Innovation labs are out, tech accelerators are in. Why are retailers investing in technology companies instead of pursuing innovation in-house?
Farfetch, itself a luxury fashion etail unicorn, has just launched a start-up accelerator named Dream Assembly in partnership with Burberry, through which it will make its expertise available to promising start-ups.
This follows the news that Net-a-Porter founder Natalie Massenet has launched a tech-focused VC firm, while LVMH launched its "Station F" accelerator program at the start of April.
What's even more interesting is that we are now also witnessing the beauty industry fully immersing itself in technology by acquiring start-ups left, right and centre. L’Oreal’s recent acquisition of Modiface comes to mind.
Innovation Labs, a thing of the past?
Innovation labs were all the rage back in 2014. Before the accelerator hype, large corporations devised innovation labs as internal hubs that could act and think like a start-up.
These labs were to bring revolutionary, industry-led ideas. However, in practice they lacked the agility to process such innovations. They were also hindered by a lack of a clear framework to achieve their goals and proved unable to align stakeholder's visions.
While corporate innovation labs may have shown a few small hurrahs, in the bigger picture of actually establishing a transformation they have been found wanting as they focused on creating something for today, but not entirely for the future.
Why partnering with tech companies makes sense
Apart from the obvious talent sourcing, technology companies are able to bring what they do best on the table - specific skillsets and knowledge of solutions. These companies have a broader industry perspective and carry expertise in project management to achieve synchronised developments.
Further to note, experimentation is costly and can be a lengthy process - hence the all too common practice of retailer's putting digital transformation projects on hold after realising the complexity and struggling to find a starting point.
Quick, tactical and customised to your needs
Retailers are turning to technology companies (often start-ups) for the disruptive technology that will ultimately enhance their customer experience as well as operations.
By partnering with a technology solutions company, retailers can bring quicker and tactical executions into their existing systems - without the expense of starting from scratch. Many technology companies are also able to customise their solutions to make sure they align with your internal operations and - most importantly - enhance the experience for your customers.
It's always important to remember the rule of thumb that the customer is king. To successfully reach the next generation of consumers, focus on innovation and future proofing your retail business for the next disruptive change. Ensure that you are investing in proactive measures as opposed to being reactive to yesterday's market shifts.
Technology accelerators are of course one approach to innovation, but we’re curious to know about yours. Inside Retail and Tofugear are still inviting retail executives and managers in Asia to take part in the 2018 Asia Digital Transformation Survey. Respondents will be given exclusive access to the findings as well as a free hard copy of the final report.
Click here to participate