The Latest In Our Retail Innovation Tracker: Ecommerce Leads The Way Across Cross-Industry Innovation
Analysis from PSFK’s Retail Innovation Tracker shows how innovative brands in ecommerce, grocery and sport/fitness-lifestyle (and more) are perceived
Results from PSFK’s Retail Innovation Tracker from August revealed that Tesla was the most innovative brand, jumping two points ahead of Amazon on our survey that ranks industry experts’ perceptions of 150+ well-known consumer-facing brands. While a majority of the market is being outpaced by industry leaders, companies at the bottom of the list seem to be at high risk of being displaced, or even replaced, in their sectors.
When analyzing these industries from a larger scope, we can clearly see some major movements—or rather, pure disruption—taking place in each industry and across the board.
On average, respondents perceived the following industries to be most innovative:
Now in our fifth iteration of the retail innovation tracker survey, we are beginning see how different verticals stratify at levels on our chart. Toward the end of the year, we’ll run a more detailed analysis that shows where different industries fit on the innovation cycle—and within each market, which companies are the leaders and which are at most risk of becoming obsolete.
For August, here’s a topline analysis for key sectors in order of their overall innovative rank:
While Tesla was considered the most innovative brand, ecommerce was ranked the most innovative industry, with Amazon (90) and Alibaba (75) leading the way, both scoring within the Top 10 Innovative Brands range.
Over the past month, we’ve seen Amazon entering various new playing fields like fashion, American malls and an expansion of its cashierless store model in New York City. At the same time, it is leaping further into the post-purchase experience by uber-izing last-mile delivery with a fleet of drivers and 20,000 Mercedes-Benz Vans.
Meanwhile, Alibaba has been busy developing Starbucks virtual store integrations and promising cashier-less and cashless wine store experiences to keep up with Amazon’s innovations in voice assistance and AI-enabled checkouts. But are these kinds of innovations enough to compete with Amazon?
Alibaba’s latest innovations seem more focused on marketing than creating impactful customer-facing change; however, their recent step into both digital health services and same-day medicine delivery is a good indicator that the company is making an effort to compete with Amazon by innovating the end-to-end customer experience—in other categories beyond retail.
Unsurprisingly, Whole Foods ranked as market leader as a result of its Amazonization and its parent company pouring heavy amounts of investment into tech-enabled upgrades to the customer journey—that is, if you’re a Prime member.
British online supermarket Ocado ranked not too far behind Whole Foods, and rightfully so, as it’s considered just as much of a tech firm as it is grocer. With its focus on logistics and delivery, it recently noted that it received 260,000 orders a week and delivered with 99% order accuracy. It also announced it had developed robotic arms for use in its customer fulfillment centers that are capable of working with about 48,000 items in the warehouses, carefully picking groceries for orders.
By taking these initiatives, Ocado is positioning itself strongly against the likes of Whole Foods, which is certainly getting a tech make over from the outside-in, rather than Ocado, which seems to be innovating from within. At the same time, the company is directly competing with Amazon’s last-mile efforts, after it ran a two-week self-driving van test as part of its quest to automate as much of its online grocery delivery process as possible.
Meanwhile, less innovative players in the space are focusing on overhauling product offerings, such as grocer Aldi moving in a more health-conscious direction with the biggest refresh in the chain’s history to respond to the popularity of these lifestyles among consumers.
Lower on the poll, but still relevant to note, Kroger, the nation’s biggest grocery chain by sales, launched Dip, its own private-label clothing brand, seeking to uncork new revenue streams with exclusive merchandise in a sector that’s been upended by players like Amazon and Whole Foods, now one in the same, and European grocers like Aldi.
Close in competition as always, Nike and Adidas ranked in a category of their own, well ahead of second-tier brands like Lululemon and Under Armour, which seem to be sustaining market share in an industry with stark contrast when it comes to innovation.
Nike’s brand recognition making headlines seems like the cherry on top of a slew of smart tech investments that are optimizing customers’ brick-and-mortar experiences.
In July, PSFK sat down with Nike Direct's leader to learn how the Los Angeles concept store will inform the brand's DTC strategy on using data to build not only the store design, but also incorporate localized services and select product stock. We agree that taking a data-driven approach towards customer-centric design is a best-in-class strategy, along with empowering shoppers. Recently, we covered how Nike is enabling in-store customers to try on any shoes without assistance from sales associates and motivating consumers by gamifying health and wellness.
While it seems like Nike is very much doing it—hitting all the marks and checking all the boxes in a game called “How To Win the CX Experience,” it’s evident that brands like New Balance and Reebok, and retailers like Finish Line and Dick’s Sporting Goods, can stand to learn a thing or two from our CX Playbook.
Adidas, on the other hand, has maintained its community-building strategy—not so innovative in terms of tech, per se—but still making valuable strides.
Given the hype/mayhem around Tesla going private in the recent month, we can see how press, whether good or bad, is still positively impacting experts’ perceptions, as Tesla was perceived to be the most innovative in both the automotive industry as well as across industries.
To prepare for the Model 3 launch and help meet the surging consumer demand, Tesla took steps to focus on the last-mile delivery by developing its own delivery division and is streamlining the buying process further with a five-minute “Sign & Drive” program.
Meanwhile, 30 points behind Tesla, BMW is focusing on personalizing the in-car experience with voice assistance that will learn driver tendencies and offer suggestions for optimal drives, as well as expanding its offerings into the bustling ride-sharing market, by letting users rent or rideshare its vehicles.
Big Box & Department
The Big Box & Department industry is quite dispersed, and we can see that dollar signs don’t equate to innovative perceptions, with Walmart (41) scoring half as well as IKEA (81), the outright industry leader.
IKEA has been moving ahead on all fronts, from store experience to post-purchase set-up, while seemingly always maintaining an emotional and human touch. With in-store navigation and product sizing being top of mind for these players, we’ve seen investments in augmented reality apps as a common denominator from IKEA to Home Depot. However, IKEA always seems to be a few steps ahead when it comes to delivering on the emotional department. Beyond all its CX enhancing investments, IKEA’s AR app helps kids dream up cardboard box creations while its Take-Back services lets owners recycle their furniture and contribute to the Circular Economy.
Target does a good job of this too, maintaining its family-oriented feel as it differentiates its brand through CX innovations. As mini Targets continue to appear in urban neighborhoods, it will be interesting to see how the retailer pulls all its pieces together‚ from mobile apps and store designs to concierge services and fulfilment strategies, to drive and personalize the customer experience.
The Pharmacy space is closely tied, though on average, the industry scored low. It’s clear there is a lot of opportunity for players like Boots, CVS Health and Walgreens to innovate and differentiate themselves as a market leader.
However, based on recent news, it looks like CVS Health may be a front-runner for capturing that market share. CVS’s MinuteClinic is now offering video doctor visits to complement its in-store clinics, which lets patients schedule a video consult with a doctor via its app, providing them with round-the-clock treatment for minor injuries, illnesses and conditions right from their phones. Additionally, to speed up the fulfillment experience, the retail pharmacy now offers prescription drug delivery throughout the United States.
PSFK’s coming Health & Wellness Debrief takes a deep-dive into how brands and retailers can incorporate a range of health and wellness-related offerings to meet growing consumer demand for a simplified, integrated and empowering experience.
Only a few marks ahead of predecessors Urban Outfitters (45) and Madewell (44), it is clear that H&M (48) is attempting to set itself apart in the Apparel Retailers space. Through the launch of its own curated outlet-like marketplace, personalized style advice via its Google Assistant app, and its voice-activated mirror that connects digital and IRL identities through the power of selfies, we can see that the Swedish multinational clothing-retail company is taking the necessary steps to make the fast-fashion CX experience personalized, integrated and interactive.
However, in terms of convenience, it will be interesting to see how these players compete with the likes of ecommerce competition innovating around last-mile fulfillment.
Hospitality, ranked the least innovative industry, is interesting because it straddles the need to provide an innovative experience that is both digital (booking) and physical (accommodations and the hospitality experience). So, which part of this customer journey is most important to focus on?
Lately, many advancements in the hospitality space have focused on equipping rooms with gadgets-galore–from virtual assistants to Marriott’s latest: using identity-recognition capabilities from Alibaba to allow guests to check in without having to speak to front desk agents.
However, for brands looking to stand-out through an innovative edge, it's worth questioning whether these tech advancements are worth the investment. In fact, it may be worth considering if they’re straying away from the very definition of “hospitality” and what it means to accommodate guests.
With the ever-growing giant of Airbnb (82)—which only government regulation can stop from continuously booming—we’ve seen that experiences matter most to travelers, and through its seamless booking platform, people are seeking authentic stays that are true to the traditional sense of the word–a warm, “generous reception and entertainment of guests, visitors, or strangers.”
Each month, PSFK surveys progressive consumers about their impressions of retailers and DTC brands. The results are published in a Retail Innovation Tracker which can be found here.