Giulio Raffaele (Research Manager, European Retail Insights)

IDC strongly believes that retail innovation goes well beyond the implementation of new technology that substitutes or integrates to legacy IT systems. According to IDC, retailers should first point at the diffusion and consolidation of an innovation culture within their organizations.


Company culture should rely on a single retail innovation strategy that is geared around the execution of new commerce everywhere business models. Then, it is fundamental that retailers allocate their short- and long-term resources to the three different types of innovation missions that IDC identifies as:


  • Contextual innovation. Delivering better business outcomes but without disrupting new business models.
  • Disruptive innovation. Delivering a transformational impact to the business with the introduction of new business models and potentially completely reshaping markets.
  • Ecosystem innovation. Delivering industry innovation in extended value chains and leveraging industry collaborative clouds. Industry collaborative clouds allow multiple companies in an industry or across industries to evolve their business models through a collaborative ecosystem to create new value, such as improving productivity or building new products and services.

Once the resources are allocated, retailers should focus on the sourcing of innovation, thus fundamentally deciding on the distribution of efforts between internally building innovation and leveraging external innovation opportunities. After having selected the sources, retailers face the crucial phases of piloting, implementing, and scaling innovation.


IDC Retail Innovation Model

IDC thinks that a digital platform is essential to execute the innovation strategy. Such platforms have the fundamental role of integrating a company’s IT and business departments around a set of shared key capabilities that include an intelligent core that can continuously analyze data from internal and external environments. Starting from this assumption, IDC calls “retail commerce platform” the retail industry’s digital platform. The conceptual architecture of the platform is composed by four core capabilities — customer experience, commerce, order fulfillment, and content optimization services — with embedded artificial intelligence (AI) and machine learning (ML) analytics foundations that provide streamed data analysis. The combination of these capabilities allows for the efficient and effective execution of enterprise, customer, and data services across all available interfaces. Thus, a retail commerce platform is needed to pilot, implement, and scale innovation and to enable the realization of profits in short-term and of long-term innovation objectives.

Importantly, all the above aspects are framed within the dynamics of retail innovation excellence, a continuous process that — based on the efficient and effective execution of retail business model innovation — allows retailers to constantly develop trust in innovation within the company and the broader ecosystem, reinvest profits in the iteration and execution of their innovation strategies, and reuse learnings from failed innovation initiatives.

The path towards Retail Innovation Excellence

To discover more on this crucial retail topic, read the IDC PlanScape: Architecting a Digital-Platform-Enabled Retail Innovation Strategy that demonstrates the importance of executing a unified retail innovation strategy through a retail commerce platform. The study addresses the topic by answering four key questions:

  • Why is the presented innovation approach important?
  • What are the main elements to consider in such an innovation approach?
  • Who are involved in the related processes?
  • How can retailers take advantage of the combination of an innovation strategy with a retail commerce platform?

“Retail executives should invest part of their efforts in demonstrating to the board why retail innovation excellence is critical and how to execute it through a digital platform,” said Giulio Raffaele, senior research analyst, IDC Retail Insights. “The most advanced retailers are disrupting legacy retail business models and generating value across the ecosystem through new commerce everywhere business models. Enabling retail innovation excellence requires a retail commerce platform built on a hybrid cloud and microservices.”