‘The UK is famous for online grocery but where else could retail find talent to export?’

In a week when Dyson announced 1,000 job losses, the future of UK innovation has been dealt a disappointing blow. However, with signs of the economy on the mend, there is potentially a wealth of opportunity waiting for those who dare to seize it.

One retailer among those benefiting from innovation and the impact of a more positive economy is Ocado. Its upbeat first half results, driven by its strategic pillars of choice, service and value, enabled Ocado Retail to grow in double digits – its share of the UK online grocery market is up to 12.3%. It has no doubt also benefited from an intensified focus by Marks & Spencer on food range innovation, bringing newness to inspire customers.

Brilliant exports

Ocado Technology Solutions achieved a revenue jump of 21.8% during the same period, demonstrating the value of the UK’s proven and valuable skills in online grocery. 

As a first mover online, the UK has exported skills and talent overseas to drive growth at retailers including Walmart. With its growing international partnerships, Ocado is maximising the opportunity to share its expertise internationally across automation and supply chains, and increasingly across merchandising and promotional strategies and online shopper acquisition and retention.

The UK is famous for online grocery, but where else could we find talent to export? To enhance its global presence, the UK must decide what it wants to be famous for. With the right investment there are several areas that could prove key to unlocking new potential. 

We should certainly support and nurture the brilliant exports that UK retail already has overseas. A number of retailers including Kingfisher, JD Sports, Primark and WHSmith through its travel division have substantial and growing international operations. Gymshark, which has just opened its second UK store at Westfield, is taking the US by storm and expanding across Europe with its community-focused ‘We Do Gym’ brand.

Circular brands

Where else might the UK be able to excel and gain first-mover status? There is much innovation among UK start-ups and newer brands, as well as opportunities to become global experts in the growth areas of retail technology, such as the practical use of AI. 

The challenge will be deciding where to play and ensuring that the right support and investment is available to support brands on their journeys. 

Following in the footsteps of Gymshark, UK activewear brand Tala, which has grown significantly since it was founded five years ago, raised £5m in investor funding this week. Tala has met its key performance indicators and continues to prioritise innovation for its customers. Yet, founder Grace Beverly has pointed out the challenges, including the fact that just 2% of VC funding in the UK is awarded to female-founded businesses. 

Also this week, sustainable fashion brand Pangaia chose London to open its first flagship store, exemplifying circular, environmental innovation with its assortment of clothing and accessories that have been carefully crafted from innovative, sustainable materials, such as grape leather and jersey crafted from organic cotton mixed with Seacell lyocell made from flax, eucalyptus and seaweed powder.

Sustainability is an area where the UK is beginning to move ahead, and brands that are circular in production and design stand to benefit from growing consumer awareness and demand.

Aspirational shoppers

With the cost-of-living crisis dominating for so long, there has been a strong focus on value, price and loyalty initiatives. But now is the time to think beyond hygiene factors to what will make our brands stand out and sparkle.

With an improving economy, we can expect value for money and sustainability to sit alongside consideration factors, such as differentiation and innovation, in the decision-making of a more discerning customer base. 

With aspirational shopping on the rise, direct-to-consumer (D2C) models and social media will play an even more critical role in influencing spend and determining which products are most in demand. Now is the time to think and plan ahead to ensure that innovation and differentiation sit at the heart of customer-centric growth strategies.

Tesco is among the retailers already thinking ahead and looking to benefit as the economy improves. Chief executive Ken Murphy revealed that the grocer is targeting an extra £1bn in sales for its Finest own-brand range to meet growing demand for premium food and drink. In an interview with The Financial Times, Murphy declined to give a timeline to meet the target, but recognised that the opportunity exists as shoppers increasingly trade up and become more adventurous with their cooking.

With a new shift in consumer needs on the near horizon, we can expect innovation to play a key part. 

After all, if the focus of UK retail remained solely on a race to the bottom, UK retailers might as well give up now and surrender to the likes of Shein and Temu. Fortunately, the signs are that as retailers and consumers we will not let this happen.