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How to sensibly assess trending retail innovations

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Whether it’s Metaversum, shoppable social or cryptocurrencies, brands are fighting over which trend best fits their technical prowess and customer value proposition.

During the rush, it’s easy to misjudge how a particular trend may or may not relate to your audience. For example, earlier this year, Hostess unexpectedly announced the launch of “$TWINKcoin,” a crypto-inspired, coin-shaped version of its classic Twinkie snack cake.

Not only did Hostess receive backlash from the LGBTQ+ community for its careless use of the offensive term, it also seriously confused its customers. The connection between the bakery conglomerate and the cryptocurrency world was not clear in their announcement.

That said, Hostess’ desire to fit into the often headline-grabbing crypto conversation was understandable. Several consumer brands including Nike, Sotheby’s and Coca Cola have made the same leap in 2021 and have faced success and positive headlines in the coming weeks and months. But several months after its launch, no one outside of Hostess makes sense of the brand’s foray into crypto — but we remember it was a flop.

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Avoidance of an innovation error

Interest in trading trends like the ones above continues to grow. In fact, Metaverse-related companies raised more than $10 billion last year, nearly doubling the amount raised in 2020. And that trend isn’t slowing down — the market size for the Metaverse is projected to reach nearly $700 billion by 2030.

However, as has been shown, participating in these trends fails without a clear connection to your brand and business model. In the Hostess example, if we put campaign offensiveness aside, the company’s product value, customers, and this new push were still mismatched.

At the other end of the spectrum, Sephora has been successful in introducing modern commerce innovations as part of its omnichannel experiences. The beauty retailer has launched technology that allows its customers to make purchases, communicate with live representatives and access exclusive discounts, all through its mobile app.

In both stores and the app, Sephora customers benefit from virtual augmented reality (AR) fittings and Color IQ technology to find the right foundation shade for their skin tone. Sephora uses data generated through both in-person and virtual interactions to provide customers with personalized communications, recommendations, and experiences. This is the right take on technology trends – Sephora prioritized customer behavior and tracked experiences that complemented its business model.

To achieve similar results, companies need to analyze whether a new innovation fits their brand identity and customer behavior. In addition, it is important to build a company culture that prioritizes continuous experimentation. For example, Sephora launched an innovation lab in 2015 to test in-store experiences before widespread adoption, thereby reducing operational costs while gathering real feedback.

Prioritize brand authenticity and customer relevance

Trending commerce innovations often look impressive, especially from a distance. But it’s important to identify a clear business case before committing resources.

Start by determining how a new innovation will increase sales and strengthen your brand values ​​and image. Equally important, make sure your customers are interested in—or can be won over by—the experiences the innovation provides. Customer surveys, consumer personas, and other feedback mechanisms can help you gauge the sentiment and needs of your audience.

Gen Z is on track to become the most digitally connected generation by 2024 and are drawn to compelling, relevant content, having grown up on social media with video-first and the streaming era, with a variety of content options that are available to them.

A good example of this was Roblox 2020 virtual reality concert with rapper Lil Nas X. The platform is built on the premise of community, social commerce and gaming and they wisely haven’t abandoned these core elements that contribute to their continued success . Roblox stuck to what they do best and delivered an experience that their audience cared about.

Ultimately, integrating modern retail innovation requires both confidence and experimentation. Self-awareness of whether these innovations align with your company’s brand and values ​​is critical to successful launches. The ability to experiment to see if your customers are interested in these innovations is key.

Create a culture of experimentation, then develop an agile tech stack to match

A culture of experimentation is fundamental to the success of retail innovation. Suppose you want to implement an NFT component in an existing offer. Instead of throwing NFT features into the offering incoherently, experiment and iterate with multiple rounds of A/B testing. Over time, this try-and-try-repeat approach fosters an organizational culture of experimentation that increases the likelihood that innovations will resonate with both new and existing customers.

But even with the right culture, a rigid tech stack can quickly stifle innovation. Conversely, an agile tech stack empowers your people to prioritize innovation, making it easier to launch, learn, iterate, and potentially discard commerce innovation with minimal risk or loss. Additionally, agile tech stacks typically include applications that do not require significant IT skills, allowing non-technical team members to fully participate in a culture rooted in experimentation.

work smarter

Despite brands’ increased appetite to embrace commerce innovation, 45% of non-technical business decision makers spend only a minimal amount of their annual budget on improving or expanding their organization’s commerce capabilities. This is particularly interesting when you consider that a majority (59%) of these decision makers say they are more likely to buy from companies that offer modern commerce experiences.

Bridging this gap starts with evaluating current and planned retail innovations and how they align with current technological capabilities, brand vision and evolving customer needs. By fostering an agile culture and investing in technologies that enable that agility, a company can innovate non-stop and capitalize on the right trade trends.

Jen Jones is the Chief Marketing Officer for Commercetools.

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