Innovation in the UK Retail Sector - Nesta

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Innovation in the UK Retail Sector companies – as some firms have done – simply transfers the problem (and in some cases the innovation potential) to those firms. 8.34 It is difficult if not impossible to train to deliver an innovation culture, but it is possible to train for management of the innovation process, or for the management of organizational change. Project management skills (required to implement innovative ideas within the sector) also appear sought after. In relation to strategic leadership skills, the Leitch Review suggested that the “highest level of skills drive and facilitate innovation, leadership and management” and urged Government to provide employers with clearer incentives and mechanisms to engage and invest in Higher Education, through lifelong learning. Reinforcing this, the Lambert Review of the UK’s HE system stressed the need to ensure that courses put on by Universities in particular areas were relevant to the needs of business. 8.35 Finally, for retail SMEs, attitudes towards innovation and preferences for exposure to innovation-related skills development may be rather different from those of larger firms. For example, the general reluctance to engage in formal ‘training’ has been noted by a number of commentators and forms of peer-to-peer mentoring appear to offer better results, but good practice is isolated 30 . Different kinds of innovation may also be important to smaller firms to allow them to think differently about their businesses – for example, new approaches to product buying and presentation can provide for a distinctive form of innovation. 8.36 Support for innovation by retail SMEs has tended to be provided at a regional or local level. The RDAs have conventionally been seen as the home for such involvement and investment, alongside work by Business Link and Job Centres Plus. Skillsmart Retail has also identified the importance of local context in assisting retail SMEs. The council’s ‘location model’, developed by its in-house research team, has proved a useful vehicle for focusing awareness relation to skills and personal development at the local level when it has been conducted. For example, following a mystery shopper exercise and local market review in Colchester, 35 independent retail businesses attended a discussion of opportunities to improve their performance. A significant proportion of these firms subsequently engaged in training initiatives. Skillsmart Retail’s ‘Location Wise’ and ‘Skill Shops’ initiatives – outlined in its most recent Sector Skills Agreement report – seeks to consolidate the learning from the location model as a mechanism for providing “practical advice and best practice for those wishing to design interventions that are relevant for their locations” (Skillsmart Retail, 2007b). 8.37 The skills council’s proposed Coaches and Mentors 4 Retail scheme seeks to build upon the preference for mentoring amongst SMEs by coaching smaller retailers in “bite-size chunks to match the phasing of the retail year”. This complements its online RetailDetail toolkit, launched in 2005 31 . However, replicating skills support and mentoring activity at the local level nationwide presents a number of resourcing challenges and it would seem sensible for a further degree of integration and collaboration between providers to be encouraged, to improve the clarity and accessibility of support on the ground. Moves in this direction would also be consistent with the principles of BERR’s Business Support Simplification Programme. 30 See for example http://www.dormen.org.uk/main.asp and Kent, T., C. Dennis, and S. Tanton, (2003), ‘An evaluation of mentoring for SME retailers’, International Journal of Retail & Distribution Management, p. 440. 31 http://www.skillsmartretail.com/retaildetail/features.htm Page 72
Recommendation 4: Innovation in the UK Retail Sector Identify and support the complex sets of skills required for retail innovation. Desired outcome: Development of appropriate mechanisms to identify and support in a more integrated way the skills required within retail businesses to stimulate, manage and sustain innovation - within both large and small retail firms. Background: Strategic innovation within retailing requires increasingly complex and varied sets of skills. Retail employers, in common with many other service sectors, are in the market for a number of scarce skill-sets, such as those in relation to project management, ebusiness, logistics, building services engineering and fashion and textile design. SMEs have less complex but nonetheless still challenging skills needs in relation to innovation. Evidence: Expressed technical skills shortages, gaps and mismatches reported in the sector. Shortage of skills in innovation and project management for SMEs. Analysis: Five specific actions flow from this desired outcome: Conclusion/Next Steps: 4.1 Provision of innovation awareness training amongst employees (promoting a culture of retail innovation) 4.2 Provision of ‘management of innovation’ skills training (leadership and project management of innovation often lacking) 4.3 Provision of cross-sector technical skills training capability (sharing employer needs across sector boundaries); and for SMEs 4.4 Development of innovative approaches to areas such as product buying and presentation for SMEs (SME’s lack skills to source and market new products) 4.5 Provision of an integrated support structure for retail SME skills and mentoring at the local level which further reduces present duplication. The risks of inaction in this area include wasteful duplication of investment and business support activity, and resultant confusion amongst retail business, especially SMEs at the local level. The absence of required skills may work to stifle innovation. Identify the lead co-ordinating agency on retail skills at the local level. Take steps to better integrate the work of the existing relevant agencies to meet both large and small retail business requirements in relation to retail innovation skills. Page 73
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