Innovation for the sake of innovation is meaningless unless it solves a problem that consumers have. So I would focus on the problem first, then apply innovation to solve that problem effectively so consumers can switch to that solution in the easiest way possible.
Retail stores need to turn adversity into opportunity - Retailers should not be thinking, hey e-commerce is taking away my sale and frown, instead look at all the opportunity with the people walking into the store, everyone has one problem or another and leverage your strength, which is you have people right in front of you, if you can understand what their problem is and solve their problem right away then you have a customer and that too if you do it so well, make that experience memorable, remember people will never forget how you made them feel, then you have customers for life time.
I will share one recent experience where a sales person from the Guitar Center at the Alpharetta store made my experience memorable, I bought a guitar for my daughter as a gift, this guitar was an open box guitar and had a slight damage, so he got me a great deal on the guitar, which was like 30% of the full price, also added the warranty on top of it and the string broke after a couple of days. I took it back and this sales guy that sold that guitar, told that the string is not covered under warranty, but while we were talking, he found another string that matched the broken string, not only replaced that broken string within minutes but also tuned the new string so quickly. And in the end we were charged only for the string not for that change at all. There he created a memorable experience, not only for myself but also for my daughter because she was so sad with the guitar with the broken string, but once it started strumming, her face was full of smiles.
One simple problem I have is, being an Indian guy with a brown skin tone, it is difficult for me to find the right color shirt and matching pant, that makes me stand out so well, especially when all the stores sell clothing that are predominantly made for white or fair complexioned skin tone, clothing is very important because it boosts your self esteem, there is a big difference when you do a presentation with the best clothes and when you do a presentation with not very good clothes, when you wear the best clothing, you feel like you are ruling the world, that is a major win for any person that is in that business of either sales or marketing or any role where the person is constantly communicating or presenting in front of an audience. If clothing stores can find a way to address that problem for me by coming up with technology where I can select the best clothing that matches my skin tone and size that would be a major win. Also keep in mind the world is becoming beige everyday, we are going to see more beige people in the future, so focus on that trend as well.
Retailers have to identify such problems that consumers have and address those problems effectively through innovation, then consumers will automatically flock to the retail stores.
Here are a few problems I have as a consumer, that retailers can address
i) - I find it difficult to determine the location of the product in a store - May be a searchable kiosk at the entrance of the store to look up the aisle of the product would be helpful
ii) - Finding best colored and best fitting clothing for my skin tone and size
iii) - Provide effective product information - For example if I see a really big tomato in a store, I suspect if it is genetically modified tomato, providing information on where the tomato was grown and how it was grown would help a lot - same would help for the meat too - even restaurants should do this