Innovation Labs Strengthen Retailer-Consumer Connections

  • May 20, 2013 at 7:01 PM EDT
  • By Kim Zimmermann
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Many traditional retailers are still grappling with ways to appeal to omnichannel shoppers who are researching and buying from their tablets and smartphones. To become more connected with these consumers, a number of retailers are forming innovation labs to develop technology that optimizes the shopping experience regardless of how or where customers interact with the brand.

Retailers are looking for new ways to reach consumersbeyond the four walls of the store, noted Gary Schwartz, CEO of Impact Mobile and author of Fast Shopper, Slow Store. “As Mike Duke from Walmart often is quoted, ‘The walls of our store are porous’ and retail, like media buying, broadcast, publishing, is about to pivot in a profound and irreversible way. Many existing business models will dry up. Many old revenue streams will become commodity channels or be circumvented over-the-top by new technologies or new business models.”

“There is hardly anything on the planet that you cannot buy online, and retailers are realizing that they have to lead in digital and mobile technologies if they want to succeed, so they are setting up centers to focus on those customers experiences,” addedCarin Van Vuuren, Chief Marketing Officer for Usablenet, a provider of mobile and multi-channel customer engagement solutions. “There is a shift and retailers want to become more customer-centric, and they realize that they have to have that commitment in all facets of their business.”

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The Velocity Lab at Staples, @WalmartLabs at Walmart, Nordstrom Innovation Lab and the Co.Labs & Target Retail Accelerator project are a few of the examples of how retailers are establishing centers to focus on mobile and other opportunities.

Driving Black Friday Deals On Mobile

Staples opened Velocity Lab at the end of 2012 with the goal of “fostering innovation and rapidly bring breakthrough ideas in online technologies to market,” according to a company statement.

Prat Vemana, Director, Velocity Lab & Mobile for Staples, told Retail TouchPoints that the investment is already paying off.  “The Staples Velocity Lab provides a space that allows our teams to think creatively and rapidly bring to market enhancements to our mobile commerce, online and in-store digital offerings.”

Vemana pointed to a Black Friday promotion as an example of the types of projects coming out of the lab. “We did with mobile hourly flash deals that drove customers to Staples.com from 11 p.m. to 5 a.m., and then in-store from 5 a.m. to 12 p.m. The entire campaign was put together in a matter of weeks, thanks to cross-functional collaboration the Velocity Lab makes possible. Ideas and initiatives are prioritized to add the most value for our customers.”

Target recently opened the Target Technology Innovation Center in San Francisco, which company executives call part of a “larger ecosystem” of innovation with a focus on digital commerce. “We are focused on how to get further ahead of emerging technologies and find things that are just starting to be funded by the venture capital community,” said David Newman, Director, in a short internal video about the launch of the center. “We can task, learn and bring that to bear so that we don’t fall behind.”

The center houses technologists, product managers and data scientists, among others, who work together to develop new strategies for interacting with digital customers.

Target also is fostering innovation by inviting outsiders to submit ideas for new mobile experiences through a partnership with Fast Company.  In March, the retailer and publication announced Co.Labs & Target Retail Accelerator, where developers will compete to create new mobile applications for Target and earn a $75,000 grand prize. The competition ran through the end of April 2013.

“Innovation is core to Target’s culture and strategy, and we are always looking for new ideas to enhance the shopping experience for our guests,” noted Casey Carl, President of Multichannel and SVP of Enterprise Strategy for Target, in a statement. “We can’t wait to see what the developer community brings to the table.”

The @WalmartLabs is reaching out to customers through social and mobile channels and with e-Commerce innovations such as its monthly subscription service called “Big Box of Goodies on the Cheap.” The retail giant is also working on specialized search engines to tracking buyers’ habits, streamlined HTML5 coding and distribution solutions, among other projects.

“Walmart and Amazon are really the gold standard in innovation,” Van Vuuren said. “Other retailers are now looking to emulate them when it comes to innovation in the digital realm.”

Earlier this year Sport Chek, a Canadian sporting goods retailer, unveiled a new store in Toronto that will serve as an incubator for technologies to be used throughout the chain.

Among the features of the store are 140 digital screens with touch technology and near-field-communication capabilities, allowing for personalized content and greater customer interaction with merchandise. A digital shoe wall is comprised of touch-screens that link to custom digital content, including product features, live twitter feeds, videos and images. There is also a kiosk to help customers select sunglasses.

“Our goal with this live lab store is to test and demonstrate the latest in retail technology to deliver the same emotional rush our customers get when they are pursuing the sports and physical activities they love,” said Michael Medline, President, FGL Sports, the parent company of Sport Chek. “The store will serve as a conduit between customers and their favorite brands.”

The Next Generation Of Innovators

In addition to retailer-run labs, universities are also setting up innovation centers to foster ideas from the next generation of retail executives. Roger Beahm, Professor of Practice in Marketing and Executive Director of the Wake Forest University Center for Retail Innovation, said digital and mobile

In the program’s first year, there have been several events in conjunction with sponsors, including CVS/pharmacy, IRI, Inmar and Bellomy Research, and more events are planned for later this year, including an innovation fair.

“Ensuring that our graduates are market-ready in terms of consumer products and retail research and data analytics,” Beahm said. “Innovation centers should be thermostats — not just thermometers — that set the temperature of innovation and utilize talent to help create change.”

Retailers that open “stores of the future” and innovation labs may successfully stimulate and reinvent their business from within, Schwartz of Impact Mobile said, but he cautioned against simply focusing on technology.  “The fundamental issue is not innovation.  The shopper has become mobile and independent. The storekeeper does not have the tools to follow the new connected-screen consumer. These will not be solved by technology alone.”

Van Vuuren of Usablenet agreed: “Retailers have to innovative through marketing and through technology. It has to be a mix of the right people to truly come up withan idea and see it through to becoming a competitive asset to the company.”

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