The “innovate or die” principal has been a key factor in the death of many retail companies. Blockbuster failed to enter into the online video rental and streaming space. The company’s lack of innovation led the billion-dollar company to liquidate its 9,094 stores. Blockbuster once employed over 84,300 people.
Failure to innovate has also led to Toys R Us, once of the most famed toy companies in the world, going out of business.
Bankruptcy has hit many companies, including Mattress Firm, David’s Bridal and even Payless Shoe. The iconic show store announced that it will shutter 2,100 stores in February 2019. Gymboree also announced the closure of 800 stores in the US and Canada this year.
The innovate or die principal could have kept many of these companies alive.
Companies, from small commercial cleaning businesses to giant multi-national corporations, have to spend resources on innovation.
Research and development spending should be part of a big business’s expenditures. Amazon spent $22.6 billion in 2018 to innovate, expanding their cloud infrastructure and offering new services to clients. The company’s retail business is now just a part of the company’s portfolio of products.
Google’s Alphabet spent $16.2 billion on research and development. Volkswagen spent $15.8 billion, and Samsung spent $15.3 billion. Companies that failed to innovate often relied on past successes to try and remain relevant.
Smaller companies are giving back when there is little room for innovation or little capital to spend on research and development.
Rainbow Property Maintenance’s owner has been innovative in the janitorial service industry through hands-on community involvement. The company stays one step ahead of the competition by giving back to the community. The owner can often be found teaching business skills he’s learned through forming a janitorial company to young adults.
Small businesses have an advantage in innovation because they don’t have to answer to stockholders, teams are smaller, and speed of execution is faster than in a large corporation.
Walmart, however, struggled to get their Internet division in place and grow. The company was overshadowed by Amazon until key changes in the division led to online sales growing by 37% in the first quarter of the year.
Walmart also introduced curbside order pickup for the company’s web grocery business, with 2,450 stores offering the service. Harris Teeter and other grocery stores are now trying to compete with Walmart by implementing web grocery options.
The company chose to innovate to compete with Amazon and grocery stores at a pivotal time when other retailers may have missed the opportunity and filed for bankruptcy.