Retailers hampered by lack of innovation

Lagging behind broader market.

 

Fewer than 20% of retailers are innovating in direct response to customer feedback, according to new analysis by the Commonwealth Bank, with even fewer retailers driving innovation to protect against disruptors or a changing workforce.  

Commonwealth Bank national retail manager, Jerry Macey said retailers continue to demonstrate cautious optimism while maintaining healthy levels of innovation activity across the industry: “albeit that retailers’ innovation index ranking has been outstripped by the average across all industries”.

He said while more retailers are adopting certain behaviours to support innovation, the research suggests that critical drivers of change, such as gathering customer feedback, responding to behavioural shifts and disruptive threats are being ignored across the industry. Retailers are more likely to invest in innovative sales and marketing approaches while staff training, store renovations and supply chain enhancements are also high priorities for investment, compared to the national average.

When assessing 15 entrepreneurial behaviours and management capabilities that comprise the CommBank Innovation Index, retailers have experienced only a modest year-on-year increase in the industry’s index score that sits below the national average. Despite the lag, retailers are willing to spend time and capital on uncertain ventures and respond to attractive opportunities along with looking for new ways to benefit from changes in the market and technology. Top innovation drivers include productivity, leveraging technology and pursuing avenues for growth. 

 “While retailers appear to be investing far less in innovation than the average business, they are generating a comparable return of almost two dollars for every dollar spent. This suggests that they don’t need to have significant budgets to generate a strong return from their innovation activities, Macey said.

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