Innovation in the UK Retail Sector - Nesta

6. What are the barriers to retail innovation?
Innovation in the UK Retail Sector
6.1 Conventional analyses of barriers to innovation within the Community Innovation Survey
and elsewhere tend break down the likely obstacles into four broad sets of factors: costs
and knowledge (linked to difficulties internal to the firm) and market-related and other,
largely regulatory, factors (linked to difficulties external to the firm). The CIS responses
are based on a specific question asking ‘what factors constrained your innovation or
influenced you not to innovate?’ In some senses, the barriers represent the obverse of the
drivers discussed in the previous section, and will not bear duplication, but this section
draws attention to a small number of distinctive features of barriers to retail innovation.
Figure 6.1. Retail Trade Barriers to Innovation
Other
factors
Cost factors Knowledge factors Market factors
Need to meet EU regulations
Need to meet UK Government regulations
Uncertain demand for innovative goods or services
Market dominated by established enterprises
Lack of information on markets
Lack of information on technology
Lack of qualified personnel
Avaibility of finance
Cost of finance
Direct innovation costs too high
Excessive perceived economic risks
Source: Community Innovation Survey 2004 (CIS4), 2005.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Not experienced Low Medium High
6.2 At the aggregate level, (shown in Figure 6.1), we might conclude that the majority of
retailers do not perceive there to be any barriers to innovation within their firms.
Amongst those that do, the biggest barriers are reportedly in relation to costs, in
particular the cost of finance and the perceived economic risks of innovation. These
results were reinforced by comments we received in consulting over this research, as
illustrated in the quotations below:
“There is difficulty in encouraging risk and innovation in challenging business conditions.”
“Financial uncertainty. Innovation never occurs when people are worried about job security.”
“People resources and business pressures to achieve financial targets stifle innovation.”
6.3 The smallest range of barriers is reportedly in relation to level of knowledge. The majority
of retailers would seem to know their markets well and to have little concern that lack of
knowledge about technological possibilities works to prevent innovation. The greatest
concerns in this area are over the availability of skilled personnel:
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