Innovation in Retail: Definition & Examples

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Some of the latest innovations in retail are right in the palm of your hand. In this lesson, you'll learn more about innovation in retail and look at some examples of modern innovations that have changed consumer behavior.

Online Impact

Less than three decades ago, if you needed a new outfit for a special weekend function, you had one option: Visit a number of retail stores until you found something that fit and that you liked. Today, thanks to an innovation in retail known as e-commerce, the ability to buy products online, consumers have myriad options. You can buy from a store. You can buy from that store online. You can even buy from that store online while standing in the store itself!

Perhaps nothing has been more transformative in the retail landscape than the idea of e-commerce, opening up a world of possibilities not only to consumers, but sellers as well. This innovative tool took the idea of offering more shopping options (not to mention ways to communicate, consume news and more) and turned it into a reality that has added value and convenience to the lives of just about everyone.

It is just one example of the idea of retail innovation.

What is Retail Innovation?

Retail innovation is all about change. But, more than that, it's about change that provides tangible value to consumers. It provides that value because it offers something new or an improvement on something old in the field of technology, services, products or business systems. In addition, to offering value to consumers, it has benefits for retailers as well. That might come in the form of increased sales, business growth and competitive advantage over market rivals.

Starbucks knows a thing or two about retail innovation. Their mobile wallet is used by more than 20 percent of their customers to pay for purchases in the coffeehouse, in addition to a host of other tasks ranging from tracking loyalty points to placing mobile orders. Mobile wallets allow people to pay for purchases with a mobile device rather than a credit or debit card.

The rate of Starbucks mobile wallet users, in fact, has surpassed those who are using Apple Pay. When you take into account that there are nearly 90 million Apple iPhone users in the United States, that says something pretty significant about the innovation of the Starbucks platform. And, it doesn't hurt that Starbucks' customers frequently purchase more - and at higher amounts - than those who don't use the app. This system provides value and convenience for customers, and sales, growth and competitive advantage for the coffee powerhouse.

So, we've looked at e-commerce and we've discussed Starbucks mobile wallet. Let's look at a couple other retail innovation highlights.

Retail Innovation Highlights


Apple frequently ranks at or near the top of many lists of the top innovative companies in the world. When they introduced the first iPod, they created a seismic shift in the way that music is not only enjoyed, but how it is consumed. Before the iPod, music lovers had to go to the store and purchase CDs (or, before that, cassette tapes) and then plug them into the proper device, which required headphones, batteries and - often - a carrying case.

It also changed the way music was stored and purchased. CDs started to go by the wayside as music began to be stored and purchased through Apple's platform, iTunes. In the span of a decade, we've moved from purchasing entire CDs at Walmart to buying songs a la carte - one at a time - and having them immediately available on our smartphones. It also had a significant impact on the way musicians are able to get their music out to the world and how they get paid for doing so.

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