At the NRF Big Show a few weeks ago, I was struck by the buzz around the Innovation Lab. The showcase exhibitor area was continually packed with attendees waiting their turn to speak with new tech and start up representatives. Solutions ranged from on demand product authentication to product visualization solutions to warehouse and in-store robotics. The continued buzz and interest in this area shows how retailers are increasingly expanding their purview and exploring how new technology and partnerships can give them an edge in an ever more competitive landscape.
Walmart has actively embraced this approach: Its Store No. 8 acts as an incubator for acquired new businesses which it views as retail disruptors, from supply chain to physical stores. Once again, attendees were lining up, this time to ask questions of Lori Flees, SVP, Next Gen Retail & Principal Store No 8 Walmart, during her session: “Building the more innovative innovation lab.” Questions like ‘How does a separate entity for innovation benefit the main retail organisation?” and “How does Walmart maintain the resources and funding for innovation alongside day to day demands of retail operations?”
Lori attributes the success of Store No 8 to 3 factors:
1) Talent: Store 8 focuses on recruiting start up talent and entrepreneurs. The founders of acquired companies have tended to stay on within their organisations, as Walmart gives them the space and means to scale their solutions and ideas (that would be more difficult to do independently).
2) Speed: Store 8 is set up for speed, operating in weekly increments with different processes to Walmart’s main retail organisation. Each new business within Store No 8 also has dedicated advisory board members chosen from parts of Walmart’s main retail organisation that would ultimately benefit from that technology or business.
3) Budget: As a separate entity to Walmart, funding for Store 8 is safeguarded from the main retail organisation where margins are thin and it can be tough to carve out and protect budget for innovation.
Finally, just as Forrester advocates for innovation and digital business transformation, Store No 8 is not an island unto itself. It maintains close ties to the main retail organisation to facilitate testing and piloting with data, technology and stores. And, it actively pursues partnerships – acknowledging that it is faster to work with a partner like Google on voice technology or natural language search than it would be doing it alone.