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RSR Research Study Explores the State of Retail Innovation

New Report Exposes Disparity Between How Retail Winners and Their Peers View and Approach Innovation

Reston, VA, Tuesday, November 6, 2018

For retailers, technology has long been viewed as a necessary evil, but the advent of mobile and omni-channel retailing has changed that. While most retailers agree technology innovation is vital to supporting the customer experience and their bottom line, many are hesitant to invest the funds or risk the potential for failure that come with the territory. Because of this, RSR Research and Software AG (Frankfurt TecDAX: SOW) set out to discover how retailers are approaching and integrating technology innovation in their organization.

The report, “Ramping Up Retail Innovation,” found that Retail Winners – defined as retailers that out-perform their competitors in year-over-year comparable sales – are more bullish on innovation across the board and understand it better than non-winners, who are not as clear about the true meaning of retail innovation. While Retail Winners let customers and technology companies drive the innovation bus, many have adopted a ‘fail fast’ mentality to stay on top of emerging trends and are evaluating new core systems to replace their legacy solutions.

“The notion that innovation leads to growth may be the most enduring legacy of the Amazon effect, but innovation means different things to different people and companies,” said Paula Rosenblum, co-founder and managing partner, RSR Research. “It’s encouraging to see that a majority of retailers believe in the importance of innovation, but it is clear that Retail Winners are more excited about it and are willing to invest more to make their vision a reality.”

Other notable findings from the research include:

  • Both Retail Winners (93 percent) and non-winners (60 percent) want to be perceived as ‘Innovation Leaders,’ yet non-winners do not believe they are more innovative than others in their vertical or revenue band.
  • When it comes to innovation, the fundamental challenge that retailers grapple with is the cost of experimentation. In fact, 66 percent of Retail Winners surveyed said if an innovation doesn’t lower costs, there is no interest.
  • Both Retail Winners (66 percent) and non-winners (51 percent) look to vendors to come up with new and innovative ideas. In addition to vendors, Retail Winners are more open to new ideas from a variety of places including consultants, other tech vendors and even other industries.
  • Nearly one-half of Retail Winners are trying to adopt a fail fast philosophy for innovation, and another 4-in-10 Winners now believe that they need to be more aggressive and accept that some ideas won't work.
  • Not surprisingly, 59 percent of Retail Winners cited legacy technology as a barrier to innovation. That number jumps to 62 percent for non-winners.
  • To Retail Winners, the most valuable technologies that facilitate rapid innovation include Cloud Computing (93 percent), New Core Systems (71 percent) and IoT (68 percent).
  • Retail Winners look to ROI to measure innovation success (68 percent), while non-winners turn to customer satisfaction (60 percent), which almost two-thirds of all retailers cite as a top-three success metric.

“Retailers have historically been technology-spending laggards, often because of legacy systems in place, so it’s exciting to see how revolutionary tech, such as the Internet of Things, is perceived as a valuable source of innovation by Retail Winners,” said Oliver Guy, global industry director, Software AG. “While there’s still room for improvement for both Retail Winners and non-winners, at Software AG we have worked hard to help our retail customers de-couple and isolate legacy technologies to help them overcome these obstacles and put innovation at the forefront of their strategy.”

Between consumers adopting innovative technologies to make their daily lives easier and more satisfying, and competitors using innovative technologies to compete for market share, retailers simply can’t afford to put innovation on the back-burner. To learn more about how Retail Winners and their peers are approaching innovation and recommendations to succeed, download the full report.

About RSR Research  
Retail Systems Research ("RSR") is the only research company run by retailers for the retail industry. RSR provides insight into business and technology challenges facing the extended retail industry and thought leadership and advice on navigating these challenges for specific companies and the industry at large. To learn more about RSR, visit http://www.rsrresearch.com.

About Software AG  
Software AG (Frankfurt TecDAX: SOW) helps companies with their digital transformation. With Software AG’s Digital Business Platform, companies can better interact with their customers and bring them on new ‘digital’ journeys, promote unique value propositions, and create new business opportunities. In the Internet of Things (IoT) market, Software AG enables enterprises to integrate, connect and manage IoT components as well as analyze data and predict future events based on Artificial Intelligence (AI). The Digital Business Platform is built on decades of uncompromising software development, IT experience and technological leadership. Software AG has more than 4,500 employees, is active in 70 countries and had revenues of €879 million in 2017.

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