Innovation in the UK Retail Sector - Nesta

Innovation in the UK Retail Sector
Director about fifty to sixty percent of like-for-like food retail growth in one of their
markets comes from innovation rather than ‘business as usual’. This drives companies to
change their strategies, structures and propositions. As the CEO of a leading discounter
pointed out,
“Innovation on a strategic level is about positive change and improvement, I don’t want to innovate and
make things worse.”
Sometime change entails radical innovation or reinvention of the business model which
requires leadership from the very top of the organisation (Hristov and Reynolds, 2005).
“Our department store model was in decline, we had to do something and go back to our routes of being
more radically innovative. We had to redefine ourselves, and that’s what we did”
(CEO).
5.5 The regulatory environment was included in 18% of responses. However considering
that the driver it becomes apparent it has a wide ranging area of impact associated with all
other drives. A wide-ranging regulatory environment (addressing relates to competition
and consumer protection legislation, planning, transportation and the environment) is
seen as important in shaping the direction of many retail innovations. In their pursuit for
growth retailers constantly see the need to adapt their strategies to the environments in
which they operate. In the spatial planning regime has given rise to new types of
shopping outlets at new locations (see Vignettes 5.1 – IKEA, 5.2 – responses to
regulation and 5.3 – Currys customer recycling proposition).
We grow organically through buying land and building the stores ourselves. This however is not always
possible. In some markets such as the UK, there are hardly any locations left, and there we combine
organic growth with possible acquisitions.
(Executive Chairman)
“In many service industries de- and re-regulation can trigger the scope for innovation. In retailing the
liberalisation of opening hours of shops in combination with changes in the spatial planning regime has
given rise to new types of shopping outlets at new locations”
(van Ark, Broersma and den Hertog, 2003).
5.6 Technology: (18% of respondents). The role of technology is seen increasingly as
supportive to the customer facing functions in retail organisations. Without ignoring the
technological dimension, interviewees appear, to reinforce the generally nontechnological
focus of retail innovation. Indeed, some commentators point toward lack of
enthusiasm among some retailers to innovate in the ICT area. There are however many
notable examples of retailers who behave as early adopters or generators of retail
technologies (Hristov and Reynolds, 2005). (See Vignettes 5.4 – Marks & Spencer and 5.5
– Tesco in a Box)
“Retailing is not like some aspects of manufacturing which is primarily about technological lead. In
retailing these [factors] are going to be further down the interest list, retailers think in terms of ‘how can
we better understand our customers, listen to customers, deliver what they need in the right format and so
on’… ‘oh, and by the way, how can we usefully deploy technology in order to achieve that?’”
(Strategy Director).
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