Innovation can be described as a new idea or a method which is often viewed as a solution to the different problems which are present or as a solution to the new requirements that exist in the given market (Vogel and Güttel 2013). The innovation is performed in order to bring about effective products, services, processes, technologies and different business models which can provide satisfaction to the different people and society at large. Innovation tends to make a meaningful impact on the society and necessarily does not involve invention. An innovation may simply involve brining about an efficient process in order to make the product cheaper to produce and more valuable to the different markets. Innovation can being about different ideas together so that they may have a positive impact on the society at large and brings together different ideas. These ideas lead to catering of the consumer demand.
The business environment is very competitive and thus due to this reason any business enterprise needs to be very innovative in order to ensure that they remain in the business environment and are able to compete with the different competitors present in the business.
A crucial aspect of innovation is creativity and the different businesses need to utilize creativity and become more innovative. The primary advances in technology are a major point of innovation. The innovative techniques and methodologies include techniques like Artificial Intelligence, Machine Learning and Robotics (Wheelen et al. 2017).Various innovative ideas like the Internet of Things have an impact on the job roles of the different people.
Innovation is commonly associated with technology and that has a huge role to play in innovation. The businesses need to remain innovative to attract audiences and guide the organization strategically.
Creativity is strategy which is largely linked to innovation and tends to form an important part of the creativity is diversity formula. Innovation brings together different kinds of people together who then contribute well towards the organization in order to ensure that different ideas and solutions can come up from different people and new ideas will be fostered (Eden and Ackermann 2013). This also leads to the fact that innovation is fostered in order to ensure that humans are not out of business and the organization remains stable enough to match up against the growing business.
Any organization who looks out to bring about innovation into the organization needs to bring about creativity and this might lead to several instances of failures but then they need to learn from their mistake so that they are able to perform better and serve the customer segment well. Secondly the different organizations need to understand how to gain competitive edge in order to succeed. For this they will be required to lead for the front and paint the vision of the organization in front of the customers. Lastly, feedback needs to be taken from the different customers and users alike in order to ensure innovation is rewarded so that it can contribute to the future of the organization.
The primary aim of the given report is to ensure that the innovation aspects of the retail industry in the United Kingdom is assessed carefully and that the companies chosen for this purpose are the Tesco Plc Supermarkets and the Asda (Bettis et al. 2014). The industry analysis will be conducted along with the innovation initiatives of the organizations and lastly the future direction will be provided.
The chosen sector for analysis in the United Kingdom is taken to be the retail; industry. The retail industry is one of the growing industries and there are several players who are present in the given sector and this leads to a high extend of competition among the different members. In order to analyze the given industry, the given tools of Pestle and Michael Porters Five forces have been discussed so that the dynamics of the industry can be understood well (Kalkan and Bozkurt 2013).
A PESTEL analysis of the retail industry
There are several new forces and trends in the retail landscape and these dynamics have a huge impact on the operations. The competitive [pressure has been increasing considerably and the number of players have been increasing considerably. New trends like cognitive intelligence and the artificial intelligence have had a huge impact on the working of the firm. The PESTEL has been given as follows:
Political
The political factors comprise of various governmental policies and regulations which have an impact on the revenue and profitability of the company (Johnson 2016). The stability of the government and the different parties also impacts the supply chain management and the sales. The change in the Brexit scenario and the arrival of the new prime minister has had a several impact on the working.
Economic
The economic factors that tend to have an impact on the working of the company comprise of the different inflation rates, purchasing power, and interest rate. The retail industry has maintained impressive sales even during the difficult times of recession and due to this, there have been impressive growth of the given industry.
Social- the social trends like the demand of the customers, the different demographic trends and other such impacts (Lasserre 2017). The demands made by the new generations has to be med by the organization.
Technological
The new innovative processes and technological aspects tend to impact the company in the sense that it tends to have on the different impacts of the operations of the firm. Technologies like the Artificial intelligence and the virtual reality have greatly had an impact on the organization (Bettis et al., 2014).
Environmental
The retail industry has also been impacted by different sustainability concerns. These concerns have been packaging, waste reduction, renewable energy and other aspects. Large brands like Amazon and other companies have already tries to reduce the carbon impact on the organization.
Legal
The legal factors having an impact on the working of the different companies in the retail sector, these factors include labor laws, food laws and others (Tesco.com. 2018).
In order to understand the positioning of the industry, the given five forces analysis has been performed. The grocery retail in the UK has been doing well however there is an increase in demand as well as an increase in the competition among the different members of the organization. The Michael Porters five forces model was developed in order to analyze the different industries and their performance.
Bargaining power of suppliers very strong and the different suppliers have enough power in order to ensure that they can regulate the industry (Bryce 2017). The supplier power can be identified by the suppliers who tend to determine the retailers for a good price.
Bargaining power of buyers
The bargaining power of the buyers is fairly high. This is because the different buyers tend to exercise this power on the different retailers as there are various choices available for the different customers. Each retailer is selling more or less the same products at competitive prices which leaves these retailers in exposure.
Threat of new entrants
The threat of new entrants is fairly low as there exists an environment whereby the competition is very tough and the new companies will not be able to prosper well.
Threat of substitutes
The threat of substitutes is quite high as each different retailer in the industry is offering products which can be easily available in other markets and thus, differentiation needs to be ensured (Wood, Wrigley and Coe 2016).
The threat of competition in the industry is very high and the different competitors often engage in price wars and fierce advertisements in order to ensure that they can stay in the industry for a long time (Barney 2014).
About organization 1- Tesco
Tesco PLC is a grocery retailer and the company provides retail banking and insurance services as well. The company has operations in the United Kingdom, Ireland and Poland including the Asian country of Malaysia and Thailand. The store has various physical stores and supports online shipping as well. The headquarters of the company are located in United Kingdom.
The company has been performing considerably well and has received the consolidated earnings of £57,491 million. The company is a fairly innovative company and is a market leader in the given domain of business.
About the organization 2- ASDA
The ASDA stores Ltd. Which trades as ASDA is a UK retailer with its headquarters in Yorkshire. The company was found in 1965 and the since then it became a subsidiary of the online retail giant Walmart and its counterpart in the United Kingdom (Asda.com. 2018). The company is the second largest company present in the UK after Tesco and ahead of Sainsbury’s after the recent performance evaluations.
The company is a market leader for a reason and has conducted various innovative practices throughout. The innovations are held in order to avoid staff mistakes and expansion. The company has updated its internal database to ensure enforcement. In order to fill up empty spaces, the company has engaged in computer technology whereby the customers can assist themselves. The information system has been renovated as well. (Alkhafaji and Nelson 2013)After analyzing the demand in the market, the company came up with a technology involving Online shopping in order to gain an upper hand in the e-retail segment as well. This was a big step of innovation from the physical store aspect to the online store aspect and has brought about a huge revenue source for the firm.
In order to ensure that it is able to combat with the various forces and is successfully able to create faster solutions for the different customers, the company came up with a 360 degree laser checkout facility to create new experiences for the customer. In this system, a new check out system called the Rapid Scan the different products and heir barcodes can be scanned from every angle when they are moving around the belt and thus, checkout has become minutes faster for very customer. The split conveyer belt also allows the customers to shop simultaneously.
Challenges Faced by Tesco
There are different challenges faced by Tesco that is required to be overcome by them in an effective manner. The main challenge faced by Tesco is relating to implementation of the online shopping application and practice in their organization. Firstly, it was noticed that the employees and the customers of the respective organization were not comfortable after the adoption of such innovation previously as they were not being able to adjust with the online shopping approach as the customers preferred the physical appearance is essential in shopping and they were not able to affluent and they were not internet savvy as well. On the other hand, the company employees felt that they won’t be able to incorporate such amendments as they are not such technologically savvy (Banu, Dumitrescu and Purcarea 2014).
However, presently the employees and the customers are happy with such online application services of Tesco as they are being to order the required products within a span of time. On the other hand, the employees are being able to complete the billing of the products along with delivering the services to the target customers within short span of time as well.
ASDA
The ASDA organization is a counterpart of the Walmart organization and thus in order to maintain the reputation of the organization, the company needs to ensure that it engages in effective sales and other procedures so as to ensure maximum customer satisfaction. The company engages in effective customer survey and employee feedback techniques with the help of which it figured out that the customers were facing problems when they were at the checkout counters as these counters made it difficult for the customers to engage in a faster process of checkout during peak hours and due to this frustration various companies preferred not to shop from the company. Hence, for this purpose, the 360 degree checkout system was approached and adopted (Abushova, Burova and Suloeva 2016). The approach has gone a long way in helping the organization to gain a competitive edge and serve each customer faster by 3 minutes. This goes a long way in helping the firm to climb the ladder of success.
Tesco
The distinct competitive advantage that has been gained by Tesco in the present years is that of their brand image. Tesco tries to achieve along with maintain level of the entire choice of the different customers due to the leading position in the market along with creating personalized experiences to the different customers in the market.
Asda
The primary competitive advantage of ASDA is that it has aimed to ensure that it provides the different customers a personality service which ensures that the products are of premium quality and priced moderately along with the staff being extremely helpful.
The familiar Linear Innovation Model is one of the appropriate models that can be used by Tesco in order to implement the innovative technology by following the different steps:
Basic research → Applied research → Development → (Production and) Diffusion
There are different characteristics of the respective innovation model that includes simplicity, descriptive, predictive along with timely assessments of the different tasks that has enabled them with different opportunities in a timeframe to analyze the different kind of processes that will lead them towards the success of entire organization effectively as well. The entire timeliness element of the respective innovation model will assist in maintaining the competitive advantage and solve in solving the issues effectively (Hughes, Peltz and Conway 2015).
This respective innovation model will help Tesco in implementing the Virtual Reality Concept in their store as to attract more customers and gain the competitive advantage in the entire market as well. With the implementation of virtual reality, this will be essential in nature to provide the customers with 360-degree view of the entire product along with making them aware of the product within few seconds (Pashaeypoor et al. 2016). Furthermore, with the basic research of the same, it can be analyzed that proper ascertainment is required to be made in accordance to make the research applied and provide the desired products to the different customers as well.
Furthermore, the development of the virtual reality technology has to be done in such a manner that this will help Tesco in analysis of the data along with forecasting the different trends to gain the edge over the other competitors as this has been noticed that there are different competitors who have started using this technology and they have gained huge success in the competitive market as well (Howell, Conway and Rajkumar 2015). Furthermore, Tesco has to train their employees such that they will gain knowledge on the different aspects of the virtual reality application and they can use the same effectively in the future to gain the advantage effectively (Sugarhood et al. 2014).
The virtual reality will assist Tesco higher officials along with the employees to gain the knowledge on using the technology effectively and this can provide the customers with a complete view of the product effectually as well (Kwon and Jang 2017). Additionally, Tesco can use the application in place of the online application such that this will assist them in understanding the preferences of the customers in the market and this can help them in attracting more customers who are now the customers of the competitors in the entire market (Villarreal and Calvo 2015). The virtual reality application in connection with the online mobile application will provide conceptual framework along with promoting innovation thought that will be easier for them to aid faster identification of the new sources of innovation as well.
Lastly, this will increase the return on innovation investment and sustain the entire competitive advantage along with anticipating the needed innovation. This will reduce the likelihood of the competitive disruption in the entire innovation process undertaken by Tesco.
Conclusion
From the entire report, therefore it can be concluded that the report has conducted detailed analysis on the innovation theory along with new development of the service and creativity in Tesco and Asda. Proper external and competitor analysis has been conducted in the report that has analyzed the different kind of political, economic along with other factors that are responsible for the innovation at the organizations.
Furthermore, the nature of the innovation has been discussed in the organizations that included the online presence along with 360-degree checkout innovation with implementation of the innovation models. The different kind of challenges has been described as this helped in analyzing the competitive advantage that is gained by Tesco and Asda. The challenges have been solved with proper implementation of different strategies to make the employees and customers understand about the importance of the strategies effectually.
Lastly, the future innovations have been described of Tesco that has analyzed that the virtual reality check can be applied by them as to make the system more competitive in nature and this can help the company in solving the different needs of the customers and employees effectually as well. With the usage of the familiar Linear Innovation Model the timelines and predictive nature has been ascertained and this has solved the different issues effectively as well that created different kind of innovative techniques to solve the issues and gain competitive advantage in the entire economy and in the entire competitive market as well.
References
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