology integrations.

Second golden rule of innovation: innovation is everyone’s job. Innovation teams, while great in theory, can’t get the job done alone without the support and buy in from all other teams, particularly the executives. Foot Locker has a very specific 3-tiered approach to ensuring every team incorporates long-term thinking into their goals. It also helps to not restrict budget when it comes to testing, as financial constraints can indicate relative unimportance compared to other business areas.

Third tip: do what you know well and partner on everything else. These direct to consumer retailers see such success because they don’t reach too far beyond their own core competencies and capabilities.

Fourth and final innovation mantra: experimentation is good (within reason)! Foot Locker, Teuful and actively cultivate a culture of innovation by encouraging experimentation ideas from all employees. They may not encourage failure outright, but they certainly don’t punish it.

This article was originally published in Forbes: How Leading Retailers Innovate In The Age Of Amazon. You can also dig in deeper by reading the full article below.

Last week, the NRF Big Show returned to NYC. With over 36,500 attendees and 700+ exhibitors crammed into the Javits Center, it is easy to become caught up in the newest and flashiest technology has to offer. With so many solutions out there, I wondered how retailers approach innovation and make decisions about technology investments?

During the NRF Big Show, I had the opportunity to speak with four retailers about how they approach innovation: Vijay Talwar, President of Digital at Foot Locker; Jack Hanlon, VP, Analytics at; Liesel Walsh, VP of CRM, Loyalty and Insights at Party City and Rob Peters, Director Marketing & Sales, Teufel Audio (German-based speaker company).

What surprised me is that none of these leading retailers get distracted by all the latest retail tech trends. Instead, they take a more pragmatic approach to technology. They integrate innovation into company operations and turn to new technological solutions when they clearly improve key business challenges like customer experience and productivity. Nobody is innovating for innovation’s sake.

I boiled down their innovation approaches into four crucial lessons that can help any company remain competitive in this rapidly changing landscape:

1. Innovate to solve business challenges, not just because innovation is cool. AI, voice technologies and robotics—trade shows like NRF showcase all the latest bells and whistles, but the executives I spoke with avoid the temptation of testing them just because. While it’s good to stay apprised of technology trends, these retailers suggest starting with a business challenge first, then determine the technology solution best suited for the job.

VR Demonstrations at NRF Big Show
VR Demonstrations at NRF Big Show. COURTESY OF NRF

For example, AI remains a hot topic, however, most deployments have not been successful operating completely autonomously. According to Hanlon, currently innovates around hybrid human and tech solutions that can help eliminate tedious tasks for its workforce in order to free up humans to do things that only humans can do such as provide great customer experiences.

Foot Locker and Party City are also focused on innovating around customer experience. Talwar discussed Foot Locker’s recently completed 18-month project modernizing their core ecommerce infrastructure. Now, the company has moved to looking at solutions that help them better serve customers. Walsh is working on creating more personalized content and experiences for Party City. She prioritizes projects based on potential revenue and profit three years out.

2. Innovation is everyone’s job and shouldn’t be a siloed goal within the organization. It may be easy to spin up an innovation team and tell everyone else to focus on executing, but the executives I interviewed believe innovation should not be a siloed function.

At Foot Locker, they use the Three Box Solution by Vijay Govindarajan as an innovation framework. This approach recommends employees split their time between three goals:

  • Box 1: Manage core business for profitability
  • Box 2: Abandon things that could inhibit innovation
  • Box 3: Innovate — convert big ideas into products

According to Talwar, “a portion of everyone’s time at Foot Locker is spent in Box 3 [innovation], with executives spending more of their time on innovative ideas.”

While Walmart,’s parent, uses Store No 8 to test its long-term strategic innovations, also encourages long-term thinking around goals to incentivize innovation within every team.

With similar intentions, Teufel doesn’t set aside a limited innovation budget. Anyone is allowed to test innovative ideas. Depending on the business needs, sometimes they execute more tests and use up to 20% of the budget, while other times it is only 5%.

3. Own core competencies and partner on other initiatives.Resources are not infinite, so when do you build, buy or partner on innovation projects? takes the straightforward approach. According to Hanlon, they ask themselves, “How crucial is this idea to the core strategic value of the business? Will it be the reason our company is successful?” If the answer is yes, they build the technology in-house. If the answer is no (e.g. an email platform), they partner with a technology provider.

Teufel and Party City also evaluate investment around core competency. If the initiative does not support a core competency, they conserve their limited internal resources and buy the external expertise either through licensing or partnership.

Specifically, Party City utilizes startups to test concepts. Sometimes those startups can scale with the business; other times, they take the initiative in-house if it proves successful. Walsh explains, “This lets us test with less internal resources before fully investing in a project that may or may not work.”

4. Experiment and give your team permission to fail, within boundaries. Experimentation is a critical component of innovation, but not every experiment yields positive results. The key is to test against a specific goal aligned with your core objectives. If the experiment doesn’t meet expectations, move on. If it does, double down.

Innovative businesses like Amazon, P&G and Netflix run thousands of experiments a year. Most experiments will likely fail, but the few that are successful can give you a huge multiple of growth. Peters warns about setting up guardrails to ensure you don’t damage the brand, but always advocates for giving employees permission to test and fail within parameters. Otherwise, you stifle innovation.

Furthermore, you don’t have test with one big deployment. Walsh suggests testing in one to two stores or on a small portion of your site to determine whether a larger rollout will have the desired results. Experimentation then becomes less risky and deployment of new ideas more agile.

“If you’re not innovating all of the time, you’re not going to make it,” attested Hanlon. “No business is naturally going to last forever. Sears was a leading retailer for over a century and then filed for bankruptcy at the end of last year.” The key is to embrace innovation and constant change as a company and make it part of the overall culture. Sometimes that means investing in moonshot projects. But often making many small improvements, with a clear vision for where you want the business to go, will ultimately result in a big impact.

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