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 />
<strong>in</strong> terms of direction, resources availability and timel<strong>in</strong>es. Evidence of that is <strong>the</strong> existence<br />
of ‘organizational rout<strong>in</strong>es’ such as annual plann<strong>in</strong>g cycles, regular board meet<strong>in</strong>gs with<br />
<strong>in</strong>novation on <strong>the</strong> agenda, strategic and range reviews <strong>in</strong> <strong>the</strong> course of which <strong>in</strong>novation<br />
is discussed and planned.<br />
“<strong>Innovation</strong> is not always about ideas, many people have ideas, it is not even about skills - many have<br />
<strong>the</strong>se as well - it is about <strong>the</strong> will of implement<strong>in</strong>g new ides, <strong>the</strong> dogged determ<strong>in</strong>ation to br<strong>in</strong>g <strong>the</strong>m <strong>the</strong><br />
market through a well thought-out strategy”<br />
(Market<strong>in</strong>g Director).<br />
5.9 Top management vision and leadership: 32% of respondents highlighted <strong>the</strong> role of<br />
<strong>the</strong> top management team <strong>in</strong> <strong>in</strong>novation. Practitioners see <strong>the</strong> role of retail directors as<br />
<strong>the</strong> ‘lead<strong>in</strong>g entrepreneurs’ of <strong>the</strong> bus<strong>in</strong>ess who provide strategic and operational support<br />
for <strong>in</strong>novation, sponsor<strong>in</strong>g as well as produc<strong>in</strong>g new ideas (Hristov and Reynolds, 2005).<br />
Beyond <strong>the</strong>ir strategic role, senior executives see <strong>the</strong> need to get <strong>in</strong>volved <strong>in</strong> front-end<br />
decisions, which keeps <strong>the</strong>m <strong>in</strong> touch with <strong>the</strong> operational side of <strong>the</strong> bus<strong>in</strong>ess and<br />
ensures a feedback loop for bottom-up creative ideas.<br />
“As a manager I deal with both strategic and operational issues. At present we have more than 750<br />
stores across five markets … I have approved every s<strong>in</strong>gle location and have personally opened most of our<br />
major stores. I travel a lot between <strong>the</strong> markets, meet<strong>in</strong>g managers and people important to our bus<strong>in</strong>ess.<br />
With our store managers I discuss <strong>the</strong> local ranges, what sells and what doesn’t and how we can improve<br />
our position. There is always room for improvement”<br />
(Executive Chairman).<br />
Senior management also see <strong>the</strong>ir role <strong>in</strong> achiev<strong>in</strong>g <strong>the</strong> right balance between <strong>the</strong><br />
‘bus<strong>in</strong>ess as usual’ which generates revenues ‘here and now’ and <strong>the</strong> need for new<br />
revenue streams which will deliver future growth. Many of <strong>the</strong>m acknowledge <strong>the</strong><br />
potential tensions between <strong>the</strong>se two seem<strong>in</strong>gly disparate bus<strong>in</strong>ess areas.<br />
“<strong>Innovation</strong> is a balanc<strong>in</strong>g act. I feel conscious that even if an organisation is do<strong>in</strong>g well I still have to<br />
provoke its <strong>in</strong>novation <strong>in</strong>st<strong>in</strong>cts”<br />
(CEO).<br />
5.10 Operational efficiency: 21% of practitioners emphasised that much <strong>in</strong>novation <strong>in</strong><br />
retail<strong>in</strong>g is driven by <strong>the</strong> need to improve operational efficiency. There are fundamentally<br />
two ways of <strong>in</strong>creas<strong>in</strong>g output: (1) to <strong>in</strong>crease <strong>the</strong> number of <strong>in</strong>puts <strong>in</strong>to <strong>the</strong> value<br />
creation process, or (2) to f<strong>in</strong>d new ways of <strong>in</strong>creas<strong>in</strong>g <strong>the</strong> output from <strong>the</strong> same number<br />
of <strong>in</strong>puts. The second one gives rise to cost driven <strong>in</strong>novation. Evaluation of key<br />
performance <strong>in</strong>dicators such as space productivity, asset productivity, f<strong>in</strong>ancial<br />
productivity or employee productivity provides scope for <strong>in</strong>novative solutions to reduce<br />
operat<strong>in</strong>g costs. Therefore considerable <strong>in</strong>novation occurs <strong>in</strong> <strong>the</strong> ‘support areas’ of a retail<br />
bus<strong>in</strong>ess – its systems, logistics or store operations.<br />
“The efficiency side, yes, seek<strong>in</strong>g to do more for less, if you like, to drive profit growth. I guess that’s<br />
because we feel that that’s more under our control”<br />
(Market<strong>in</strong>g Director).<br />
“…we've had to really k<strong>in</strong>d of ref<strong>in</strong>e and ref<strong>in</strong>e our processes and our systems to make ourselves a much<br />
more productive beast”<br />
(Bus<strong>in</strong>ess Development Director).<br />
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