Where will ‘disruptive innovation’ take the retail business?

Discussion
Source: MishiPay
Mar 31, 2021
Karen S. Herman

Karen Herman, founder of Gustie Creative, is the author of the newly released book, “Solutions for Disrupting Disruption, COVID-19 Handbook, The Essential Guide for Brands and Businesses, is Timely and Actionable.”

Many believe that Clayton M. Christensen’s theory of “disruptive innovation” is one of, if not the most, important business ideas of the current century.

In an interview with Prof. Christensen conducted  last year by his longtime collaborator Karen Dillon for MIT Sloan Management Review, he called disruption “a process” that is “intertwined” with an organization’s resources, changes in customer needs and “the constant evolution of technology.”

Advancements in technology are being tested and adopted by retail and consumer brand businesses at a pace unlike any other in history. Those who embrace technology’s potential see tools enabling them to increasingly anticipate and meet future change from a position of relative strength. The shock that hit retail last year when the novel coronavirus pandemic spread across the U.S. and the world has borne out this hypothesis in practice.

Solutions enabling seamless shopping experiences and fulfillment, frictionless commerce and shoppable media are demonstrations to one degree or another of the disruptive innovation process in real time. Examples include:

Scan, pay and go: Transactions are conducted via mobile devices or self-directed kiosks to provide a contactless method for speeding the checkout process. Future advances in facial recognition technology (controversial, I know) and other biometric processes, including palm scanners, may eventually make payment via phone obsolete.

Smart vending: Fewer technologies have had their use cases proven more concretely than this method of contactless shopping. Today’s machines are definitely not the vending units of the past (not just candy, chips and soda) with many using artificial intelligence and cloud-based technologies to capture data in real time on the customers using these units.

Autonomous delivery: The move to autonomous cars, trucks, drones and robots moves inexorably closer to reality with each pilot program completed. Today’s technology learns right alongside the humans who create and use it. Maybe not tomorrow, perhaps not even in two years, but never is not an option. It’s just a matter of when.

Social commerce: Americans are staying home, and the demand for social media has never been greater with more retailers and brands looking to mine access to this audience and convert it into revenues and profits. Whether its Instagram, Facebook, Pinterest TikTok or YouTube, companies are developing shoppable content and moving into live-streaming events as another answer to providing convenience aligned with where, how and when customers want to shop.

DISCUSSION QUESTIONS: Where do you think disruptive innovation will take the retailing industry? What promising technologies do you think will have the greatest effects on consumer shopping behavior and the customer experience in the coming years?

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37 Comments on "Where will ‘disruptive innovation’ take the retail business?"


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David Naumann
BrainTrust

In the near-term, the most impactful innovations that affect retail shopping will be technology that enables contactless and more convenient experiences. Scan and go or shop and go technology will be much more pervasive in the next few years. From a longer-term perspective, autonomous delivery will have a big impact on retail and the shopping experience. Autonomous/robot technology is already replacing humans for repetitive, predictable tasks in warehouses and even on retail sales floors.

Neil Saunders
BrainTrust

All of the points listed are relevant and will disrupt retail in the years ahead. However for my money, automation is one of the most significant areas of development. This is mostly because it helps to square the circle of reduced margins from online so it has a tangible benefit and payback. Eventually, when autonomous delivery becomes more mainstream, we will see a highly automated fulfillment chain that is efficient and cost effective.

Dr. Stephen Needel
BrainTrust

Disruptive innovation is a trivial factor in today’s retailing industry. None of these ideas have caught on at a sufficiently widespread level to say they have disrupted anything – the pandemic may have, but not these others. With all due respect to Professor Christensen, disruptive innovation is a rare event that, while giving an edge to the innovator, provides a market lead that is rarely sustainable. When you can count the number of disruptive innovations that have remained on both hands, this is not something worth pursuing – low probability of ROI.

Gene Detroyer
BrainTrust

Steve, I rarely disagree with you, but now I must. “disruptive technology/innovation” only becomes disruptive when it takes hold. But, when it does, it changes everything. Let’s look at today’s innovative companies. They are the ones that said let’s knock down the walls of what is and start form scratch: Google, Amazon, Apple, Microsoft, Tesla.

Dr. Stephen Needel
BrainTrust

And I rarely disagree with you, Gene – but I wouldn’t call these retailers.

Gene Detroyer
BrainTrust

Here is where I agree: “Disruptive innovation is a trivial factor in today’s retailing industry” – and that is a historical problem with most retailers and continues today.

Ricardo Belmar
BrainTrust

A historical problem with most retailers, yes — but I see this changing. And we can identify which retailers are leading that change because they are the ones who are most successful coming out of the pandemic. For retailers, whether the innovation is truly disruptive is something we only know in hindsight — looking back at the evolution of that technology or innovation to decide if it really disrupted. I think the issue is how freely the word “disruptive” is thrown around in conversations about “digital transformation” and “digital integration.”

John Hyman
Guest
20 days 22 hours ago

Really? Google, I get that label but Amazon, Apple and even Tesla provide a unique and refreshing shopping experience, especially with their approach to brick-and-mortar. Who sold cars in mall showrooms before Tesla? Apple brought service back to a retail landscape sadly oblivious to it since Marvin Traub ran Bloomingdale’s. Although less successful, Microsoft tried to mimic that Apple look and feel in their stores. Amazon has blazed a path of enhanced online shopping? Yes, I would call them retailers.

Ananda Chakravarty
BrainTrust

Just wondering, who would’ve called Amazon a retailer in 1994? Or Apple a smartphone manufacturer in 2006? Or even knew what a search engine was in 1998? Must agree with Gene — innovative disruption changes everything. Retail will be completely changed when whatever disruption comes along and per Clayton’s thinking, it usually comes up from new entrants to mainstream over time, slowly pushing out the space leaders, almost like boiling a lobster….

Richard Hernandez
BrainTrust

All of the innovations above will be front and center in the next five to 10 years with scan and go just beginning to be more prominent. I am excited to see how the drones, driverless cars and trucks, etc. are introduced into the market and mix with the everyday bustle of traffic and pedestrians.

Lee Peterson
BrainTrust

Wait, didn’t Amazon write this book about 20 years ago? Like any great “rabbit” used in racing, the Seattle giant has led the whole industry forward in every category mentioned for quite some time now and continues to surprise almost weekly. Not sure how Clayton missed that 900-pound gorilla.

Raj B. Shroff
BrainTrust

Lee, I think Amazon is a perfect example of what he called the innovator’s dilemma. Walmart, Target, etc. didn’t see the tiny bookseller coming, they didn’t take Amazon seriously in the early days; Target even let Amazon host their website until 2009. Amazon slowly and surely took bites out of the categories that were low hanging fruit and of less concern to the big retailers. And they worked their way up the chain to become who they are today.

Gene Detroyer
BrainTrust

Absolutely Raj, real disruption means throwing everything that has worked for you and is working today out and inserting a new vision that destroys the old. A great example is Kodak, they invented digital photography, but shelved it because they want to protect their film business. That didn’t work out so well.

Lee Peterson
BrainTrust

Right, that’s exactly why this seems like a little bit of a “duh” to me on all counts you mentioned — if you didn’t happen to notice how AMZN led retail into this century, then I guess the book is spot on, but for some of us, it was painfully obvious!

Bob Amster
BrainTrust

Disruptive innovation will open the doors to enable the industry to better cope with, or respond to yes, “disruptions” in the environment around them where, for a while, things may become abnormal. Additionally, the industry will be in ever-improving conditions to enhance the customer experience, remove some costs from the supply-chain, and even improve the product lifecycle and time to market. Two technologies most likely to have the greatest impact are contactless payments, including scan-and-go, and robotics, with a third being AI.

Adam herman
Guest
21 days 3 minutes ago

Disruptive innovation is more than simply applying the latest technology to solve a problem or advance a solution. It is a joint mindset between consumer and retailer, where each pushes each other to evolve in the selling and buying of goods and services. COVID-19 has certainly accelerated these approaches enabling consumers to buy when and where it is more convenient (or adheres to social distancing practices). For instance, BOPIS has been around for years, but neither consumers nor retailers had the need to make it as widely accessible or practical until they needed to. This disruptive innovation could only succeed when both parties realized the need and value to implement.

Cathy Hotka
BrainTrust

A year ago I would have laughed at this concept, but retail is markedly different now. With the exception of autonomous delivery (which is still a bright shiny object not ready for prime time) retailers are actively engaged in reducing friction and transforming operations. Companies that want to pretend that it’s still 1997 will fail.

Di Di Chan
BrainTrust
The magic of retail is experiential. The products sold are part of a greater story that enables social bonding and individual expression. The most disruptive technological innovations are solutions that can enhance the shopping experience without dominating the shopping experience. Ironically, the most disruptive technology will not be as noticeable to shoppers or retailers. It will just work in the background enabling a more effortless shopping experience. Scan and go is the fastest-growing frictionless checkout solution because it is cheap to scale, it does not compete with retailer’s existing brands, and it places the power of checkout in the shopper’s hands. A really disruptive technology is a platform that can easily connect with other innovative solutions to offer retailers an easy way to create the best in-store experience for their shoppers. For example, Westside Market in New York City is the first retailer to integrate its scan-and-go platform with SIRL’s location search and navigation features. Their shoppers are the first ones who will be able to seamlessly check out with their mobile checkout app and… Read more »
Raj B. Shroff
BrainTrust

In my opinion, the “tech” mentioned here just moves parity forward. Keep chasing them as game-changers at it will be exactly what he’s talking about in his first book.

I think a glimpse at something such as Vans’ customization is an enabler, mass customization done well could lead to something interesting. Micro-manufacturing, micro-fulfillment, getting product manufactured closer to real-time and personal — probably things like that which are happening in small bits around the globe.

Gene Detroyer
BrainTrust

If one really wants to understand disruptive technology/innovation, one should study the history of the members of the DJI 30s. Remember Woolworth, once the largest retailer in the U.S.? They were sent into oblivion by an innovator named Sam. Once Paramount was listed, they eventually were replace by an innovator names Walt. We could go on and on — in my classes it is a three-hour lecture.

Retail is one of the sad stories for innovation. It always seems to come from the outside. Malls, mass merchants, online. Will 3-D printing be next?

What is next? First retailers in the U.S. must catch up with Chinese retail innovation. Why are our retailers behind? Then the focus for retail innovation must be to make the entire process for the consumer convenient, convenient, convenient.

Gary Sankary
BrainTrust

The big lesson I have learned over the last decade is consumers will tell us which innovations are worth investing in. Retailers and most other industries have not had a great track record trying to force innovation on their customers, unless that innovation has demonstrative value for the customer. Frictionless commerce (scan and go) and free home delivery are at the top of the list right now. I expect to see further innovations in fulfillment, inventory management and supply chain as well. Better reliability in product availability seems to be a lesson we have to learn over and over. There has been a lot of innovation in that space recently that I expect to see implemented in the near future.

Jeff Sward
BrainTrust

So many great comments on shopping, fulfillment and last-mile innovations. But my head goes to the first mile. Merchandising, design and product development. How do all these process innovations help make the retailer smarter about product? Where is the supply chain innovation that will make the time/action calendar more responsive to in-season responsiveness? I look at end-of-season residue inventory in apparel and think about the profit drain that could be improved upon if the retailer could know more and guess less. Digital design can now shorten the design cycle dramatically. Can there be a breakthrough in raw material and production management that can respond to more specific demand rather than projecting trends?