The need to differentiate from the competition is as great as it has ever been. While global consumer confidence was flat in third-quarter 2013 from the previous quarter, confidence was on the rise in over half of the countries Nielsen surveys, including the U.S. Still, many shoppers remain focused on value for their money. At the same time, e-commerce has attracted a growing number of users. Innovation, however, can give retailers the all-important edge.
The urgency for retailers to innovate is nothing new. Getting ahead has always been a struggle in this fiercely competitive field, where similar products and store density can easily lure shoppers away. And the recent recession has made that battleground even more intense.
Today’s consumers have more retail choices than ever but are cutting back on their overall purchases. According to the Continuous Innovation: The Key To Retail Success report, trip frequency in the U.S. has fallen 15 percent over the last six years, while basket size has climbed only 9 percent. And we’ve seen similar trends around the world. For stores to beat the competition, they need to encourage consumers to increase the number of trips, grow the size of their basket, or both.
Retailers have several avenues to reach shoppers in new ways based on need—convenience, choice (or assortment), shopability, price value and even promoting the brand outside the store. Innovations in these categories all make the shopping experience easier, faster, or better for consumers, encouraging them to make more trips and buy more.
In addition, while e-commerce has often been portrayed as a threat to traditional brick and mortar stores, some of the most successful innovators in retail have leveraged online to meet the needs of their 24/7 shoppers. Today’s consumers live, work and shop in a digitally integrated world. The Internet holds the promise of changing the landscape entirely, and retailers must at least keep up—and ideally get ahead.
Innovation persuades shoppers to do something different: to buy, to try, to move, to change. For a brief time, it captures consumer attention, bringing in new customers or improving existing ones’ loyalty. But newness wears off quickly and copy cats can easily reproduce many retailers’ ideas. To stay ahead, stores must continually develop new ways to capture consumers' interest.