Where the innovation for retail business starts?

When I started to work for Toyota brand 20 years ago, I had to learn Toyota and generally Japanese way of thinking and working. It was different compared to our mid-European mindset, but after couple of months I was able to follow. Moreover I realised well known success of Japanese products through the culture of their production and distribution systems.

Among all of business ways of thinking, there is one I admire a lot and use frequently till now. It is just Gentchi Genbutsu. Difficult to translate, but in basic principle it means: go to the source of the problem, observe the location of the problem, understand the conditions, analyse and find effective solution. 

It is very easy to say, more difficult to understand and hard to follow.

When you accept detail breakdown of the issue and bottom up approach, you more think about the most suitable measures and come to the very logical solutions. There are many companies pushing now for an efficiency through their processes and through the exact definition of employees job description. The bigger company, the more detailed processes and more specified job descriptions. The aim is clear - eliminate the mistakes and unify the working process. Smaller companies try to get often such a know-how and pay for the expensive managers from big corporates in order to implement such a processes into their small company environment and so called "professionalize" their way of working. In many cases big portion of corporate processes can work even for SMEs, but there are some, which can significantly harm the SMEs uniqueness and value. Big part of the innovative corporate approach, especially last couple of years, is a digitalisation of the business.

Innovation = digitalisation, right?

Today digitalisation and innovations are very modern words. Digitalisation is even a symbol of the innovation. Company identifying the area for digitalisation and managing it correctly definitely move the business forward. Either catch the competition or in better case move in front of the competition.

Companies digitalising their processes, hoping in the ability of the final customers to search for the information through the on-line tools. Dependency on human power is decreasing and focus is more on digital experience. Innovative efficiency for the first view. In the reality digitalisation naturally produce more and more advanced products which needs to be properly explained to customers. More difficult products = higher demand for the right sales strategy and proper product explanation. Unfortunately digitalisation does not go hand in hand with the natural human approach, customer needs and expectations. That is the phenomenon, which is well known, but the push on effectivity in big corporates as well as in retail buinsess has still higher priority. 

Usually digitalisation is correctly planned, developed and implemented. Ideally people should be well trained and the effect of the digitalistion should be explained. In the reality, there are still a lot of cases when explanation and training of involved people is unfortunately not a standard. Moreover understanding and acceptance is not proven and checked. 

Reflection:

Try to remember your last purchase of some advanced technology product. How the process looked like in basic principle? 

Definitelly it started by your needs or wishes, later information search mainly on producers web pages. As the next steps some independent reviews, possible specifications, best offers and consultancy with some people having experience already. 

When your virtual basket was full of two - three potential products, you either selected the best offer on web pages and purchased in case of less complicated product, or visited specialized shops for demonstration and afterwards you selected and purchased.

I have perfect examle from automotive sector. Majority of car manufactures produce technically advanced and complicated products. Progress compared products 20 years ago is massive. Prestigious consulting companies developing re-definition and digitalisation of the sales processes. The new Dealer Management Systems are being implemented. And .... at the end of the entire distribution system ...  there is a salesperson. The final contact person, who either do a business with customers for the brand or shut down all the effort of thousands people.

Feelings about the digitalisation in retail of today are mixed.

I have done a small test. I have learnt one specific top equipped car specification from producer sites and visited couple of showrooms of the respective brand. The findings were, let's say surprising. 

There was a case I got some nice recommendation for my ideal mobility solution. I have received open questions, what kind of mobility solution I need to solve, for whom, etc. My product questions, concerns has been answered and I got a test drive offer. Generally nice approach, without doubts. 

Unfortunatelly majority of the visits were different.  Oftenly sales consultant tried to demonstrate   his expertise in product knowledge by endless speaches or opposite. Guy who hardly coped with difficulties of technically advanced modern product explanation. In both cases the advisory part of the business was completelly  skipped. 

The most often experience was the game with discount. Questions if I already visited some other showrooms and how big discounts I got. I was leaving the showroom oftenly with the feeling "do not ask, get the best discount and sign the contract!"

The same problem is almost everywhere in sectors, where the new smart products with modern technology occur. Various electronics, garden tools, sport machines or even clothes, just whatever. Producers more and more bet on the customers inteligence and web based product education.

I'm questioning, where the innovation starts and where ends up? And how to solve the digitalisation with needed human approach?

When I analysed retail business situation in general, I came up with a solution proposal which is not any rocket science. Just use robots!

Sure, just joke!

According to me "Go To the Source & Fix the Basics" is a key. I focus on this topic a lot.  

Combination of smart advisory for the consumer with processes of the digitalisation to optimise the costs and final product price.

How to cope with retail innovations in simple steps?

POINT 1/ Analyse Customers Touch Points

First of all, every company needs to analyse so called "touch points" with customers. If they are correctly managed, if claims are solved, level of customers satisfaction and management of customers wishes or ideas. If the company does not need any human touch, it can be advantage for now, but from long term perspective? See point 4/ 

Company having shops, showrooms should invest the effort to the sales personnel (sales & aftersales) with the highest priority and on daily basis.

POINT 2/ Market and competition screening

Secondary, the market and competition environment has to be analysed. Every local dealer/shop has to carefully check where the market is, what innovations are in the pipeline among competitors and where is the space for a differentiation.

Only when market is analysed and segment carefully selected, the measures can be found, discussed and challenged with mother corporate / headquarter. Big corporates are setting a global strategy without the attention on a markets deviations in many cases. The role of the importer or local dealer is to challenge the headquarter and communicate all the market specific issues!

POINT 3/ Manage all the basics

All findings have to be discussed with the same attention as the intended brand innovations. All has to be cross-checked and again returned to the customers "touch points". Let the customers evaluate how much and in what scope are they willing to accept digitalisation in all respective areas. If naturally customers do not prefer digital approach in certain area, they change the brand easily. 

POINT 4/ Always have "a plan B"

In other wording, switching all the efforts and investment to digitalisation can bring effective results in short period, but can jeopardise a long term business development. Imagine for example exodus from city to the countryside or just some huge hackers terrorism which can occur suddenly in the same power as well known Covid 19.  Only companies having "a plan B" and keeping natural business environment  can stay sustainable.

The ideal business model does not exist, that's clear. 

I try to recommend and suggest to play smartly with both - digitalisation as well as with human approach. 

According to me analysis of real market environment, fix the basics in terms of dialy routine could start up every innovation intention. The basic principle of the business - just deal between at least two parties - should stay secured. Even more, it has to be further developed despite the strong push of the digitalisation. Brands, headquarters should be challenged continuously by the necessity of the human approach. Importers, retailers and business executors should secure F2F meetings, dinners and common meetings.

There are many topics which can be smartly hidden during the on-line communication or neccesary emotions which can have a decision character.

The real business, loyalty and correct relationship will continue only by communication from the top to the bottom of the company and vice versa. Real meetings, open and clear communication in the company environment as well as with customers. 

Yesterday was business about the human touch. Today world is full of digitalisation. And tomorrow?