XRC Labs Chief Anthos: Retailers Must Adopt “Test and Learn” Culture

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of the world’s gross domestic product. Technological innovations such as 3D printing, robotics, and artificial intelligence are threatening current practices up and down the retail food chain from manufacturing and shipping to sales and marketing.

But, so far, most retailers “look at innovation in a silo instead of something that needs to be across a company’s culture,” Anthos says.

Accelerating the use of new technologies in consumer goods companies is a growing niche. In addition to XRC Labs, New York is also home to AccelFoods, a $35 million venture fund that invests in food and beverage companies, and Retail X, a self-described “boot camp” for early stage, pre-seed startups.

Outside of New York, there is REVtech, a Dallas-based accelerator that focuses on restaurant, retail, and hospitality innovation. Austin is home to the consumer goods technology-focused SKU accelerator, and Cincinnati is home to the Brandery, which focuses on branding, marketing, and design. (Interestingly, San Francisco does not seem to be a hotbed of retail-focused accelerators, though plenty of retail tech startups go through programs like Y Combinator.)

Anthos says XRC Labs serves as a “canary in the coalmine” for the retail industry, pointing out what tech trends are no longer relevant, or investable, and what’s coming up. In addition to working with the accelerator’s startups, XRC Labs works closely with its retail sponsors—typically, those startups’ ultimate customers—hosting quarterly “state of the industry” reviews that address tech trends. XRC Labs also hosts an Innovation Lab at the National Retail Federation’s annual conference.

Anthos says that vantage point shows him that the retail industry overall has been slow to allow innovation to thrive. The ongoing travails of retailers such as Macy’s (NYSE: PG) or Sears (NASDAQ: SHLD) are well known. But even once high-flying companies like Under Armour (NYSE: UAA) can hit rocky seas, if they don’t embrace a culture that promotes constant innovation, he says.

The common denominator among these struggling businesses, Anthos says, is a corporate culture that prevents retailers from being responsive to customer needs. The Internet provides transparency about products and their features—just think of all the times you discovered something you wanted to buy but hadn’t seen in the store. Technologies like 3D printing and robotics enable more personalization, meaning customers can decide which color or embellishment they prefer on a garment instead of just accepting how it’s offered by a manufacturer, he says.

Retailers, on the other hand, “are used to telling people what to like and not like,” he says.

But Anthos adds that he is seeing that smaller retailers are more amenable to trying out new technologies in short-term pilots, quickly adopting what works and discarding the rest. The larger retailers are, in turn, keeping track of those activities, he says.

Ultimately, the retail industry as a whole must get more comfortable with a test-and-learn culture more typical of the tech industry. “Are you bonus-ing people for testing 10 things a month … for demonstrating failure as well as success?” Anthos says. “You need top-down culture change and bottom-up tech adoption.”

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