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 />
Figure 6.2. Nature of protection of <strong>in</strong>novation employed: retail trade<br />
Formal Strategic<br />
Lead-time advantage on<br />
competitors<br />
Complexity of design<br />
Secrecy<br />
Copyright<br />
Confidentiality agreements<br />
Patents<br />
Trademarks<br />
Registration of design<br />
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%<br />
Not used Low Medium High<br />
Source: Community <strong>Innovation</strong> Survey 2004 (CIS4), 2005.<br />
6.7 Relatively low levels of <strong>in</strong>novation protection are employed by retail firms and <strong>the</strong>re is a<br />
tendency to use <strong>in</strong>formal (such as secrecy) over formal methods (such as patents). In part,<br />
this relates to <strong>the</strong> nature and <strong>in</strong>cidence of retail <strong>in</strong>novation – often not patentable or<br />
capable of be<strong>in</strong>g trademarked, and where designs may be much less complex than <strong>in</strong>, say,<br />
manufactur<strong>in</strong>g. <strong>Retail</strong>ers appear to rely more on secrecy and lead times <strong>in</strong> protect<strong>in</strong>g <strong>the</strong><br />
new th<strong>in</strong>gs <strong>the</strong>y do from competitors. But <strong>the</strong> majority <strong>in</strong> every case who do not employ<br />
ei<strong>the</strong>r formal or <strong>in</strong>formal protection mechanisms re<strong>in</strong>forces <strong>the</strong> visibility and – <strong>in</strong> many<br />
cases – transparency of retail <strong>in</strong>novations, particularly customer-fac<strong>in</strong>g ones.<br />
6.8 When compared to <strong>the</strong> protection employed by, say, eng<strong>in</strong>eer<strong>in</strong>g firms, (Figure 6.3) <strong>the</strong><br />
irrelevance of all k<strong>in</strong>ds of protection for retail<strong>in</strong>g becomes clear. The nature of often<br />
complex proprietary eng<strong>in</strong>eer<strong>in</strong>g projects leads to very low levels of appropriability and<br />
<strong>the</strong> likely greater success of <strong>in</strong>formal mechanisms, whilst <strong>the</strong> tangible nature of much<br />
<strong>in</strong>novation <strong>in</strong> eng<strong>in</strong>eer<strong>in</strong>g lends itself also to formal protection mechanisms. Eng<strong>in</strong>eer<strong>in</strong>g<br />
projects are habitually front-loaded <strong>in</strong> terms of cost and often require more complex<br />
f<strong>in</strong>anc<strong>in</strong>g; retail<strong>in</strong>g <strong>in</strong>novation is more <strong>in</strong>cremental, cheaper, and can be turned off<br />
relatively quickly if it fails or becomes more expensive than orig<strong>in</strong>ally budgeted. <strong>Retail</strong><br />
projects are more often back-loaded from <strong>the</strong> po<strong>in</strong>t of view of f<strong>in</strong>ance, as we have<br />
suggested. <strong>Retail</strong>ers appear to be more confident of <strong>the</strong>ir markets and relevant technology<br />
better, but <strong>the</strong> relative difference <strong>in</strong> relation to technology not as high. F<strong>in</strong>ally, <strong>the</strong> two<br />
sectors are closer on regulatory barriers, but eng<strong>in</strong>eer<strong>in</strong>g appears more affected by EU<br />
regulation than <strong>UK</strong>. We might speculate that this reflects actual or perceived lack of<br />
services legislation at EU level.<br />
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