“Innovation” has become yet another buzz-word, used overwhelmingly by organizations to distinguish themselves from competitors. This article explores one strategy that local champions can use to be more innovative in their local markets: scan the globe for trends and insights and generate insights and ideas that can be adapted to drive innovation at the local market level.
Insights: the core ingredient for innovation
The starting point for almost all innovations is insights. Although there are different types of insights that an organization can seek, typically it is about unmet customer needs. These types of insights are usually drawn from qualitative research, and data collection is primarily observational – often referred to as customer ethnography. These findings help us become more aware of trends, how behaviors and needs are changing, what products are “in” – all of which ultimately set the foundation for innovation.
We live in an increasingly global world. As stated by a US News Money report, many large American organizations are following the globalization trend, with “about 40% of profit for firms listed in the S&P 500 stock index now coming from overseas” (Newman, 2011). Similarly, Thomas Friedman’s bestseller The World is Flat made a strong argument for the impact of globalization (Friedman, 2005). As it is becoming a norm for many industries, it is increasingly important to understand emerging trends and changes in consumer behavior around the world.
While gathering customer insights on a global scale can be powerful for a company’s ability to innovate at the local level, it can be exhausting and ineffective if not executed correctly. A consumer trend in one region or country may not be true in another.
Meeting unmet customer needs is at the core of innovation.
Global insights can add value to many companies in this era of globalization in their pursuit of finding and meeting unmet customer needs, which is at the core of innovation.
Reinventing a retail experience using Global Insights
A large regional retail company selling primarily books and music expressed interest in using global insights to help design a new concept store – what they called their “megastore for the next five years.” It was clear to our client’s team that while retail stores selling books and music were struggling with declining sales, internet-based virtual stores such as Amazon.com and iTunes were rapidly growing – forcing a reevaluation and adjustment of the current business model. They decided to pursue a strategy of reinventing the retail experience and to look around the globe for inspiration and insights for how to reinvent the local retail experience.
Collecting global insights by traveling to other countries can be very difficult for foreign visitors not accustomed to the local language, cultural and societal norms, and ways of expressing emotion. Understanding these aspects of culture is especially critical for collecting valuable insights. Thus, having local people collecting insights significantly improves the quality of the data.
Customer Experience Matters. The consumer’s satisfaction and overall experience (often referred to as the “customer journey”) with a company is a key driver of brand loyalty. Customer experience is more than just products, it’s about the atmosphere and interactions that pulls individuals to a particular store.
Lifestyle Focus. Customers are most engaged when product offerings are personal and relevant to their own interests. It is therefore essential that products are relevant to an array of lifestyles. This trend has also led many retail stores to start incorporating lifestyle services such as cafes and salons, where customers can go to a particular store for more than just the traditional products.
The team selected eleven destinations considered trend setting places – Rome, Milan, London, Warsaw, Hamburg, Berlin, Paris, NYC, Tokyo, Shanghai and Singapore. Local team members visited stores to gather insights and spot trends. Initially the team focused on local bookstores and began collecting local inputs. Since some of the trends identified were not yet embedded in the bookstore industry the team expanded the scope to look also at food & beverage (including restaurants) and stores using digital technology to improve the customer experience. Local representatives identified stores to visit based on their first-hand knowledge of the city or geographic area. For each store that was observed, the team members provided: an overview of the store, a description of the environment, a summary of the customer experience, personal feedback, customer feedback (through interviews), pictures and video. Overall, the team analyzed more than 60 selected stores around the world.
Cities visited: Rome, Milan, London, Warsaw, Hamburg, Berlin, Paris, NYC, Tokyo, Shanghai and Singapore
The local research resulted in an enormous amount of information and insights into local markets, but more importantly showed universal trends that were common around the world. Using a structured approach to capture, analyze, prioritize, and distill these insights helped identify several key themes that could help reinvigorate the local retail experience.
Working together, the team was able to translate local inputs into global insights. These insights were then transformed into actionable business outcomes, leading to the design of three concept stores – one of which was selected for implementation. The new store has become a huge success: it provides a positive experience to customers, while also generating substantial revenue for the company. The sales per square foot resulted between 150 and 180% of what budgeted (obviously already significantly higher than current business performance).
Global insights can be a powerful tool to identify opportunities for innovation. Gathering local trends and translating these into true global insights is a crucial tool to recognize global trends that could result in local innovations.
By Roberto Copercini
About the author
Roberto Copercini is a Director at Valeocon Management Consulting, helping clients to execute their strategy either through improving the current operating processes or through innovative the Business Models. With experience in many industries including Financial Services, Pharmaceuticals, FMCG, Retail and others, he is an expert in transactional processes. Before joining Valeocon, he worked at Merrill Lynch and held various positions at General Electric. Mr. Copercini speaks Italian, English and French. He is based in Geneva (CH) and can be reached at [email protected].