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Innovation in retail. What does it take to be a leader?

By Sam Wright

At Klarna, we champion retail innovation. In such a fast-moving and customer-centric industry, retailers can’t afford to stand still. While innovation also brings risk, the pay off can be huge – and we have always encouraged those merchants making bold changes to drive the sector forward.

Part of the reason why is because our own business was built on disruption. Invoicing for online payments, and letting consumers to pay for their goods once they arrived, seemed an unusual idea to many when Klarna first started in 2005. But we’d rather win new consumers than see them walk away at the checkout – and with ⅔ of shoppers abandoning baskets in the UK, the opportunity is sizeable.

Klarna is founded on anticipating customer demand – a characteristic we recognise in all of the forward-thinking retailers which with we partner.

Inspired by these game-changing merchants, we wanted to take a closer look at innovation in the retail sector. In particular, we wanted to find out what it takes to lead and inspire technological change within companies – the result of which is a white paper, produced in partnership with Internet Retailing.

Through many interviews conducted with retail leaders, there emerged some recurring themes:

First mover advantage is real

Consumers today are tech-savvy and more connected than ever before. That means that in order to survive, retailers must be too. While change is largely driven by the consumer, the savviest of retail leaders need to always be one step ahead of their customers to anticipate what they want and need. Being a first mover holds huge business advantages – including differentiation, winning sales from the competition, and offering superior customer service. While it may be uncharted territory, fortune favours the bold.

It takes a certain kind of person to lead

The leaders we talked to all spoke of inspiring teams. After all, change doesn’t happen in a vacuum – it relies on collaboration and sharing of ideas. Success will only happen if employees are engaged and involved. It’s up to leaders to inspire and galvanise their employees – if they don’t, they’ll only deliver average results.

A chance to win big

A common characteristic of the retail leaders we interviewed was courage. They recognise the need for change, and will take a chance on something new. When we first started out, our main challenge was convincing retailers to trust us. But retailers who have taken the leap and added Klarna’s Pay later option into their checkout – such as ASOS, Arcadia Group and Schuh – are reaping the rewards, with an average increase of 20% in purchase frequency and an increase of 15% when it comes to basket value.