Innovation in the UK Retail Sector - Nesta
Innovation in the UK Retail Sector - Nesta
Innovation in the UK Retail Sector - Nesta
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<strong>Innovation</strong> <strong>in</strong> <strong>the</strong> <strong>UK</strong> <strong>Retail</strong> <strong>Sector</strong><br />
Sa<strong>in</strong>sbury also has its own a technology store <strong>in</strong> Hazel Grove where it tests <strong>the</strong> appeal of<br />
new concepts to its core customer base 11 .<br />
c. The retail <strong>in</strong>novation pyramid<br />
4.9 What traditional <strong>in</strong>novation literature does not explore or expla<strong>in</strong> at any length are <strong>the</strong><br />
typical application areas <strong>in</strong> which retail <strong>in</strong>novation occurs. Our research has identified<br />
three such areas: (1) offer-related <strong>in</strong>novations, (2) support-related <strong>in</strong>novations and (3)<br />
organisation-related <strong>in</strong>novations. These areas are summarised <strong>in</strong> ‘<strong>the</strong> retail <strong>in</strong>novation<br />
pyramid’ <strong>in</strong> Figure 4.1 at <strong>the</strong> apex of which is <strong>the</strong> retailer’s overall corporate strategy<br />
(Hristov, 2007).<br />
Figure 4.1. The retail <strong>in</strong>novation pyramid<br />
Source: Hristov, 2007<br />
4.10 Offer-related areas of <strong>in</strong>novation <strong>in</strong>clude <strong>in</strong>novations <strong>in</strong> product, service, category<br />
format, channel and market, etc. For example Tesco’s <strong>in</strong>novations <strong>in</strong> non-food categories<br />
<strong>in</strong>clud<strong>in</strong>g stationery, enterta<strong>in</strong>ment, house wares, cloth<strong>in</strong>g, electronics, f<strong>in</strong>ancial services,<br />
telecoms and convenience store. For example <strong>the</strong> US retailer Whole Foods Market has<br />
extended <strong>the</strong>ir organic concept beyond <strong>the</strong>ir supermarket format <strong>in</strong>to non-food by roll<strong>in</strong>g<br />
out <strong>in</strong> 2005 <strong>the</strong>ir “Lifestyle” store of environmentally conscious cloth<strong>in</strong>g, house ware and<br />
o<strong>the</strong>r non-food products. By locat<strong>in</strong>g what <strong>the</strong>y refer to as <strong>the</strong> ‘Lifestyle Annexe’ next to<br />
<strong>the</strong>ir full-range supermarkets <strong>the</strong> company is creat<strong>in</strong>g one-stop retail dest<strong>in</strong>ations for <strong>the</strong><br />
rapidly <strong>in</strong>creas<strong>in</strong>g number of environmentally conscious consumers. (See also <strong>the</strong><br />
example of retail service <strong>in</strong>novation <strong>in</strong> Vignette 4.3 – <strong>Retail</strong> Cl<strong>in</strong>ics). Such <strong>in</strong>novations are<br />
central for retailers s<strong>in</strong>ce <strong>the</strong>y <strong>in</strong>volve customer <strong>in</strong>teractions and have direct contribution<br />
to growth. They are often led by major functional areas like commercial (buy<strong>in</strong>g), retail<br />
operations, NPD or creative and market<strong>in</strong>g. In terms of deconstruct<strong>in</strong>g retail <strong>in</strong>novation<br />
11 http://www.igd.com, (26.03.2007)<br />
Strategy<br />
Offer‐related <strong>in</strong>novations<br />
Support‐related <strong>in</strong>novations Organisation‐related <strong>in</strong>novations<br />
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