Report Finds Retail Disruptors in All Shapes, Sizes

Industry disruptors are differentiating themselves in four key areas: unified commerce, informed insight, customer acquisition and the role of the store, according to a new research report from Retail Systems Research and JDA Software. 

The report defines “Disruptors” as retailers that are making bold moves and redefining the game of retail transformation, compared with competitors taking a more conservative approach. But contrary to popular thinking, it finds that disputers are not mainly pure-play e-commerce companies, but instead value both the physical and online experiences. They also make strategic investments rather than investing in technology for technology’s sake.

“Disruptive technologies are reshaping the retail landscape and many retailers are eager to adapt,” the reports. “Disruptors … have a different perspective on retail transformation and how to take advantage of the disruption shaking the industry. They live at the intersection of growth versus scale; they focus on the best products, delivered in the fastest, most responsive way, through the best customer experience. And they deliver on promises consistently and profitably.”

Conducted in winter 2017, the “2018 Retail Disruptors Survey” 109 C-suite executives in consumer packaged goods, apparel, hard goods and other product categories across multiple retail channels. Sales totals among the group ranged from less than $75 million (19%) to $10 billion-plus (13%). While 49% of respondents consider themselves Disruptors, 51% do not.

Among other findings:

• Most disruptors are not pure-plays: 87% of Disruptors operate physical store locations, compared with 79% of non-Disruptors. While this may seem surprising, it’s difficult to achieve a level of scale without investing in stores. In fact, some retailers that built their model on a pure-play strategy are finding stores to be an important element in their growth. 
• Disruptors also position the store as a critical part of a unified commerce experience. Stores are living, tactical brand ambassadors, giving consumers the chance to interact with merchandise. They also cater to shoppers who want assistance and the human touch to achieve goals.
• Disruptors are often medium-size: Despite myths that they are either small upstarts (under $75 million) or large-scale organizations, most disruptors have revenue in the $250 million to $500 million to $1 billion range. They must be large enough to have industry impact, but too large to be unwilling to change the status quo.
• They focus on customers: Their top three investment priorities revolve around engaging lifestyle content (58%), customer-focused activities and events (57%) and the shopper experience (55%). Non-disruptors, meanwhile, prioritize investment in the consumer experience (54%), but give equal importance to digital advertising (54% vs. 49%), with personal product recommendations third on their overall list (48%). 
• Disruptors do not spend recklessly, although they move quickly if investments do not look like they will bear fruit. This lets them control costs and remain profitable while growing. 
• They don’t invest in every bell and whistle: They invest strategically, viewing technology’s role in their business differently, largely to enable a differentiated customer experience. Disruptors define ROI as they go; non-disruptors seek out an ROI before investing, shutting them out of a critical learning curve in both technology and customer experience.
• Disruptors invest early in technologies to support efficiency: For example, 49% of disruptors have implemented systems designed to increase visibility in end-to-end supply chain, compared with 23% of non-disruptors. These implementations have been particularly challenging for many companies.
• They are human, too: While theassumption isthat most disruptors are heavily data-driven, in reality, most are interested in the combined forces of data and human insight.

The study also discusses what happens as disruptors mature and provides recommendations on how both disruptors and non-disruptors can thrive in the coming years.

Download the study below.