Innovation in the UK Retail Sector - Nesta

Innovation in the UK Retail Sector
in terms of direction, resources availability and timelines. Evidence of that is the existence
of ‘organizational routines’ such as annual planning cycles, regular board meetings with
innovation on the agenda, strategic and range reviews in the course of which innovation
is discussed and planned.
“Innovation is not always about ideas, many people have ideas, it is not even about skills - many have
these as well - it is about the will of implementing new ides, the dogged determination to bring them the
market through a well thought-out strategy”
(Marketing Director).
5.9 Top management vision and leadership: 32% of respondents highlighted the role of
the top management team in innovation. Practitioners see the role of retail directors as
the ‘leading entrepreneurs’ of the business who provide strategic and operational support
for innovation, sponsoring as well as producing new ideas (Hristov and Reynolds, 2005).
Beyond their strategic role, senior executives see the need to get involved in front-end
decisions, which keeps them in touch with the operational side of the business and
ensures a feedback loop for bottom-up creative ideas.
“As a manager I deal with both strategic and operational issues. At present we have more than 750
stores across five markets … I have approved every single location and have personally opened most of our
major stores. I travel a lot between the markets, meeting managers and people important to our business.
With our store managers I discuss the local ranges, what sells and what doesn’t and how we can improve
our position. There is always room for improvement”
(Executive Chairman).
Senior management also see their role in achieving the right balance between the
‘business as usual’ which generates revenues ‘here and now’ and the need for new
revenue streams which will deliver future growth. Many of them acknowledge the
potential tensions between these two seemingly disparate business areas.
“Innovation is a balancing act. I feel conscious that even if an organisation is doing well I still have to
provoke its innovation instincts”
(CEO).
5.10 Operational efficiency: 21% of practitioners emphasised that much innovation in
retailing is driven by the need to improve operational efficiency. There are fundamentally
two ways of increasing output: (1) to increase the number of inputs into the value
creation process, or (2) to find new ways of increasing the output from the same number
of inputs. The second one gives rise to cost driven innovation. Evaluation of key
performance indicators such as space productivity, asset productivity, financial
productivity or employee productivity provides scope for innovative solutions to reduce
operating costs. Therefore considerable innovation occurs in the ‘support areas’ of a retail
business – its systems, logistics or store operations.
“The efficiency side, yes, seeking to do more for less, if you like, to drive profit growth. I guess that’s
because we feel that that’s more under our control”
(Marketing Director).
“…we've had to really kind of refine and refine our processes and our systems to make ourselves a much
more productive beast”
(Business Development Director).
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