Canadian Retailers Use Their Innovation Labs For Testing New Tech, Products

Canadian Retailers Use Their Innovation Labs For Testing New Tech, Products

Some of Canada's largest retailers have opened so-called "innovation labs" in recent years to test new technologies, develop products and forecast trends.

In so doing, companies such as Lululemon, Sears Canada and Canadian Tire are trying to figure out how increasingly technology-enabled customers want to shop, and the future-focused business units are often viewed by executives as a response to the frequently touted retail maxim "innovate or die."

As such, leaders from the innovation business units at Sears and Lululemon told attendees at the Dx3 retail technology conference it's critical that the test labs work in tandem with the strategies of the central retail business to affect real change.

"When you are in the space of innovation, you can keep experimenting, almost keep going around in circles… excited by ideas and theories, but floating around without any kind of strategy or insight," said Courtney Lawrence, insight manager at Vancouver-based Lululemon, which opened its innovation lab, Whitespace, in 2014.

"For the apparel industry and for retail, you need the components of research and development, strategic thinking and innovation, and really strong human-centered insights."

Whitespace's goal is to create products that bring a new value to the company, products "that fundamentally change the customers' behaviour in some way," she said.

Lululemon has been fighting to maintain and grow its market share in the face of rivals such as Under Armour and Nike. When the brand creates functional, "technical" clothing for specific sports, analysts say, it extends the credibility of those goods to all of its athleisure apparel, such as sweatpants and hoodies.

Prior to the Rio Olympics in 2016, Whitespace engineers ran tests with Canada's Olympic beach volleyball team in order to design uniforms that would respond well to the athletes' needs on a scorching South American beach. It used a body scanner to customise the uniforms to each individual athlete and fit the group within a "climate chamber" in order to perfect the sizing, because heat and humidity cause garments to expand. Whitespace is also responsible for developing its four-way stretch "Naked Sensation" soft athletic leggings, a top seller for Lululemon since their introduction in 2015.

Sears Canada opened its lab, Initium, last year in part to spearhead a massive IT overhaul, replacing 20 years of legacy technology an integrated cloud-based system and launch a new online platform to operate the backend of Sears.ca.

"When we are building a technology or process improvement solution, we are solving it for a specific Sears Canada challenge, but we are also solving a challenge that many if not most retailers also have," said Alex Glinka, head of strategic innovation at Sears Canada. "We are looking at it from the perspective of where we are at now not only in the retail industry, but everywhere, to what is happening in the S&P 500. The cycles of renewal, if you will, are becoming faster and faster."

Under the stewardship of executive chairman Brandon Stranzl, Sears has been trying to lower costs, simplify its processes and find ways to appeal to customers, but continues to struggle.

In the third quarter ended October 29, the department store more than doubled its net loss and reported a 7% drop in same-store sales. At the time, Stranzl said Sears is "in a process of constant innovation to deliver better products and experiences to customers and thereby drive better business results over time," despite having "much work to do."