Innovation in the UK Retail Sector - Nesta

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Innovation in the UK Retail Sector Sainsbury also has its own a technology store in Hazel Grove where it tests the appeal of new concepts to its core customer base 11 . c. The retail innovation pyramid 4.9 What traditional innovation literature does not explore or explain at any length are the typical application areas in which retail innovation occurs. Our research has identified three such areas: (1) offer-related innovations, (2) support-related innovations and (3) organisation-related innovations. These areas are summarised in ‘the retail innovation pyramid’ in Figure 4.1 at the apex of which is the retailer’s overall corporate strategy (Hristov, 2007). Figure 4.1. The retail innovation pyramid Source: Hristov, 2007 4.10 Offer-related areas of innovation include innovations in product, service, category format, channel and market, etc. For example Tesco’s innovations in non-food categories including stationery, entertainment, house wares, clothing, electronics, financial services, telecoms and convenience store. For example the US retailer Whole Foods Market has extended their organic concept beyond their supermarket format into non-food by rolling out in 2005 their “Lifestyle” store of environmentally conscious clothing, house ware and other non-food products. By locating what they refer to as the ‘Lifestyle Annexe’ next to their full-range supermarkets the company is creating one-stop retail destinations for the rapidly increasing number of environmentally conscious consumers. (See also the example of retail service innovation in Vignette 4.3 – Retail Clinics). Such innovations are central for retailers since they involve customer interactions and have direct contribution to growth. They are often led by major functional areas like commercial (buying), retail operations, NPD or creative and marketing. In terms of deconstructing retail innovation 11 http://www.igd.com, (26.03.2007) Strategy Offer‐related innovations Support‐related innovations Organisation‐related innovations Page 28
Innovation in the UK Retail Sector along the lines of the more ‘traditional’ innovation typologies of product versus process, incremental versus radical, we conclude that all these are seen amongst retail practitioners. Nevertheless their prevalence appears distinctly retailer specific, for instance in the case of the novelty mix of a retail range. (See also Vignettes 4.1 – Hotel Chocolat, 4.8 - Smiley’s Delicatessen, Farm Shop and Café). 4.11 Support-related areas of innovation: On the other hand, support-related areas of innovation encompass innovations in technology, systems and the supply chain, etc. Examples of these are the development of extranet capabilities in terms of electronic stock control, payment, invoicing and delivery systems, similarly sharpening customer focus through the introduction of customer databases and loyalty schemes or innovating in in-store technologies in terms of sustainable energy consumption, shelf-management or payment systems. These are seen as key facilitators for the offer-related area and contributors to overall retailer efficiency and productivity (See Vignettes 4.9 - Boots and Tesco and 4.10 - The Mid Counties Co-op: payment systems innovation). 4.12 Organization-related innovations comprise the third area, which includes innovations with strategic or operational significance that provide management and delivery frameworks for the previous two - such as innovations in the retail model, in administrative processes, cross-functional teams or in new activities which require coherent management mechanisms such as in the case of CSR, sustainability and ecology. (See Vignettes 4.5 - Zara and 4.6 – TK Maxx, 4.7 - Somerset Local Direct, 4.11 - ASDA and 4.12 - the Co-op). 4.13 The management levels and areas of retail innovation described above are summarised in the organising framework shown in Figure 4.2. Figure 4.2. Organising framework of retail innovation Drivers of retail innovation: ‐ external ‐ internal Source: Hristov, 2007 Strategy Management of retail innovation: ‐ strategic ‐ operational Areas of retail innovation Market Page 29
Page 1 and 2: Report for NESTA December 2007 Inno
Page 3 and 4: Contents Innovation in the UK Retai
Page 5 and 6: Innovation in the UK Retail Sector
Page 9 and 10: 2. The nature and contribution of r
Page 23 and 24: v. Retailers’ reverse innovation
Page 27: Innovation in the UK Retail Sector
Page 41 and 42: Vignette 5.3: Currys customer recyc
Page 43 and 44: 6. What are the barriers to retail
Page 47 and 48: 7. What are the measures of retail
Page 49 and 50: . Types of Measures Innovation in t
Page 65 and 66: . Promoting innovation in sustainab
Page 69 and 70: Conclusion/Next Steps: Innovation i
Page 73 and 74: Recommendation 4: Innovation in the
Page 77 and 78: Appendix 1 Research Methodology 350

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