Role of Innovation in Retail Supermarket in the United Kingdom : A Study of Four Big Retailers

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University of the West of England

Frenchay Campus

Submitted for the Qualification of MSc in

International Management

The dissertation title:

Role of Innovation in Retail Supermarket in the

United Kingdom: A Study of Four Big Retailers

Name: Seaktheng CHHEAN

ID: 14007310

Supervised by: Vikas Kumar

Date: 06th January 2015

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Declaration

This dissertation is the result of my own work. Material from the published or unpublished works

of others, which are cited in the dissertation, is credited to the authors in the text. The dissertation

is approximately 17,500 words in length

Date: 06th January 2014 Signature

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Table of contents

Declaration

Acknowledgement

Index of Figures and Tables

Executive Summary

Chapter 1: Introduction

Chapter 2: Literature Review

2.1 What is Innovation?

2.2 Types of Innovations

2.2.1 Technological Innovation

2.2.2 Non-Technological Innovation

2.2.3 The Relationship between Technological and Non-technological

Innovation

2.3 Challenges of Adopting Innovation

2.4 Example of Innovation in Various Industries

2.4.1 Financial Service Industry

2.4.2 Telecommunication Industry

2.4.3 Manufacturing Industry

2.4.3 Retail Industry

Chapter 3: Methodology

3.1 Research Approach

3.2 Research Instrument

3.3 Data Collection

3.4 Population

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3.5 Data Analysis

Chapter 4: Analysis of Innovation in Retail Supermarkets in the United Kingdom

3.1 Tesco

3.2 Sainsbury

3.3 Asda

3.4 Morrisons

Chapter 5: Analysis and Discussion

Chapter 6: Conclusion

References

Appendices

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Acknowledgement

I would like to pay my greatest respect and gratitude to some people who have involved in this

dissertation.

First, it is the greatest pleasure for me to show my sincere gratitude to my supervisor, Mr. Vikas

Kumar, for his encouragement and suggestions which helped me throughout this project.

Second, I would like to pay my deepest respect to my family who always support me in any

circumstances.

Fourth, I heartily wish to say thanks respondents for their collaboration.

Last but not least, I would like to pay my gratitude to my friends who gave me support during the

hard time of the research.

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Index of Figures, Tables, and Graphs

Figure 1: The Various forms of Innovation

Figure 2: Constraints of Open Innovation to SMEs

Figure 3: A classification of retail business model innovation

Figure 4: Kantan’s Estimated Chart

Figure 5: Tesco SWOT analysis

Figure 6: Overview of Tesco, Sainsbury, Asda and Morrisons Significant Innovations

Table 1: Cross tabulation of Gender and Age of Respondents

Graph 1: Age of Respondents

Graph 2: Company that has more Innovative Technologies

Graph 3: Supermarkets that Customers Frequently shop

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Executive Summary

This dissertation aims to study the role of innovation in the retail supermarket in the United

Kingdom. The aims and objective are, first, to gain an understanding about innovation in

service sector. Second, it is intended to examine impacts of innovation in the UK’s retail

supermarkets. Finally, it is targeted to investigate how innovation in the UK retail

influences customers’ buying behavior. The area of research focuses on four big retailers

in the United Kingdom, who are Tesco, Asda, Sainsbury and Morrisons.

The first objective is achieved by using previous literatures and studies as it is explained

in literature review chapter. The second objective is accomplished by using a secondary

source which includes companies’ annual reports, websites and online news. Lastly, the

final objective is completed by using structured online questionnaire which targets 100

respondents.

The result of the study reveal that innovations in big industries like financial,

telecommunication, manufacturing and retailing industry are ranged from the adoption of

new technologies to the innovation and implementation of new business models and

strategies in the company. Specifically, in the UK’s retail supermarket, the result shows

that retailers are adopting and investing heavily on both technological and non-

technological innovation in order for them to be competitive in the market. Last but not

least, with the survey data analysis, it can be examined that innovations that are currently

adopted by retailers in the United Kingdom have an influential impact on customers’

buying decision in term of store selection.

Thus, this dissertation contributes to the innovation literature by focusing on the impact

of innovation in the UK retail supermarket on customers’ buying behavior in the United

Kingdom. Furthermore, the study also reveals that further studies should look at the

impact of innovation on retailer’s financial performance or should improve the topic by

using mix-methodology in respond to the limitation of this dissertation.

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Chapter 1 Introduction

Retail Sector in the United Kingdom

The United Kingdom (hereafter the UK) is the combination of four different countries

which consist of extremely competitive and innovative businesses including world class

firms, stable high street anchors, and innovative independents. According to the Office for

National Statistic (ONS) in the UK, the key facts of retail sector and the economy indicate

that retail sector is a vast and pervasive area as; for example, in 2012 UK retail sales were

£310 billion, which was accounted for 5% of the UK Gross Value Added, and the retail

sector paid £17.5 billion of the 4 largest taxes (VAT, Business Rates, National Insurance

and Income Tax) equivalent to 9% of the UK total. Furthermore, it is shown that 9% of

all VAT-registered businesses in the UK were retail enterprises. Retail activities function

in every location of the United Kingdom. Also, they connect suppliers and consumers who

influence the supply and demand. As they are linked to production and consumption,

retailing is extremely beneficial for the economy and other industries like manufacturing

industries, construction, wholesale distribution and the wider logistics (Department for

Business Innovation and Skills, 2013).

According to the Oxford Economics (2012) the retail sector in the United Kingdom is an

excellence paragon as it is consisted of challenging competitions meaning that the UK

consumers get a better deal than in the rest of Europe by paying roughly 5% less. In this

regard, UK retailer are deemed to be much cheaper in every sub-category of goods except

for alcohol and tobacco which are more expensive due to the higher duty rate. More

importantly, notwithstanding the strong cost-push inflation created by the significant

depreciation of sterling, the price of food in the UK is still lower than the European

average (Oxford Economics, 2012).

In terms of labor productivity, from 1995 to 2007, UK retail sector’s labor productivity

increased by over 40% compared to less than 10% in France and Germany. By enlarging

retailers in the UK, it helps increasing the sales and profits proportion from overseas

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customers, both abroad and as tourists to the UK; moreover, it aids the earning export

revenue, and helps supporting the UK’s brand abroad (Oxford Economics, 2012).

Historically, in the 1960s and 1970s, with the arrival of the in-town shopping center, the

old-fashioned model of high streets and local displays began to alter. In the 1980s, the

deregulation of the system to more approaches allowed a development of new forms like

superstores, retail warehouses, regional shopping centers and outlet centers (Burt, Sparks

and Teller, 2010). Later in 1990s, as policy was gradually tightened up the snowballing

effects from retail decentralization on town became more obvious (Burt, Sparks and

Teller, 2010). In this regard, the progression of out of town shopping centers, retail parks

and individual supermarkets had an immense transformational effect on shopping

outlines. In total, the changing outlook of the United Kingdom retail has urged the

country’s retail sector to be extremely competitive and responsive to the alteration of

wants and needs of consumers. Besides, regarding the characteristics of the United

Kingdom retail market, there are numeral of distinctive features of the UK market which

have affected the advancement of the retail sector over the past twenty years (Burt, Sparks

and Teller, 2010).

As the retail sector in the United Kingdom got developed, the face of the UK retailing has

been changed in response to competitive competition and to the changing wants and needs

of consumers. Over the last few years, UK retail has introduced new channels to market

system including e-commerce and m-commerce which have been advocated by persistent

fixed and mobile internet access and broadband (Department for Business Innovation and

Skills, 2013). Within this development, the report of department for business innovation

and skills (2013) in the UK shows that the new channels of market system have paid a

huge contribution toward the increase in home delivery, and reduction in customers going

into the stores. Since the new era of channels have been introduced, many stores across

the UK have perceived that they no longer necessarily needed a physical presence in every

high street in order to attain national attention, and thus some have dropped their bricks

and mortar presence to fewer sites (Department for Business Innovation and Skills, 2013).

Also, other retailers have been modifying means in which they can utilize their existing

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space to permit and empower new services and new layouts; more importantly, some other

retailers have been sharing and forming partnership with others to combine offers for

customers. For some manufacturers and suppliers, the new channels carter them benefits

that allow them to sell directly to customers via the internet (Department for Business

Innovation and Skills, 2013).

With all of those progression in the retail sector, today’s markets are not just down the

road or in the next town, but throughout and across the country, the United Kingdom.

Meanwhile, a Department for business innovation and skills (2013) asserted that standards

of living the UK people has been altering as the working hours are longer than before, and

there have been more people involving or re-entering the labor market working part time

as the innovation of the changing face of UK retail sector took place. Accordingly, it is

noticeable that there has been an increase in consumer demand for better and greater

option of high quality goods and services that can be bought and delivered quickly.

Internationally, when E-commerce takes place, it has been making the cross-border trade

become much easier for retailers to enter the market both internationally and locally.

Positively, this effect has created a challenging global competition for the UK retailers.

Therefore, it can be understood that the changing face of the UK retail sector has

potentially helped facilitating and re-organizing the whole UK retail industry as it has

helped lowered the entry barriers for existing and new businesses in the UK (Department

for Business Innovation & Skills, 2013). Interestingly, it can be implied that the changing

face of the UK retail sector has involved significantly with innovations. In this matter,

innovations are reported to have played a significant in supporting the UK’s retail sector

as well as the 20% (ESRC, 2013) of UK’s economic (Department for Business Innovation

& Skills, 2013).

Specifically, the dissertation attempts to examine the role of innovation in the United

Kingdom’s retail supermarket. The reason for choosing the United Kingdom’s retail

supermarket as a population is that the UK market is one of the most successful markets

in the world and standing in the leading position in the global economy. Moreover, very

few studies have investigated the role of innovation in the UK’s retail supermarket; most

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of the similar studies have been done on effects of innovation types on firm performance

in general.

Particularly, this dissertation’s aims and objectives are:

1- To gain an understanding about innovation in the service sector.

2- To examine impacts of innovation in the UK’s retail supermarkets.

3- To investigate how innovation in the UK retail influences customers’ buying

behavior.

Therefore, in the next section, chapter 2, will present a literature review of the topic, and

followed by the methodology using to collect innovations evidences in chapter 3. In

chapter 4, it will elaborate analysis of innovations in the retail supermarket in the UK

collected by using a secondary source. In chapter 5, it will provide an analysis and

discussion. Finally, Chapter 6 will provide the concluding remark of the dissertation.

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Chapter 2: Literature Review

The purpose of the present chapter is to introduce previous literatures of innovation. Upon

several definitions of innovation, this chapter aims to elaborate different types of

innovations, challenges of adopting innovations and, finally, to give examples of

innovation in various industries. This chapter not only helps to understand the topic, but

also raises awareness of how important topic is.

2.1 What is Innovation?

What is innovation, and how do people know if it is innovative? Originally, the presence

of innovation was pointed out by Kondratieff in Russia, and his discussion on the

innovation was not recognized locally and internationally (Jonathan, 2007). Innovation

has been a pivotal topic of study for a number of important fields, including economics,

business, engineering, science, and sociology (Howells, 2005). According to the Oxford

dictionaries, innovation is the action or process of innovating. Innovating is to make

alterations in something established, especially by presenting new methods, concepts or

products. At the same time, innovation refers to renovating, modifying, or inventing more

operative procedures, goods and means of doing things (An Australian Government

Initiative, 2014).

Speaking of offering something new, in Latin origin of the word, innovation means to

“make something new”, and it can be better comprehended by dividing the concept into

three parts. Firstly, innovation concerns about generating or understanding new idea that

is called invention and creativity. Secondly, it is about realization that concerns about the

development of new ideas into product or service. Finally, the implementation is the stage

in which deals with the implementation of new product and service. (Mentz, 1999)

Interestingly, according to Kuczmarski (1996) innovation is described as a mentality, a

permeant attitude or a way of thinking focused beyond the present into the future vision.

Innovation is explained as a mindset that can be sensed, thought and felt. Also, it allows

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businesses to see beyond the present and create a future vision. Questions are frequently

asked whether innovation is a process, strategy, benchmark, cross-functional team, and

management technique or leadership responsibility. Further it is also described that

innovation is all of the above characteristics and more when it is very well done or defined,

and it is understood that there is no halfway measure of innovation since it is a pervasive

attitude, a feeling, a state of mind, an ongoing commitment to inventiveness (Kuczmarski,

1996).

Besides, to gain a competitive advantage, it is necessary for firms to utilize the innovation

effectively (Goksoy, Vayvay and Ergeneli, 2013). In order to retain real competitive

advantage, the innovation shall be focused on producing a product that is new to the world

or new to the market that caters consumers with numerous of benefits (Kuczmarski, 1996).

Innovation is the main strategic tool to have a competitive advantage in such complex

environments (Gardaker, Ahmed and Graham, 1998).

According to Howells (2005) on defining innovation, it is discussed that despite the fact

that innovation is an interesting topic to study, the terminology has always been poorly

understood and confused with other terms like change, invention, design and creativity.

Therefore, it has compiled a number of keywords from previous definitions to create a

new definition which is deemed to be accurate enough to explain a number of main notions

as applied in any organization. Innovation is the application of concrete tools and

procedures that create alterations, large and small, to products, processes, and services

that result in the overview of something new for the organization that adds value to

consumers and contributes to the awareness of the organization (Howells, 2005).

Furthermore, regardless of a particular type of innovation, there have been several

definitions used to define the term innovation. First of all, according to Johnson (2001),

in figure 1, he illustrated that there are various forms of innovation. First, the innovation

deals with any change in product and service that involves the creation of new product

and services through research and development department. Second, innovation concerns

about any modification in the application of established product or service. Third,

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innovation is associated with any change in markets exploited. Fourth, innovation

involves in any alteration in the way product or service is created and delivered which

concerns with operational and logistical innovation. Finally, innovation is concerned with

the change in business model.

Figure 1: The Various forms of Innovation

(Source: Johnson, 2011)

Likewise, in Jason (2013), he addressed several definitions of innovation. Firstly,

innovation is perceived “ as a process that includes the generation, development, and

implementation of new ideas or behaviors. Further, innovation is conceived as a means

of changing an organization, either as a response to changes in the external environment

or as a preemptive action to influence the environment. Hence innovation is here broadly

defined to encompass a range of types, including new products or services, new process

technologies, new organizational structures or administrative systems, or new plans or

programs pertaining to organizational members.” (Damanpour, 1996, page 11, cited in

Jason, 2013). Secondly, Deiss (2004), page 11, quoted in Jason (2013), asserted that

innovation is “things that change the way we can do what we want to do; [things that]

have added value to our daily lives . . . new, desired, or needed services that add value for

university faculty, students, and other scholars. . . . Innovation is more significantly about

what our target audience can do—about the increased capacity of library users to do what

they want and need to do in the way that most benefits their productivity, pleasure, and

excellence . . . facilitating the work of our primary constituents in ways that are new and

useful to them.”. Thirdly, innovation is described as the multi-stage procedures in which

firms use to renovate notions and concepts into new or established products, services or

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processes in the aim of developing, competing and differentiating themselves successfully

in their market place (Baragheh, Rowley and Sambrook, 2009). Finally, innovation is

discussed as not just about doing things that are new or different, but it is more likely

about meeting the needs and expectations of user or customer (Kaser, 2011).

By all definitions, innovations have an element of originality in them, and they are

different from what existed before. However, not all innovations are the same. Over years,

scholars have, indeed, proposed a number of different of innovation and ways of

classifying innovations. Hence, in the following section, different type of innovations will

be discussed and explained.

2.2 Types of Innovations

First of all, innovation as a term is not only related to products and processes, but is also

linked to marketing and organization. Schumpeter (1934) defined different types of

innovation which are new products, new methods of production, new sources of supply,

the exploitation of new markets, and new ways to organize business (Cited in Gunday,

Ulusoy, Kilic and Alpkan, 2011).

Essentially, in Tidd and Bessant’s book (2013), they describe that there are four

dimensions of innovation which are product innovation, dealing with the changes in the

things which an organization offers, process innovation, concerning the ways in which

goods and services are created and delivered, position innovation, emphasizing the

changes in the context in which the goods or services are introduced, and paradigm

innovation that deals with the adoption of mental models which firms adopt to.

According to the OECD (2005), four different innovation types are also presented which

are product innovation, process innovation, marketing innovation and organizational

innovation. Holistically, the four types of innovations are categorized into technological

innovation and non-technological innovation (Schmidit and Rammer, 2007; OECD and

Eurostat, 2005).

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2.2.1 Technological Innovation

In this respect, the conceptual understanding of innovation in firms shows the differences

between product and process innovation, but since these two types of innovation is related

with the development of technologies, they are regularly called technological innovations

(Schmidt and Rammer, 2007). “A product innovation is the introduction of a good or

service that is new or significantly improved regarding its characteristics or intended

uses; including significant improvements in technical specifications, components and

materials, incorporated software, user friendliness or other functional characteristics”

(OECD, 2005). Product innovation is also described as a difficult process motivated by

evolving technologies, altering customer needs, shortening product life cycles, and

escalating global competition (Gunday, Ulusoy, Kilic and Alpkan, 2011).

At the same time, process innovation is the execution of a new or significantly improved

production or delivery method which includes significant changes in techniques,

equipment, and software. Process innovations can be suggested to decrease unit costs of

production or delivery, to increase the quality or to produce or deliver new or significantly

improved products (OECD, 2005).

Technological innovation’s notion consists of three main points. First, technological

innovation is the concept that concerns about creating or comprehending new ideas and

solutions that based on technology, capability or knowledge to a real or perceived needs,

which can be called invention. Second, upon the invention of ideas and solutions,

technological innovation concerns about developing new ideas and solutions into a

product or service which is called realization. Finally, the implementation, it concerns

about introducing and supplying new products and services of technological innovation

to meet consumers’ needs. (Mentz, 1999)

Therefore, according to OECD (2005), technological innovations embrace new products

and processes and important technological modifications of products and processes. An

innovation has been applied if it has been introduced on the market (product innovation).

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“Technological innovation is quite a diffused and variegated phenomenon” (Sirilli and

Evangelista, 1998).

2.2.2 Non-technological Innovation

Between technological and non-technological innovation, the main point for separating

between the two types is the different role of technology. Since technological innovations

are normally characterized by inventing or utilizing new technologies likes new technical

knowledge and technical inventions, non-technological innovation is not necessary to get

involved with changes in technology or the adoption of new technology, but it may merely

rest on the use of new business methods. Non-technological innovation is defined by the

two new types of innovation which are marketing innovation and organizational

innovation (OECD and Eurostat, 2005). In the following section, the two new types of

innovation will be discussed and elaborated.

Marketing Innovation

Companies with comparatively lower research and development deeds often assign their

innovation performance to strategies that emphasis on competitiveness, marketing, and

distribution channels (Hall and Bagchi-Sen, 2007). In this regard, marketing innovation is

introduced; moreover, marketing innovation is explained in terms of three notions that are

product strategy, price strategy, and promotion strategy (Rust et al. 2004). Later, the term

marketing innovation has been clearly distinguished and defined as a practice of a new

marketing methods and applications involving significant alterations in product design or

packaging, product placement, product promotion or pricing (OECD and Eurostat, 2005).

The strategies indicate tactical changes in marketing actions by modifying the design or

packaging, altering sales or distribution procedures, and changing advertising schemes

(Mothe and Nguyen Thi, 2010). Overall, the main objective of the innovation is to increase

the awareness of firms’ products to new markets.

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Organizational Innovation

Academically, organizational innovation is a comprehensive perception that comprises of

strategies, structural and behavioral dimensions (Mothe and Nguyen Thi, 2010). Firms

that actively involve with technological innovation usually utilize organizational

innovation to advocate their innovation plans. “An organizational innovation is the

implementation of a new organizational method in the firm’s business practices,

workplace organization or external relations.” (OECD and Eurostat, 2005, p. 180).

Organizational practices are observed as an input for firms' innovation processes and

innovation capacity.

Within the definition of both technological and non-technological innovation, it can be

understood that both terms are closely related. Therefore, the next section is to discuss the

relationship between both types of innovations.

2.2.3 The Relationship between Technological and Non-technological

Innovation

In relation with technological innovation, the two specific types of non-technological

innovations, organizational innovation and marketing innovation, are closely linked with

technological innovation and has shown complementary effects. In this regard,

organizational innovation is viewed to be closely linked with process innovation

(Schimidt and Rammer, 2007). In process innovation, since presenting new technologies

in production or distribution may require reorganizing business practices, which may also

prompt the introduction of new business practices or new organizational models. Also,

organizational innovation could also happen in product innovations, as when new products

are created, new production or sales divisions call for re-organization of workflows,

knowledge management or external relations (Schimidt and Rammer, 2007).

There have been many studies been undertaken by emphasizing on the importance of

technological innovation as a determinant for organizational changes, and they show that

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there are complementary effects between organizational and technological innovation

(Dougherty, 1992; Danneels, 2002, cited in Mothe and Nguyen Thi, 2010). Interestingly,

another research has been conducted to display the inverse relationship by underlining the

role of organizational innovation in improving flexibility, creativity which helps

facilitating the development of technological innovation (Mothe and Nguyen Thi, 2010).

In terms of the marketing innovation, it is closely linked with product innovation since

new products may demand new methods of marketing, market innovation, to be

introduced. In practice, new marketing notions for product innovations may signify a vital

part of an innovative effort (Schimidt and Rammer, 2007).

Within the relationship between non-technological and technological innovation, it has

shown that firms which can successfully integrate customer, technological and

organizational skills tend to bring more innovative product to the market (Mothe and

Nguyen Thi, 2010). Also, along with work of Mothe and Nguyen Thi (2010), Dougherty

(1992) and Danneels, (2002), it is observable that the organizational innovation has

positive effects on firms’ technological innovation. Moreover, for the marketing

innovation, it is noticeable that companies which focusing on marketing innovation are

likely to be able to increase customer satisfaction compared to competitors (Baker and

Sinkula, 1999, cited in Mothe and Nguyen Thi, 2010). In this respect, since market

innovation and organizational innovation is closely linked with product innovation, they

both are expected to boost firms’ performance in terms of achieving product innovation

and the sales of new innovative products (Mothe and Nguyen Thi, 2010). At the same

time, Schmidt and Rammer (2007) showed that the combination of technological and non-

technological innovation had positive impacts on innovation performance.

Analytically, there have been several reasons used to critique the technological view on

innovation. First of all, it is perceived to not able to fully apprehend the innovation in

service sector as it tends to be subjective towards innovation in manufacturing (Hipp and

Grupp, 2005; Hipp et al., 2000). In addition, innovation is understood to not only about

evolving and applying new technologies, but it also has to deal with the adoption and re-

organization of the business practices, internal organization, external relation and

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marketing (Baranano, 2003; Boer and During 2001). Finally, the significance of

assimilating product, process and organizational innovation for effectively transmitting

new ideas and new business opportunities into market success is delineated by innovation

management literature (Tidd et al., 2001; Cozzarin and Perzival 2006) and stresses the

essential role of connecting R&D, technological innovation and new marketing

approaches (Griffin and Hauser, 2001).

Therefore, it can be concluded that for getting a big picture of firms’ innovativeness across

all economic sectors, the concept of both technological and non-technological innovation

are equally important. Nevertheless, to have both technological and non-technological

innovation practiced and focused is not an easy thing to manage. There are always

challenges of adopting both innovations. Hence, in the following section, challenges of

having both types of innovations adopted will be discussed.

2.3 Challenges of Adopting Innovation

There have been studies conducted to find out the challenges of innovation

implementation. The innovation implementation is assumed to be the adoption of

innovation that is described as a process of attaining targeted employees' appropriate and

committed use of an innovation (Klein and Sorra, 1996). Implementation effectiveness is

defined as the reliability and quality usage of innovation by organizational members. The

effectiveness of the implementation is the power function of an organization for the

implementation of innovation and the fitness of the innovation to targeted users' values

(Klein and Sorra, 1996). In this extent, the implementation failure is likely to create an

obstacle for the adoption of innovation. Implementation failure happens when employees

use the innovation less frequently, less consistently, or less attentively than required which

can let the potential benefits of the innovation be realized (Klein and Sorra, 1996).

Besides, SMEs, which are technological based, are suffering from critical barriers and

challenges of technological commercialization (Rahman and Ramos, 2013). As described

in Rahman and Ramos (2013), the constraints are comprised of intellectual property (IP)

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brokers, venture capitalists, and technology trading platforms. More importantly, apart

from the above limitations, there are a few other barriers has been categorized in four

aspects, such as human aspects, constraints in general and related to policies, and

constraints that have evolved due to increased globalization and competition (See Figure

2).

Likewise for the financial service industry, similar difficulties exist regarding the

protection of intellectual properties (IP) and the patenting of financial innovations. The

increase of integration and globalization of electronic services with traded products, which

involves with electronic transfer and order with the inclusion of credit cards and

investment funds, have created a varying innovation process that can no longer be

protected and often not even efficiently controlled (Schulz, 2006).

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Figure 2: Constraints of Open Innovation to SMEs

(Source: Rahman and Ramos, 2013)

2.4 Example of Innovation in Various Industries

This part is aimed to illustrate of some explicit examples of innovation in different

industries. In every industry, innovation is the key to gain competitive advantage.

Specifically, this sector will elaborate four major different type of industries which are

financial service, telecommunication, manufacturing and retail industry.

Human Aspects General constraints Policy constraints Competition

Scarcity of skilled manpower

Lack of market demand (Low purchasing power of customer)

High cost of open innovation

Increase the quality of product/service

Scarcity of the non-skilled manpower Lack of skilled manpower Lack of financing

Increase product differentiation

Low image of the profession Too expensive manpower High economic risk

Look for market niches (demand)

Low image of the sector

Lack of quality management personnel

Organizational rigidities

Increase marketing activity

Low image of the type of enterprise

Problems with administrative regulations

Government regulations

Reduce costs of production

Wage levels too expensive

Problems with infrastructure (e.g., electricity, gas, communication, etc.)

Lack of customers' responsiveness

Forming strategic partnerships

Unpleasant work Problems with access to finance (other than interest rates)

Lack of knowledge to use new technology

Reduce prices (prices of products/services)

Unpleasant working conditions High-interest rates

Lack of information on market

Increase working hours

No problem with recruiting

Lack of knowledge in implementing a new form of technology

Did not have any innovative plan

Look for other foreign markets

Lack of knowledge in implementing a new form of organization Reduce production

Difficult to protect intellectual property

Did not have any open innovation plan

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2.4.1 Financial Service Industry

In the service industry, particularly in financial service industry, innovations have been

playing a pivotal role to embrace the changes. The revolution in information and

communication technologies has become fundamental to developments in the banking and

financial services industry. Most banking sector analysts embrace technological change

on the short list of imperative factors that have influences on banking sector structure and

performance (Furst, Lang and Nolle, 1998). For example, the improvements in

information management are performing a critical role in empowering banks to take

advantage of expanded powers and reductions in geographic restrictions (Furst, Lang and

Nolle, 1998).

Particularly, in the United States, financial innovation has been the driving force behind

the economic boom, but it has remained passive and often limited to some new online

banks and financial service providers (Schulz, 2006). The financial innovation is also

being driven by new technologies in most industries. Between 1990 and 2002, the

financial innovations in the United States was scrutinized by Lerner (2004) showed that

33.5 percent of innovations in the United States happened in security underwriting and

trading, and 26.2 percent of innovations appeared in both asset management and pension

funds. Besides, in retail banking and mortgage banking, it is shown that financial

innovations were accounted only for 11.6 percent, 5.2 percent for credit card and insurance

business only, and 0.6 percent for commercial banking (Schulz, 2006). “Most financial

innovations of the 1990s in the United States focused on capital-market-based security

trading, underwriting, and asset management, but they were introduced by commercial

banks, wishing to diversify into these markets” (Schulz, 2006, p. 42).

In response to the technological changes in 1990s, banks invested heavily in the

technology as it could increase profitability by either increasing revenue or reducing costs

(Furst, Lang and Nolle, 1998). A key purpose of the investment was to improve the

efficiency and revenue-generating opportunities of both traditional delivery channels such

as branches, automated teller machines (ATMs), and call centers, and new distribution

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channels such as internet banking (Furst, Lang and Nolle, 1998). Likewise, in the banking

industry in the United Kingdom, the UK first direct organization utilized a telephone

banking or mobile banking as innovation, which was able to attract 10,000 new customers

(Tidd and Bessant, 2013).

In contemporary environment, a recent study has been conducted to investigate the

benefits of innovative information technology in the banking industry. The study result

shows that implementing a long-term sustainable business model is the key to success

(Hellmich, Pinedo, Schuck, Siddiqui and Uhl, 2014). A long term sustainable business

model is a part of the organizational innovation of banks. The innovations that banks

recently have taken into account are changing regulatory and risk management

requirements, the improvement of information flows and the variations in customer

behavior and preferences (Hellmich, Pinedo, Schuck, Siddiqui and Uhl, 2014).

2.4.2 Telecommunication Industry

Besides financial industry, telecommunication industry is also one of the fast growing

industries. Telecommunication advancement is one of the important indicators of

sustainable growth of both states and the world economy (Ageenko and Vidishcheva,

2012). The existence of telecommunication technologies enables to create new markets

and cater new services. In this respect, the telecommunication industry is the most

dynamic industry which is characterized by a high speed of innovation (Bourreau and

Dogan, 2001).

Research in the telecommunication industry has experienced a revolutionary changes in

recent years. Nowadays, big telecom companies appeal new approaches of innovation to

engage the entire value chain in the development of new products and services (John,

2013). For example, an operator in Spain called Telefonica has turned to attach customer

feedbacks to create a number of projects that aim to facilitate and improve the company

product development. Also, some of Europe's biggest telecom companies have advanced

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themselves further by establishing a more venture capital to encourage stronger links with

start-up founders, academic researchers, and other commercial partners (John, 2013).

Moreover, in order to gain a competitive advantage, telecom firms are also outsourcing

their R&D (John, 2013). Ogbo, Okechukwu and Ukpere (2012) found that competition

has led to the service providers in the telecoms industry endeavoring to outmaneuver each

other in value services provision. This has in turn led to innovation in the industry. For

instance, Nokia Siemens Networks has outsourced to IBM a range of R&D services for a

better voice and multimedia applications, mobile Internet offerings, and VoIP products.

As a result, this outsourcing allows Nokia Siemens to reduce costs and gain specialized

knowledge. The company is also working closely with a number of start-ups in the

development of 4G networks. Moreover, it has moved to establish new R&D facilities in

key markets, including India and China, and to strengthen existing ones.

In addition to European’s telecom companies, one of the telecom businesses in

Bangladesh has restructured and innovated its system and business model. The company

has improved its business strategy by integrating internal management system with a focus

on the external environment (Ratan, Alam and Sohel-Uz-Zaman, 2007). By this means, it

allowed the company to enriched their HR inventory by employing bright and promising

youths from various academic institutions and as well as from their competitors. Likewise,

in IBM global CEO study (2006), the finding showed a high positive correlation between

innovation in business model and faster-than-average operating margin growth.

In response to consumers demand of connectivity and speed and fast growing economy,

Craig Wigginton, vice chairman and US Telecommunication leader, asserted that

“telecom companies need to invest – expanding their footprint, updating technology and

infrastructure, acquiring spectrum and funding R&D. Companies that don’t, or can’t,

maintain focus on rapid innovation may lose out to those that do” (Deloitte Development

LLC, 2014). At the same time, Mr. Craig Wigginton also addressed that the most

significant thing about telecommunication innovation is that mobile is currently on the

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leading power of innovation that crosses almost every industry and sector, and is a crucial

instrument of economic development.

To recap, it can be understood that the telecommunication industry is one of the industries

that innovations play a pivotal role in shaping the competitiveness of the industry.

2.4.3 Manufacturing Industry

Innovation in manufacturing sector covers a range of extents like the introduction of new

processes/practices, new technology/equipment, and new materials (KPMG, 2007).

Innovation in manufacturing does not only focus on the productivity and quality gain, but

it also results in improving responsiveness to customers’ demands, lowering turnaround

times, reducing waste levels, increasing product quality, bettering designed products and

improving relationships with suppliers and clients (KPMG, 2007). Similarly, Sirilli and

Evangelista (1998) argued that in manufacturing the most important objective of firms’

innovation strategies consist of enhancing service and product quality, increasing market

shares and reducing production costs. In this regard, for example, Cisco is widely known

for its capability to launch highly innovative products endlessly into the markets, as well

as enter or create new markets (Cisco, 2014).

Based on KPMG (2007) assessment of successful innovations across multiple sector in

manufacturing, the key types of innovation can be found are innovation in sourcing,

innovation in manufacturing process, management innovation and innovation through

technology. For instance, the fundamental innovation in Cisco is that it has extensive

involvement relating people, process, and technology to drive innovation and works with

companies across the globe to improve their capability to bring innovative products and

services to market successfully (Cisco, 2014).

Another explicit example of innovation in manufacturing is The International

Organization for Standardization (ISO) certificate. For business, the ISO allows

companies to reduce costs, enhance customer satisfaction, access to new market, increase

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market share and provide environmental benefits (ISO, 2014). Mangiarotti and Riillo

(2014) asserted that when the focus is on technological innovation and formalized

innovation expenditures, the certification upsurges innovation propensity in

manufacturing. In opposition, when non-technological aspects are involved, and

allowance is made for wider innovation activities, the impact of certification on services

tends to emerge. Nevertheless, the study shows that the statistical evidence for

manufacturing shows a more important role of certification for innovation success in the

manufacturing sector (Mangiarotti and Riillo, 2014).

In short, innovation in manufacturing industry is imperative. With Cisco as an example,

an innovation in manufacturing sector has improved significant in response to the demand

in the market.

2.4.4 Retail Industry

As this research focuses on the role of innovations in the United Kingdom’s retail

supermarket, it is necessary to comprehend the whole view of innovation over the retail

industry. Innovation in retailing has been ranged from changes in business model, store

formats, and technologies to fundamentally new ideas and concepts for chasing growth

opportunities in global market (Shankar and Yadav, 2011). In Shanka and Yadav’s work,

they addressed five articles which explore different aspects of current and future

innovations in the retailing environment. First of all, innovations in retailing are ranged

from modifications in business models and store formats to inventive and creative strategic

adaptations across international markets. Second, retailers must understand the

associations of development in communication technologies comprehensively,

particularly those in the area of social media. Third, retailers need to think innovatively

and resourcefully about evolving, since the new business models that could hypothetically

hover the feasibility of the main business models. Fourth, changes in assortment and

private-label brands should be based on a scrutiny of alterations in consumer favorites,

technology, and co-creation opportunities. Fifth, the marketing strategies and plans

succeed when there is a win–win–win scenario for the shoppers, retailers, and

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manufacturers which involves seamless, solution-based experiences. Sixth, value-creating

innovations are the success in innovations of price promotions, which involves both

process and technology. Finally, some of the key retailing innovations in international

markets are new store formats, adaptive inventory systems, and technology-enabled

applications such as mobile marketing.

Specifically, according to the past study in 1960s, it stressed that technological innovation

provides potential economic benefits to retailers in the UK in relation to productivity

(McClelland, 1962, 1964; Towsey, 1964, cited in Alexander, Shaw and Curth, 2005).

More importantly, in Alexander, Shaw and Curth’s work in 2005 regarding promoting

retail innovation as the emergence of self-service and supermarket retailing in Britain,

they addressed the history of self-service in the USA and Britain. Self-service is one type

of explicit examples to explain technological innovation, and the implication of self-

service and supermarket retailing innovations in the Britain to the marketing revolution is

well renowned (Bowlby, 1997; Dawson, 1981; Wrigley and Lowe, 2002, cited, in

Alexander, Shaw and Curth, 2005). Historically, self-service and supermarket retailing in

the US have been well established. The success of self-service in the US as an innovation

reflected not only modifications in retail management practices, but also pressures

generated by the progressively mass production and packaging of goods, and shifts in the

geography and demographics of consumer demand (Humphery, 1998; Mayo, 1993, cited

in Alexander, Shaw and Curth, 2005). Meanwhile, in Britain, the self-service was the first

innovative technology which was introduced to the retailing market in the postwar. First

in 1947, there were no more than ten self-service stores in Britain; surprisingly, decades

after, the number of self-services store and supermarket increased significantly

(Alexander, Shaw and Curth, 2005). Interestingly, “the concept of the supermarket helped

to transform the way people shopped and brought about marked changes in the culture of

consumption” (Bowlby, 1997; 2000; Humphery, 1998, cited in Alexander, Shaw and

Curth, 2005).

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Regarding the business model in the retail industry, the business model is defined as how

customers and market are given appropriate value from a retailer. The values creation is

based on three main themes which are customer efficiency, customer effectiveness and

customer engagement (Sorescu, Farmbach, Singh, Rangaswamy and Bridges, 2011). The

innovation in retail business model is best understood with three main components which

are the way activities are organized, the types of activities that are implemented and the

level of involvement of the doers in preforming those activities (Sorescu, Farmbach,

Singh, Rangaswamy and Bridges, 2011). Aside from the previous understanding of what

retail business model is, the term has been expanded further to focus on operational

efficiency, operational effectiveness and customer lock-in (Sorescu, Farmbach, Singh,

Rangaswamy and Bridges, 2011), also as stated in their work, traditionally, the operational

efficiency, operational effectiveness and customer lock-in can be improved by several

ways by focusing on the inventory management for the optimal turnaround, enhancing the

store environment to reduce costs and increase profit, and finally, concentrating on saving

cost by adopting new technologies that help facilitating processes.

For instance, a solid example of retail business model innovation to improve the

operational efficiency is the implementation of new model, fast fashion, from Zara, one

of the world’s largest clothing retailer, (Sorescu, Farmbach, Singh, Rangaswamy and

Bridges, 2011), and it is described that the model is “to use smaller assortment with faster

turning inventory” (p, S8) which allows Zara to maintain its competitiveness in the

industry. Figure 3 displays the classification of retail business model innovations, and it

shows both traditional ways and innovative ways of how operations and values can be

improved and created.

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Figure 3: A classification of retail business model innovation

(Source: Sorescu, Farmbach, Singh, Rangaswamy and Bridges, 2011)

In nutshell, it can be understood that innovation has a major impact on the retail industry.

Regardless of the type of innovation, retailers are striving to innovate their business to

gain competitive advantage in the market. Likewise, according to Wrigley (1996) and

Lowe (2002), cited in Alexander, Shaw and Curth (2005) also asserted that innovations

inspire many aspects of the changing retail background identified within the new retail

geography. To recapitulate, within financial, telecommunication, manufacturing and retail

industry, it can be understood that innovations have significant influences on the

competitiveness of the industry.

On the other hand, as the aim of the research is to study the role of innovations in the

United Kingdom’s retail supermarket, it is noticeable that with all previous studies and

literatures, there has not been a distinctive study been conducted to elaborate precisely

about the role of innovation in the United Kingdom’s retail supermarket. Therefore, with

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the insufficient elaborations from previous studies toward the role of innovation in the

United Kingdom’s retail supermarket, this particular research is aimed to fill up gaps of

the previous studies.

This dissertation aims to answer two research questions:

a. What are the significant innovations that are currently being adopted by big

retailers in the United Kingdom?

b. What is the impact of innovations on consumer’s buying behavior in the United

Kingdom’s retail supermarket?

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Chapter 3 Methodology

In this section, the main six components of the method include research approach, research

instrument, data collection, population sampling, and data analysis will be discussed in

detail.

3.1 Research Approach

To begin with, this research is conducted by using an inductive approach. Inductive

approach is a type of research approach which works in the opposite way from the

deductive approach. The process of this approach involves illustrating generalizable

implications out of observations (Bryman and Bell, 2011). As can be evidently seen from

the nature of this study, research questions have already been created to figure out to find

out the role of innovation in the UK’s retail supermarket. Therefore, it is best for this study

to adopt inductive approach as it permits the researcher to generalize the role of innovation

in the UK on retail supermarket.

3.2 Research Instrument

In order to fulfill the study aims and objectives, the dissertation is conducted using a

quantitative method along with the use of secondary source to collect data and

information. First of all, previous literatures including journals, books and companies’

reports relating to the research topic are used to achieve the first objective as explained in

chapter 2. In addition to that, the research is also carried out by using a secondary source

to fulfill the second purpose of the study. Finally, to achieve the last objective of the study,

the research is conducted by utilizing quantitative method.

With quantitative method, it is believed to provide several benefits to this study and the

researcher (Gray, 2004). First of all, it is useful for studying large group of people.

Secondly, it allows the researcher to construct a circumstance that eliminates the

bewildering impact of many variables, allowing one to more variables establishes cause-

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and-effect relationships. Thirdly, the approach gives out a precise, quantitative, numerical

data. Finally, the approach is not costly to conduct (Gray, 2004). Moreover, according to

Creswell (2014), it is said that the nature of the quantitative method can be identified

through elements that are mentioned in the research statements. Those factors include the

independent variables, dependents variables, and the connection between the variables,

respondents and research location. Looking back at the nature of this study in particular,

it can be seen obviously that the independent variable is innovation, the dependent

variables are the impact of innovation on customer’s buying behavior in the UK retail

supermarket.

3.3 Data Collection

According to Bryman and Bell (2011), there are various types of research methodologies

such as survey, case study, experimental design, ethnography, action research, grounded

theory, phenomenology, narrative research, historical research, life history, content

analysis, discourse analysis, documentary analysis, semiotics, attitude research, image-

based research, archival research, textual analysis, meta-analysis and feminist research.

Among those twenty research methodologies, the nature of survey research methodology

seems to match with the character of this study more than others. Survey research

methodology is suitable for quantitative research study with the involvement of some

qualitative factors. Survey methodology aims to collect data from respondents regarding

their opinions, ideas, perceptions (Balnaves and Caputi, 2001) which is matched with the

purpose of this study which aims to figure out the impacts of innovation on customer’s

buying behavior in the UK retail supermarket.

In addition, in terms of data collection methods, questionnaire is suggested to be a suitable

method that is mostly adopted by many researchers who adopt survey research

methodology (Balnaves and Caputi, 2001). In this regards, the research is conducted by

using the online questionnaire. With online questionnaire, it provides several benefits for

the research as it fast, cheap, more accurate and quick to analyze (Wright, 2005).

Specially, Qualtrics’ online survey platform is used to distribute the questionnaire.

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Here is a link to the survey:

https://qtrial2014az1.az1.qualtrics.com/SE/?SID=SV_5znhYpbi3F5Ki21

Specifically, the questionnaire is designed with both open-ended and close-ended question

in the purpose of collecting all the needed information. In the questionnaire, there are 14

close-ended questions and one open-ended question. For close-ended questions, questions

are designed in the format of scale question. Likert scale is used in which respondents are

asked to indicate how strongly they agree or disagree with statements (Gray, 2004). With

both close-ended question and open-ended question, it allows researcher not only to be

able to gather information which is on the surface, but also to trigger more in-depth

information from respondents regarding their perceptions and understandings without

being affected by neither interviewer nor questionnaire (Ticehurst and Veal, 2000).

Particularly, respondents will be asked about their perceptions toward the supermarket

innovations.

Besides using the quantitative method to collect data, the data about the retailers’

innovation is obtained by using a secondary source. In this regards, information and data

are collected from online newspaper articles, BBC, Telegraph, Grocer, Daily mail, etc.,

and companies’ annual reports. Specifically, to search for information and data, several

keywords are used to search from google web page like innovations, new technologies,

new business models and new strategies.

3.4 Population

For the quantitative method, the research is initiated by using non-probability sampling.

Notably, snowball sampling technique is used since it matches with the nature of the study.

The snowball technique allows the researcher to contact with a small group of people who

are relevant to the research topic and then uses these to establish contacts with others

(Bryman and Bell, 2011). In this regard, the online link of the questionnaire will be sent

out to a group of people, then the researcher will ask the contacted respondents to help

sharing the link to their friends who are relevant to the research topic.

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As it has already been explained above that the primary intention of this study is to figure

out the impact of innovation on customer’s buying behavior in the UK retail supermarket.

Therefore, the target respondents are those who has involved in doing the grocery

shopping in the UK.

For the size of the population, Saunders, Lewis and Thornhill (2012) suggest that the

proper distribution of the result can be yielded from a sample of 30 respondents.

Therefore, around 100 respondents can be considered as an appropriate sample size for

this study.

In addition, the researcher chooses the four retailers in the UK, Tesco, Asda, Sainsbury,

and Morrisons, to extract information about their innovations. The main reason is that the

four selected retailers are the largest retailers in the UK. Large companies are more likely

to have more disclosure which is useful for the study.

3.5 Data Analysis

To analyze the collected data, data will be categorized for the statistical test. In this regard,

nominal data, ordinal data, interval data and ratio data will be determined. Then, frequency

tables for every type of data will be made in response to the questions in the survey. With

a frequency table, the researcher will present the data by using descriptive statistics in

which charts or graphs will be used for catering the potential for communication of data

(Gray, 2004). In this matter, Microsoft excels and Spss application are used to help

analyzing the data and constructing tables and charts.

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Chapter 4. Analysis of Innovation in Retail Supermarkets in the United

Kingdom

As mentioned above, the retail sector in the United Kingdom has played a major role in

the United Kingdom’s economy. In the United Kingdom, there are four big supermarkets

that have significant impacts toward the United Kingdom’s economy. Moreover, the four

largest supermarkets in the UK are also positioned on the same page among the 20 largest

retailers in European, according to Kantar Retail study (Rigby, 2013) (See figure 4).

Specifically, the four largest supermarkets in the UK are Tesco, Sainsbury, Asda Walmart

and Morrison. Since the research area of this study is to focus on, particularly, the United

Kingdom’s retail supermarket, it is essential to look at the four top supermarkets in the

United Kingdom, Tesco, Sainsbury, Asda and Morrison. By this means, it allows the

author to understand and generalize the role of innovation in the United Kingdom’s retail

supermarket.

In the following section, each of the four companies’ background, SWOT analysis and

evidences of innovation will be addressed, discussed and scrutinized separately. Not to

mention, SWOT analysis as discussed by Kotler (2011) is a situational analysis tool that

is used to examine an organization’s internal strengths and weaknesses and at the same

time used to scrutinize the external threats and opportunities. Also, evidences of each

company’s innovations will be presented and categorized based on four types of

innovations, product, process, organizational and marketing innovation.

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Figure 4: Kantan’s Estimated Chart

(Source: Rigby, 2013, http://internetretailing.net/2013/08/uks-four-largest-supermarkets-

among-european-retail-elite-kantar/)

3.1 Tesco

Tesco is a famous British multinational retailer which deals with general merchandise and

groceries. Jack Cohen founded Tesco in 1919. Tesco has been operating for almost 100

years, and it has expanded more branches domestically and internationally. As the matter

of fact, globally, Tesco has employed more than 500,000 employees and it has 6,784 stores

worldwide operating in twelve markets, UK, South Korea, Ireland, Turkey, Thailand,

Poland, India, Czech Republic, Slovakia, Malaysia and Hungary; also, locally, in the

United Kingdom, among the 530,000 employees employed by Tesco, 310,000 of them are

employees working in 3,378 stores in the UK (Tesco PLC, 2014). The chairman of Tesco

PLC is Sir Richard Broadbent as he was appointed on the 30th of November 2011 (Tesco,

PLC, 2014).

Tesco's UK stores are divided into six formats, distinguished by size and the range of

products sold (Tesco PLC, 2014). Firstly, Tesco Extra stores are larger and mainly located

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out‐of‐town hypermarkets that stock nearly all of Tesco's product ranges. Secondly, Tesco

superstores are standard large supermarkets which stock groceries and a much smaller

range of non‐food goods than Extra stores. Thirdly, Tesco Metro stores are sized between

Tesco superstores and Tesco Express stores. They are mainly sited in city centers and on

the high streets of small towns. Fourthly, Tesco Express stores are neighborhood

convenience shops, stocking mainly food. Fifthly, One Stop stores are the only category

which does not comprise the word Tesco in its name. These are the very smallest stores.

In addition, Tesco has a banking support called Tesco Personal Finance; operates as an

ISP, mobile phone, home phone and VoIP businesses; sells petrol and diesel at their own

petrol stations; and offers a loyalty card scheme to customers (Tesco PLC, 2014).

Regarding the company vision and strategy, in every business having a well-defined

vision and strategy is like having a clear direction which is vital. Tesco is a company built

around customers and colleagues, high-quality assets around the world and numerous

opportunities for growth, and these characteristics are essential to the company vision for

business (Tesco PLC, 2014). Particularly, the company itself has five core elements of

vision which are, first, Tesco aspires to be wanted and needed around the world, second,

a growing business with full of opportunities, third, be modern, innovative and full of

ideas, fourth, be winners both locally and internationally and, finally, be inspiring, earning

trust from customer, colleagues and communities. (Tesco PLC, 2014). Currently, the

primary prioritized business strategy of Tesco is to continue invest vigorously in the UK

market with six critical areas of improvement which are service and staff, stores and

format, range and quality, price and value, brand and marketing and clicks and bricks

(Tesco PLC, 2014).

Analytically, with SWOT analysis, it can show the strengths, weaknesses, opportunities

and threats that Tesco has around its business.

Strengths

In terms of the company strengths, the company has an increasing in the market share,

strong brand image (Datamonitor, 2004) and a leadership position in the United Kingdom

with £72 of cash reserve with sales in 2011-2012 (Dudovskiy, 2014).

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Weaknesses

Besides, Tesco also possesses weaknesses like unsustainable competitive advantage of

Tesco that can be imitated by its competitors, and the over-dependence to the home market

in the UK (Dudovskiy, 2014).

Opportunities

Also, some of the noticeable opportunities for Tesco are the international growth and

further diversification of services (Dudovskiy, 2014). The international growth will helps

strengthening its global market position. Moreover, the company have more opportunities

in terms of diversifying their service.

Threats

The company also get exposed to several threats that are the price war between main

competitors in the UK. There has been aggressive competition in the UK grocery market.

Tesco though has been dominating this sector for 15 years, but is now encountered with

intense competition from its competitors who are gaining in market share.

Figure 5: Tesco SWOT analysis

(Source: Dudovskiy, 2014, http://research-methodology.net/tesco-swot-analysis/)

Significant Evidences of Innovation

In order to survive in this fast growing and digital economy, firms need to be able to

change and adapt to the changes. Likewise, for Tesco, the success of the company depends

on the innovation of the company based on Philip Clarke Speech (Tesco, 2014c). In this

regard, significant evidences of the company innovation will be presented based on four

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categories, product innovation, process innovation, organizational innovation, and

marketing innovation.

Product Innovation

For this particular type of innovation, one of the most significant innovation of Tesco is

the operation of Tesco’s Clubcard. The company’s club card was originally introduced in

1995 (Tesco, 2014b) to offer customers one point for every £1 they spend in store. With

the Clubcard, it enables customers to save and get discount when they shop at Tesco; also,

the Clubcard helps enhancing the customers’ in-store shopping experience by allowing

them to access to the in-store Wi-Fi and new technological product like hand scanner

(Tesco, 2014a).

Talking about enhancing in-store experience, Tesco has significant in-store innovations

to improve its customers shopping experience. Frist of all, the Broccoli Cam is an

overhead digital camera that identifies and analyzes empty trays in the vegetable aisle

(Tesco PLC, 2012). In addition, Tesco also introduced Smart Badge that is GPS-sized

computer, and it allows the store employees to scan items and answer customer queries

on the shop floor; besides, another significant technological innovation used in Tesco

stores is the Electronic shelf edge labels (Tesco PLC, 2012). Unlike the traditional shelf

edge labels, the electronic shelf edge label technology allows for more efficient alterations

in pricing labels. Finally, the noticeable Tesco’s in-store innovation is the scan as you

shop technology (Tesco, 2014a). The technology is a handheld barcode scanner that

connects to a Clubcard and aids customers to avoid the checkout queue.

More importantly, Tesco has teamed up with IBM to use an augmented reality mobile app

to boost shopping experience for Tesco customers (Nazario, 2014). Currently, Tesco is

testing the technology at a pilot location near London. With the technology, mobile app,

it allows the company to stay ahead in the competition by maximizing its inventory and

sales (Barnett, 2011).

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Process Innovation

Regarding the process innovation, Tesco has quite noteworthy technologies to facilitate

processes operating in the store. Tesco is of the major supermarkets that introduce the self-

service technology. The adoption of the technology was made to respond to remove the

need for queuing. Currently, as a business in growing, Tesco is now looking to reduce

queuing time by using smaller and slimmer self-service checkouts that are called Slimline

tills (Quinn, 2014). Along with the older self-service tills, it is estimated that the queue

time had been reduced by a quarter and also severed 15 seconds off average time at the

checkouts (Quinn, 2014).

Interestingly, in May 2014, Tesco introduced and unveiled the new technology of check

out called Super-till at the new Extra store in Lincoln, United Kingdom (Poulter, 2014).

Functionally, the new technology is said to be three times quicker than standard checkout.

The checkout can scan up to 60 items per minute without the need for the item to be

handled by staff which means items will be automatically scanned. With this technology,

Tesco spokesman, cited in Quinn (2014), asserted that the technology is about making a

more relaxed experience for customers. In addition, in helping the process checkout,

Tesco’s hand scanner is also considered to be part of process innovation that helps

facilitating the checkout process.

Additionally, Tesco has adopted the online grocery as its strategy is to establish a

multichannel offer. Tesco launched the first online grocery business in 2010 (Tesco PLC,

2014). Also, while the online shopping is operating in Tesco, the company has created

Mapster. The technology has helped customers to keep track of their delivery when they

order online (Tesco, 2014c).

To recap, the significant product innovations that are being adopted by Tesco are the

Clubcard, Broccoli Cam, Smart Badge, Electronic shelf edge label and the Scan as you

shop technology. Also, to stay ahead in the competition, the company is planning to use

augment reality mobile app in the near future. Moreover, for process innovation, it can be

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observed that significant technologies of Tesco are self-service checkouts including

slimline tills, super-till and hand scanner, and online grocery shopping.

Organizational Innovation

Organizational innovation of Tesco is best described with the company business model.

The company business model comprises of three core elements which are core activities,

circle enablers and the virtuous circle (Tesco PLC, 2014). As a retailer, the core activities

of the company are set based on four activities. In this regard, Tesco focuses on providing

customers with the most compelling offer and the best shopping trip, and Tesco works

closely with its suppliers to provide an excellent range of products and services. Then

Tesco moves the products through modern and efficient supply chain into a well-located,

multi-format store network that is ready for customers (Tesco PLC, 2014). The company’s

key enablers are innovating the offer, building the company brand, leveraging group skill

and scale, developing people, creating valuable property, operating responsibly and

establishing a multichannel offer (Tesco PLC, 2014). These elements are what make

Tesco different, and they help Tesco to sustain and improve the core activities. The final

circle of Tesco’s business model is that by developing economies of scale and investing

in an ever-improving customer offer, it drives the company loyalty and grow sales.

Strategically, Tesco has three top priorities of strategies to drive sustainable growth which

are to continue invest in a strong UK business, establish multichannel leadership and

pursue disciplined international growth (Tesco PLC, 2014). Recently, Tesco has a plan

for the new era of retail by focusing on health and wellbeing (Montague-Jones, 2014). In

respond to that, Tesco plans to develop stronger partnerships with suppliers as things go

serious on innovation.

To establish a multichannel offer, Tesco has adopted the online grocery strategy. Tesco

launched the first online grocery business in 2010 (Tesco, 2014c). At the same time, Tesco

also offers customers opportunities to pick up their ordered products, and this is called

click and collect. Tesco was the first supermarket to launch Click & Collect Grocery

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Drive-Through in the UK in 2010, and it is now available in 200 Tesco stores across the

country.

Moreover, the three areas of new investment and innovation of Tesco are the company

digital Clubcard, multichannel leader and store overhaul (Bold, 2014). Later this year,

Tesco will digitize its Clubcard, converting the loyalty scheme into a connected and

multichannel format that consumers can use via their computers and smartphones (Bold,

2014). Additionally, the big plan for Tesco is that Tesco will emerge as a multi-channel

connected business as it focuses on multi-channel reinvention (Pratley, 2014). Thus, the

investment and innovation is best described with the phrase bricks and clicks as it was

used to encapsulate Tesco's future-facing strategy (Bold, 2014).

Marketing Innovation

In respond to the price competition in the UK, Tesco has introduced the price promise

scheme to give out automatic compensation vouchers if products could have been bought

cheaper at another store (West, 2013). Also, to win customers’ trust, Tesco announced an

initial investment of £200 million in bring down and keeping the price of essential

products low like milk, carrots, onions and eggs (Tesco PLC, 2014).

Regarding the brand and marketing of the company, Tesco uses Clubcard as the core of

catering a differentiated and personalized offer. Furthermore, Tesco determines Clubcard

to be the heart of the company unique relationship with its customers. The company

Clubcard gives an unrivaled insight into consumer habits, trends and preferences (Tesco

PLC, 2014). Moreover, to getting closer to the customer, Tesco uses BT cloud contact

technology as it gives customers a superior, more flexible and more responsive contact

center service (BT PLC, 2013).

In total, Tesco’s organizational innovation is best comprehended with the company new

business models and strategies. It can be seen that Tesco mainly focuses on the

establishment of multichannel that triggers the adoption in online business. For marketing

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innovation, Tesco uses price promise scheme and Clubcard to stay ahead in the

competition and to gain trust from customers.

3.2 Sainsbury

Sainsbury is one of the leading retail company in the UK dealing with general goods and

groceries. Sainsbury was founded in 1869 by John James Sainsbury and his wife, Mary

Ann Sainsbury, in London. Since 1869, the company has been expanded to 523

convenience stores and 583 supermarkets in the UK; more importantly, Sainsbury has

employed around 157,000 employees. The management team of Sainsbury is run by three

important people who are Mr. David Tyler, the chairman, Mr. Justin King, the CEO, and

Mr. John Roger, the CFO (J Sainsbury PLC, 2014).

Sainsbury is a retailer with over 1,200 stores, and it sources products across the world

distributed sales in the UK based supermarkets, convenience stores and online.

Furthermore, their food business is complemented by our general merchandise and

clothing offer. More importantly, Sainsbury also offers banking and financial services

products through wholly owned subsidiary Sainsbury’s Bank and have a number of joint

ventures including property development (J Sainsbury PLC, 2014).

Sainsbury has a clear, long-term strategy to deliver its vision of being the most trusted

retailer. The commitment and strategy that differentiate Sainsbury from others is the

commitment to operational excellences (J Sainsbury PLC, 2014). The company promises

to help customers “live well for less” that is more than just price (J Sainsbury PLC, 2014).

The company core values are to be best to offer best food and health, respect for the

environment, make a positive impacts on the community, be a great workplace and to be

sourcing with integrity (J Sainsbury PLC, 2014). To recap, it can be understood that the

company vision is to be the most reliable retailer where people love to work and shop, and

the goal is to make all customers’ lives easier by offering great quality and service at fair

price (J Sainsbury PLC, 2014).

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Regarding the channels and services, Sainsbury, in 2014, has 592 supermarkets, and each

week it is estimated that there are 17.4 million of transactions; moreover, Sainsbury also

expands its convenience stores to 611, and there are 6 million transactions per week (J

Sainsbury PLC, 2014).

Interestingly, through the online channel and service, it is stated that the company has

accumulated more than £1 billion annual grocery sales with more than 190,000 deliveries

per week (J Sainsbury PLC, 2014).

Diagnostically, in term of the company’s SWOT analysis:

Strengths

The company’s strengths are the significant presence in the UK retailing market, strong

portfolio of own labeled products, consistent performance of the company’s cash position

and competitive advantages through Nectar and Brand Match loyalty programs (Mahasaga

Publication, 2014).

Weaknesses

Besides, the company also has weaknesses which are, first, the significant reliance on the

UK market exposing the company’s business to dependency risks as the dependency on

the UK market only could make Sainsbury’s business and operations vulnerable

(Mahasaga Publication, 2014), and second, the company, Sainsbury is having a low

margin compared to its competitors (Bennallack, 2014a).

Opportunities

Regarding the company’s opportunities, the company can benefit from the increase in

online retail sale in the UK (Mahasaga Publication, 2014), and also Sainsbury has a lot of

properties, equivalent to £12 billion, that can help Sainsbury to boost up its business and

operations (Bennalack, 2014a).

Threats

Finally, the main threat that the company is exposed to is an increase in labor cost in the

UK which may affect the company’s profitability.

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Significant Evidences of Innovation

Product Innovation

To compete in the retail industry in the UK and improve business operation, Sainsbury

has innovated plenty of technologies. One of the significant innovation of Sainsbury is the

Nectar card. Sainsbury has adopted Nectar card in respond to the creation of Clubcard

created by Tesco. Similar to Tesco’s Clubcard, Nectar card is used to collect points when

customers shop with Sainsbury (J Sainsbury PLC, 2014). Statistically, there are around 12

million people regularly use their Nectar card when they shop at Sainsburys (J Sainsbury

PLC, 2014)

In addition to that, to be consistent with the company core value, respect the environment,

Sainsbury is the first retailer to use new LED light technology to save energy and reduce

carbon emission (Kennett, 2012). Also, to help reducing carbon emission, Sainsbury has

invested in a number of new technologies like biomass boiler, rainwater harvesting,

natural refrigeration, comprehensive recycling facilities and zero food waste to landfill

(Kennett, 2012). More importantly, Sainsbury has tried new technology, real-time

technology, with its supply chain to reduce the amount of unbought by 15%; also, this

technology was created in-house and would help reducing in CO2 emission of 1,400

tonnes (Brittain, 2010).

To support the sustainability plan of the company, Sainsbury has financed in sheep

worming technology that will help the company sheep farmers to improve returns through

better worm control on-farm (Allison, 2014). Moreover, the company is now supporting

the research and development of cloud technology that allows farmers to monitor parasite

level carefully in sheep (Donnelly, 2014).

Process Innovation

As Sainsbury is one the largest retailers in the UK; thus, to stay competitive in the

competition, process innovation is imperative for Sainsbury. First of all, one of the

significant innovations can be seen in Sainsbury store is the self-checkout service. With

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self-checkout service, Sainsbury has improved its checkout process and queue by reducing

500,000 hours per years (J Sainsbury PLC, 2014).

More importantly, in order to enhance the shopping experience and reduce the queue time,

Sainsbury has introduced what is called mobile scan and go. Mobile scan and go is a

service which allows customers to scan their shopping and pay with their smartphone (J

Sainsbury PLC, 2014). Notably, Sainsbury has partnered with Zapp, a company which

deals with mobile payments, to work on the mobile payment as to facilitate the new

smartphone app of Sainsbury (Hart, 2014). ). At the same time, the company also offers

the online grocery shopping and a click and collect service (J Sainsbury PLC, 2014).

Organizational Innovation

In respect to the company organizational innovation, the company business strategy

speaks out the innovation plans inside the organization. The company strategies are

reinforced by the company value and the company operational excellence. The strategies

of Sainsbury are growing space and creating property value, excellent food, compelling

general merchandise and clothing, complementary channels and services and developing

new business (J Sainsbury PLC, 2014). With all of these core strategies, Sainsbury has

developed many technologies in both product and process innovation to underpin the

strategies.

Recently, Sainsbury has done a strategic review, and the company’s CEO, Mike Coupe,

qouted that strategic review would “build on our strong values, differentiated offer of

quality products and services, competitive values proposition, advantaged store portfolio,

established convenience and online businesses, great colleague service and our unique

understanding of our customers” (Brooks, 2014). Additionally, the company has also

planned to invest £150 million more into pricing scheme by focusing in the area where

customers matter the most about price. Upon the strategic review and investment plans,

Sainsbury has piloted new store formats focused on optimizing range, layout and ease of

shop to meet alteration customer shopping patterns (Brooks, 2014).

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In addition, Sainsbury has continued to make a significant commitment toward the

sustainability plan with many activities from zero waste to landfill to 100% fresh British

pork (J Sainsbury, 2014). In 2003, Sainsbury announced innovation and investment for

the future of farming. In this respect, Sainsbury has invested £1.2 million in agricultural

research and development. With the announcement, it indicates the evidence of the

company’s commitment toward the Sainsbury’s 20 by 20 sustainability plans (Batchelar,

2013).

Besides, to enhance further of company channels and services, Sainsbury has designed to

launch what is called dark store. The company intended to build the dark store, so named

because it is not open to the public and only to fulfill online orders, in Bromley-By-Bow,

east London (Davey, 2013). At the same time, the company organizes its operation by

offering the online grocery shopping and a click and collect service (J Sainsbury PLC,

2014).

In 2012, the press released Sainsbury plan for 2020 as it will emphasize on new targets of

customer but same business model; moreover, the climate change and environment

manager at Sainsbury’s highlighted that the supermarket anticipates to invest up to £1bn

to achieve the plan’s target (EC Newsdesk, 2012).

Marketing Innovation

With marketing innovation, it merely concerns about how Sainsbury gets connect with its

customer. In this respect, the fundamental innovation of marketing for Sainsbury is the

use of Nectar card. Nectar card is the product innovation of the company, and it has

immense impacts to improve customer relationship and gain competitive advantage

(Caines, 2012). Sainsbury's has 12 million active card users, and with data from Nectar,

Sainsbury can reward customers directly at the till with points, and relevant rewards and

promotions (J Sainsbury PLC, 2014).

In 2007, Sainsbury collaborated with Aimia to improve stronger and closer relationships

with its customers and suppliers. The steps to develop stronger and closer relationship

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with clients are to put customer at the heart of the strategy, utilize date effectively, build

a strong partner network and use insight to lead organizational change (Buckingham and

Coupe, 2013). To drive the necessary change across the business, Sainsbury’s used Nectar

to gain deeper customer insight by examining purchase behavior, testing promotions,

measuring the results and reporting the impact on in-store product sales (Buckingham and

Coupe, 2013). Within ten years of partnership with Aimia, Sainsbury’s has shown

sustained improvement in operating performance; also by using insight from Nectar data

has helped Sainsbury’s grow its operating profit year after year (Buckingham and Coupe,

2013)

Another scheme that has been used to improve customers’ relationship is Brand Match.

In 2011, Sainsbury launched the first price match scheme. Brand Match is a great example

of how Sainsbury enhances relationship with its customers. Typically, Brand Match

functions as a technology that checks price of over 14,000 branded goods against Tesco

and Asda (Caines, 2012). However, recently, Sainsbury has dropped Tesco from the Brand

Match price comparison and brought more attention toward Asda (Ruddick, 2014).

Sainsbury’s insisted the modifications to its prices, and Brand Match were about “making

the shopping experience simpler and easier for customers” (Bulter, 2014).

3.3 Asda

Asda is yet another one of the leading retailers in the UK dealing with general goods and

groceries. Asda was originally found in 1920s by a group of Yorkshire farmers in the

name of Hindell’s Dairiers. Then in 1949 the company was expanded to be called

Associated Dairies and Farm Store Ltd. Asda was formed when two separate companies,

Associated Dairies and the Asquith brothers’ supermarket chain Queen’s, came together

in 1965. Since then, Asda has had success period to expand the store. Interestingly, in June

1999, Asda became part of the world largest retailers as Wal-Mart Store Inc brought it. In

2010s. Asda continued to grow and with the launch of more than 100 new local Asda

supermarket. (Asda Stores Limited, 2014b)

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Briefly about Asda, Asda’s aim is to “offer Britain’s best value weekly shop with prices

that are independently shown to be lower than its competitors, and with an excellent mix

of fresh food, grocery, clothing, home, leisure and entertainment goods” (Asda Stores

Limited, 2014). Asda has over 525 stores across the UK and employed over 175,000 of

people. Positively, the local stores of Asda play a decisive part in the community by help

raising £1.2 million for the charities (Asda Supplier, 2014). Regarding the company’s

mission, the company aims to be Britain’s most trusted retailer, and for its purpose, the

company intends to save everyone money, every day. Furthermore, the company, Asda

holds three beliefs that are to service to its customers, respect for individual and strive for

excellence. Currently, Asda is operating under Mr. Andy Clarke, CEO of the company,

and Alex Russo, Chief Financial Officer. (Asda Stores Limited, 2014b).

Regarding Asda’s business strategy, the company mission, purpose, values are the core of

the strategy which focuses on customers, operational model, colleague, and shareholders.

To complement the client values, the company had five pledges which are to be happy to

help, always available, good quality, best for new and to offer EDLP (everyday low price)

(Asda Stores Limited, 2014b).

Critically, with SWOT analysis, it allows Asda’s strengths, weaknesses, opportunities and

threats to be understood and perceived. Again, the analysis is aimed to examine an

organization’s internal strengths and weaknesses and at the same time used to scrutinize

the external threats and opportunities (Kotler, 2011).

Strengths

The main Asda’s strength is that Asda has numerous stores throughout the United

Kingdom, which allows Asda to enhance it strong brand name. In addition, the fact that

the company has over 136 retail stores means that the company benefits from economies

of scale which enables the company to increase its market share. More importantly, since

Wal-Mart owns Asda, this can be an indicator to show that Asda has a strong parenting

company to support.

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Weaknesses

Asda main weakness is that Asda can possibility be deemed to sell poor quality products

resulting from being a cheaper retailers as noted by Renton (2011). In addition, the large

size of the company can be determined to be a weakness as it can be at times difficult to

manage and coordinate all the activities.

Opportunities

Asda has many opportunities to exploit since the UK is part of European Union. In this

regard, there is a chance of Asda to expand itself into the European market which has high

potential. In addition to what Asda is offering, the company can also diversify its service

offering into other sectors such as travel, insurance and broadband services.

Threats

The main threat to Asda is the surging of competition such as Tesco, Sainsbury, and

Morrisons. In addition, as noted by Renton (2011) German-based Aldi and Lidl have also

been gradually gaining market share in the UK retail sector implying that they also pose

a threat to the company and others.

Significant Evidences of Innovation

Product Innovation

Like Tesco and Sainsbury, Asda has tried to develop new technologies to improve its

business operation and to compete with its traditional competitors. One of the significant

innovations that Asda plans to introduce is the intelligent pods. The scheme of introducing

a new technology is in the respond of the company’s expansion of click and collect

strategy (Yeomans, 2014). The intelligent pods will be used to store both general

merchandise and fresh food from customer's order (Rigby, 2014).

In addition to that, to enhance customers shopping experience, Asda has trialed a new in-

store technology called beacons (Ghosh, 2014a). Functionally, the technology is a small

transmitter that detects with nearby smartphone or device by Bluetooth and other

connectivity; also, the technology can notify customers about discount information as

customers walk past a hidden beacon (Ghosh, 2014a).

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Interestingly, the supermarket is now running trials to enable its customers to shop through

the supermarket’s YouTube channel (Ghosh, 2014b). The added functionality would

enable customers to display a shopping list of products alongside supermarket’s YouTube

videos. By clicking on any product would allow the viewer to log into their Asda basket,

add the item, and then check out - all without leaving YouTube (Ghosh, 2014b).

Environmentally, Asda has become the latest UK supermarket chain to new Enacto TM

software technology (Vallely, 2014). The software technology allows Asda to see the full

view of the company energy usage, and by which it enables Asda to manage and reduce

the energy consumption effective (Vallely, 2014).

Process Innovation

Similar to other retailers, Asda has an innovative technology to facilitate its process

operation. In this respect, one of the noticeable technological innovations of Asda is the

implementation of self-service checkout technology. Interestingly, like new technology of

Tesco, Super-till, Asda has introduced new barcode scanner, Rapid Scan, that can scan up

to 100 items per minute (Lanyon, 2013). The technology was developed based on the idea

of self-scan checkout, which have been presented in hundreds of stores for people with

just a few items (Somerville, 2013). The implementation of the new technology was first

installed at the supermarket’s York store. However, the technology is still an experiment,

and it will be out for national roll when the company has enough feedbacks from

customers about the technology (Woollacott, 2014).

In addition to the self-service technology, the company, Asda, has also planned to launch

a mobile payment. The same as Sainsbury’s, the company has formed a partnership Zapp,

a company that deals with mobile payments, to work on the mobile payment as to facilitate

the new smartphone app of Asda (Hart, 2014). As the plan proceeds, Zapp expects to

launch the first half of the technology in 2015. Moreover, Asda has also offered online

channel to help enhancing its services.

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More importantly, Asda has invested £700 million into technology. With the investment,

Asda has adopted an advanced software called Cross docking (King, 2012). The advanced

software allows Asda to receive goods from suppliers and then immediately load them

into the truck; also, the software brings about positive changes to the company inventory

management (King, 2012).

Organizational Innovation

In terms of the company innovativeness, last year, Asda implemented an innovative

service called click and collect as well as next-day delivery (Baldwin, 2014a). Alex

Alexander, multichannel technology director at Asda, asserted in Bladwin (2014a) “in the

UK, there are some things we’re the market leader at, including click and collect and

same-day/next-day delivery”. The company has been trying to improve the click and

collect strategy by investing heavily in technologies, automated collection locker, and

intelligent pods. Interestingly, Asda plans to increase the number of clicks and collect

location from 218 to over 1,000 in the next five years (Asda Store Limited, 2014a).

Besides the click and collect strategy, the company also focuses on Omnichannel

(Baldwin, 2014b). Again, Alex Alexander quoted “We really want to make sure we can

reach out through all channels anytime, anywhere,” (Baldwin, 2014b). Asda’s

Omnichannel strategy is different from others as the plan is deemed to provide a consistent

approach across all of the customers’ interaction with Asda through online, mobile, call

center and in-store (Baldwin, 2014b). Along with Omnichannel, Asda had already

launched Asda Direct strategy in 2008 that enables customers to shop online and over the

phone (Asda Store Limited, 2014ba).

Additionally, as mentioned above that Asda has invested to £700 million on technology,

Asda has believed that having a high tech depots will enhance the capacity and efficiency

to the company supply chain (King, 2012). As a result, the company has come with new

software, cross docking, to enhance and implement the strategy. More importantly, to

maintain the companies’ technologies, the company has opened a technology center in

Leeds to cater better service for customers (Baldwin, 2014a).

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In 2013, Asda set out its three strategic priorities for the next five years. The purposes are

to improve the core business, extend Asda’s reach and expand the brand by lowering

prices, increasing quality and providing customers more opportunities to shop with Asda

(Asda Stores Limited, 2014a). In this respect, the company has planned to invest £1 billion

in lowering price and £250 million in quality, style and design (Addy, 2013).

Interestingly, recently, Asda’s CEO, Andy Clarke, has made an announcement the

restructuring and reforming the scheme on the company management (Clarke, 2014).

Specifically, Mr. Andy Clarke has notified that in order to have strategies delivered, the

company will lead change at the Executive Board level (Clarke, 2014). In this regard, the

restructuring is to have an organization structure where accountabilities are clear,

repetition is removed and decision making is decisive (Clarke, 2014).

Marketing Innovation

Regarding the marketing innovation, Asda has implemented many new approaches to

improve the relationship with its customers. Particularly, Asda has cooperated with EE to

provide public Wi-Fi within the company stores. The public Wi-Fi offering allows staffs

and customers to use their own devices without interfering the company's IT security

policies (EE Limited, 2014). More importantly, with the Wi-Fi offering, Asda reflected it

as a commitment to customer service innovation; also, the offering has brought about

positive improvement toward the company brand positioning (EE Limited, 2014).

Furthermore, Ed Child asserted in EE Limited (2014) that the Wi-Fi usage can be used as

cross-references with customers to get the full overview of customers’ buying behavior;

thus with this means, it has allowed Asda to identify the significant the gaps and provide

better services across all channels.

Besides, to compete in the price competition, Asda has been promoting the price guarantee

strategy. The price guarantee approach is similar to Tesco’s price promise and Sainsbury’s

brand match; also, the procedure is used to offer customers an opportunity to check the

cost of their shopping and online order at Asda against other retailers like Tesco,

Sainsbury and Morrisons (Asda Stores Limited, 2014a).

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3.4 Morrisons

Morrisons is the fourth largest food retailer in the United Kingdom. Initially, the company

was founded by William Morrisons in 1899. Historically, Morrisons has been operating

for over 100 years in the supermarket business. In 1967, the company became a public

limited company listed on London stock exchange. In March 2006, Morrisons became the

fourth largest supermarket in the UK. The company is operated by three famous people

who are Sir Ken Morrison- president, Sir Ian Gibson-chairman, and Dalton Philips-chief

executive officer (Wm Morrison Supermarket, 2014).

As Morrisons is the fourth largest food retailers in the United Kingdom, in 2013, the

company’s annual turnover is £18 billion (Wm Morrison Supermarket, 2013). Also, the

company has over 500 stores across the UK served by 129,000 employees; furthermore,

weekly, over 11 million customers are estimated to visit Morrisons’ store. In the market,

the Morrisons’ market share is 11.8%. Regarding the company financial performance

2012/2013, the company had £18 billion of turnover, £879 million of profit before tax,

26.7p of basic earnings per share, £2.2 billion of net debt and 11.8p of total dividend per

share (Wm Morrison Supermarket, 2013).

In term of the company vision and strategy, Morrisons’ is to be the food specialist for

everyone and it differentiates itself from competitors by having its own manufacturing

and packing facilities, more people in-store preparing food and more specialist butchers,

fishmongers and bakers in-store (Wm Supermarket, 2010). For the company’s strategic

objectives, the company align it to the brand values by focusing on fresh, value and

service. In this respect, the company aims to offer more fresh food with quality at the price

people like, and it seeks to have the right product always available for customers.

In respect to the SWOT analysis, Morrisons is thought to have significant strengths,

weaknesses, opportunities and threats.

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Strengths

One of the main strengths that Morrisons possesses is being one of the largest food

retailers in the United Kingdom. Besides, Morrisons establishes their supply chain with

strong brand loyalty (Bennallack, 2014b), which can be argued to be the strength of the

company.

Weaknesses

The main weakness of the company is that the company has just operated its online

business (Bennallack, 2014b). Since it sponsored the concept of Market Street to the

customers, its network and infrastructure in terms of information technology is not very

well established (Researchomatci, 2014), and also it has only a few convenience stores

compared to its competitors. Furthermore, another weakness of the company is the

reliance of the business upon the UK market.

Opportunities

Opportunities for Morrisons is to build upon weaknesses the company already has.

Creating an online business and opening more of a convenience store would be the best

opportunities for the company (Bennallack, 2014b). Another excellent opportunity for the

company is to into different markets like insurance and banking.

Threats

The big threat for the company is the price war and the increasing of competitors in the

UK, which means the company market share is being stolen (Bennalack, 2014b).

Significant Evidences of Innovation

Product Innovation

As product innovation is a part of the company survivability, Morrisons has invested

heavily into innovation and technology to compete with other big retailers like Tesco,

Sainsbury and Asda. In this respect, the first noticeable product innovation is the

presentation of Morrison’s loyalty cards. Morrisons has created three new loyalty cards,

Match and More, Miles More and Yello. The three new loyalty cards are functioned as

the same as Tesco and Sainsbury’s card since they enable customers to earn points to save

money and collect rewards (Wm Morrison Supermarket PLC, 2014).

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More importantly, Morrisons has introduced the electronic cash counting systems in-store

(Sillitoe, 2013). The introduction of the technology also has helped to ensure and sustain

Morrison’s competitiveness as the technology will simplify the cash counting operation.

The technology was aimed to help improving the efficiency of cash office operation

(Spary, 2013).

Besides, the company has also invested in technology to revamp the company system. For

this matter, Morrisons has launched new farming apps and technology what is called

texting cow (Ws Morrison Supermarket PLC, 2014). Moreover, the development of new

technologies, electronic identification, DNA tags and texting cow, has helped enhancing

food safety and animal traceability as well as animal breeding and husbandry (Ws

Morrison Supermarket PLC, 2014).

Last but not least, the company has been seen to have signed a five-year agreement with

NG Bailey regarding the innovative energy solution. The energy solution is called Rare

Energy, and it is expected to offer a guaranteed cost saving through operational

optimization (NG Bailey, 2014). This energy solution is in the support of the company

carbon reduction target.

Process Innovation

To begin with, one of the significant process innovation that can be seen at Morrisons is

the self-checkout service. Likewise to other big retailers, Morrisons has adopted the self-

checkout service in respond to the rapid change demand of retail customers. Particularly,

Morrisons has been working with Irisys InfraRed Integrated Systems to deliver a queue

management solution (Strange, 2011). With the innovation of the self-checkout service,

Morrisons has introduced the tunnel scanners, new checkout technology, to its new store

in Preston as they are deemed to help improving the checkout process (Thomas, 2013).

Furthermore, in respond to the new company’s commitment towards technology, the

company has updated core systems for the product management and implemented new

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technology to enable electronic communication with its suppliers (Wm Morrison

Supermarket PLC, 2014). In this point, technology has provided Morrisons with the ability

to track stock at every stage during its journey through the warehouse, advancing accuracy

and enabling better service to the stores (Wm Morrison Supermarket PLC, 2014).

Regarding the operation, Morrisons has innovated its approaches by giving tablets to staff

to handle the daily operation (Hegarty, 2013). This approach is to ensure that store

manager are better connected to the business's supply chain and the control on the shop

floor (Sillitoe, 2013). At the same time, technology in the supermarket’s meat

manufacturing has also been innovated by introducing the new platform called central

data platform where store, product and sales information are stored together (Sillitoe,

2013).

Organizational Innovation

In terms of the company’s organizational innovation, the most significant innovation is

structural changes. In particular, Morrisons has invested profoundly to improve and

innovate its new business model by focusing on the implementation and adoption of E-

commerce strategy, increase in the company convenience store and advancement of IT

system (Wm Morrison Supermarket PLC, 2014). In total, the company expected to spend

£1.2bn on the investments, online and convenience stores (Ruddick, 2013).

First of all, unlike like other big players in the industry, Morrisons has just got to operate

its online business in early 2014 due to outdated IT infrastructure and system. In this

regard, Morrisons in 2013 announced a long-term agreement with Ocado Group plc which

would enable Morrisons to operate its online business (Wm Morrison Supermarket PLC,

2014). To develop a new channel, Morrisons had spent £27m on developing its online

food business (Ruddick, 2013). Interesting, upon the online business, Morrisons has

planned to trial its first innovative click and collect the scheme in the year of 2014/2015

(Wm Morrison Supermarket PLC, 2014).

Moreover, with an increase of company convenience store, Morrison had opened 100

convenience stores open by the end of 2013/2014. Along with the increasing of

convenience stores, Morrisons has been focusing on the new formats of store; in this

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respect, Morrisons has planned to develop three new Format Flex store with differing

propositions, ranges, store designs and environments (Hegarty, 2014). The new formats

of Morrison would build on the ease of shop work already used across Morrisons’ stores.

Morrisons’ director of format & space, Andy Newton, asserted that the new formats would

make their customers feel relevant to them and their family (Hegarty, 2014). In particular,

Morrisons has launched a new store format, M Local, which aims to offer a new take on

supermarket shopping somewhere between a local market and a convenience store.

Marketing Innovation

Regarding the company marketing innovation, Morrisons has been trying to revamp its

systems to keep in touch with its customers. In the price competition with other retailers,

Morrisons has positioned itself as a low-priced supermarket with “Love it Cheaper”

strategy (Smith, 2014). The new brand positioning of the company is “I am your new

cheaper Morrisons”. Within the low-priced strategy, Morrison has launched a strategy

called Match and More to provide a price match guarantee against Aldi, Lidl, Tesco,

Sainsbury and Asda (Wm Morrison Supermarket PLC, 2014). Along with this, Morrisons

has been trailing three loyalty cards as part of its pricing strategy. The three new loyalty

cards work the same as Tesco and Sainsbury’s card since they allow customers to receive

points to save money and collect rewards (Wm Morrison Supermarket PLC, 2014).

In addition, Morrisons was expected to be the first retailer to run mobile marketing

campaigns across the Vodafone, EE and O2 network via the Weve joint venture

(Chapman, 2013). In this campaign, the company would be able to contact 15 million

mobile users.

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Tesco

Product Innovation Process

Innovation Organizational

Innovation Marketing Innovation

Club Card Hand Scanner Invest in the UK market Club Card Strategy

In Store Technologies: Self-Checkout tills

Establish Multi-Channel - Leadership

Price Promise Scheme

-Broccoli Cam -Super tills BT Cloud Contact Technology -Smart Badge -Slim line tills

-Electronic Shelf Edge

£200 million invest in price

- Hand Scanner Mapster

(Application)

-Augmented Reality Online Grocery

Sainsbury

Nectar Card Self-Checkout till Strategic Review Nectar Card Strategy

LED Light Mobile Scan and Go

Invest in Price Scheme

Brand Match

-Save Energy

Biomass Boiler Mobile Payment

New Store Format (Zapp)

Rainwater Harvesting

Online Grocery

Sustainability Plan 20*20

Natural Refrigeration

Enhance Channels and Services

Recycling Facilities

Real-time Technology

Sheep Worming Technology

Asda

Intelligent Pods

Self Service Expansion of Click and

Collect Strategy

Public Wi-Fi

-Rapid Scan -Brand Positioning

-Cross reference

Beacons

Mobile Payment Omni Channel

Price Guarantee

(Zapp) -Online, Mobile, Call Centre,

In store

YouTube Channels Cross Docking High Tech Depots

Enactor TM Software Online Grocery

Low Price Strategy

Increase Quality

Restructuring

Morrisons

Morrisons Loyalty Cards Self Service

E-commerce Strategy Loyalty Cards strategy -Tunnel Scanners

Cash Counting System Online Grocery

Click and collect Strategy Match and More strategy

-Price Guarantee

New Farming Apps Use of tablets

Increase convenience store

Mobile Marketing Campaign

-Texting cows

Central Data Platform

-Electronic ID

-DNA tags

NG Baily Solution New Store Format

(Energy Solution) Investment in Technology

Fig

ure

6:

Over

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w o

f T

esco

, S

ain

sbu

ry, A

sda a

nd

Morr

ison

s

Sig

nif

ican

t In

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on

s

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Chapter 5 Analysis and Discussion

In this chapter, the author is going to present analysis of the finding evidences as to fulfill

the aims and objective of the research and to answer the research questions.

To begin with, as described in the literature view chapter, innovation has played a major

role not only in the retail sector, but also another noticeable sectors like financial,

telecommunication and manufacturing. In the four big industries, the innovation is

understood to range from the adoption of new technologies to the innovation and

implementation of new business models and strategies. Also, the key reason that

innovation exists in those industries is that because firms need to innovate in order for

them to survive and gain competitive advantage (Goksoy, Vayvay and Ergeneli, 2013) in

the competitive market.

Specifically, in the United Kingdom’s retail supermarkets, it is observable that the

innovation has performed an indispensable role in the market. What is more, it is also

noticeable that the innovation is ranged from the utilization of new technologies to the

enforcement of new strategies and business models (referring to figure 6). Likewise,

Shankar and Yadav (2011) asserted that the innovation in retailing has been ranged from

modification in business model, store formats, and technologies for chasing growth

opportunities in the market.

Additionally, it is perceivable that organizational innovations are the core of the

innovation. As organizational innovation is the core, it shows the correlation between

organizational innovation, product innovation, process innovation, and marketing

innovation. Particularly, the innovation in strategy of the four companies triggers the

investment and development of technologies as to achieve the innovative strategy and to

stay competitive. One of the explicit examples of the four retailers is the innovation in

establishing and enhancing their channels and services. The innovation in such strategy

sparks the development and introduction of online grocery, the creation of convenience

store, the use of loyalty cards, the increase in self-checkout tills and price guarantee

scheme, the as well as clicks and collect plan. Likewise, it is discussed by Gunday, Ulusoy,

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Kilic and Alpkan (2011) that there are significant positive correlations between the four

types of innovations. As a result, it can be assumed that there is noteworthy correlation

between organizational innovations and other three types of innovations in the UK’s retail

supermarkets.

More importantly, it is also recognizable that the big four retailers have very similar

strategies and technologies used in their store. In this regard, referring to figure 6, it shows

that retailers are trying to develop and innovate their strategies, business models and

technologies to be competitive and innovative in the UK market. In particular, in the

product innovation, the significant innovations overview of the four retailers are the

innovation of loyalty card and the adoption of technologies to help enhancing in-store

experience. For process innovation, the noteworthy innovations currently being adopted

are the innovation of new self-checkout tills and the adoption of mobile app. For

organizational innovation and marketing innovation, it can be seen that the four companies

have invested heavily in their new business models and strategies to improve their

channels systems and customers’ awareness. For example, the E-commerce strategy, the

adoption of clicks and collect strategy, the establishment of new store format and the

adoption of low-price strategy are the indication of strategies used to gain and maintain

their market share and fulfill their customers’ satisfaction.

Primarily, for the questionnaire finding, there are 100 respondents, male 69 and female

31, whose age between 18 and 54 (See Graph 1 and table 1).

Graph 1: Age of Respondents

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Table 1: Cross tabulation of Gender and Age of Respondents

Age Total

18-25 26-34 35-54

Gender Male 44 24 1 69

Female 23 7 1 31

Total 67 31 2 100

Stimulatingly, based on the survey findings, it shows that customers frequently shop more

at Tesco, Asda and Sainsburys among the four retailers (see graph 2). Moreover, the result

shows that among the big four retailers, Tesco, Asda and Sainsburys are perceived to have

more innovative technologies to help customers while they shop (see graph 3). As it is

suggested that innovative firms tend to have high market share (Gunday, Ulusoy, Kilic

and Alpkan, 2011), it can be said that the three retailers have large market share in the

market. Therefore, with link of the innovativeness and the level of retailers’ market share

and based on Liargovas and Skandalis (2012), who argued that the competitiveness of the

firm in market can be defined the market share of a company, it can be assumed that Tesco,

Asda, Sainsbury and Morrison are trying to be innovative in order for them to increase or

maintain their market share as it has a significant implication toward the competitiveness

in the firm.

Graph 2: Supermarkets that customers frequently shop

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Graph 3: Company that has more innovative technologies

Alternatively, it can be understood that innovation in the retail supermarket has significant

influences on customers buy’s decision. According to the survey result, it indicates that

77% of the respondents prefer to use self-checkout service to traditional checkout, and

more than 70% of them use the self-checkout more than occasionally, which means that

seven people out of ten prefer to use self-checkout and have used it more than

occasionally. More importantly, the finding also shows that 70% of them prefer to visit a

retailer with self-checkout kiosks than others, while there is only a small percentage of

them who disagree and neither agree nor disagree, 13% and 17% respectively. With this

statistic, it can be assumed that customers whose age between 18 and 35 in the United

Kingdom prefer to shop at stores that have more innovative technologies as they like to

have those technologies to help.

What is more, regarding customers’ perception toward shopping, the result shows that

71% of the respondents like to shop in-store rather than shop online. However, even

though 71% of them like to shop in-store, more than 70% of respondents still believe that

online shopping service provided retailers are useful whereas there is less than 10% who

disagree with that. More importantly, the result indicates that 70% of the respondents

consent that the ease of online shopping provision guides their decision to choose retailer

when they shop online while there is only 9 % of them disagree and 21 % of them do

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really take this matter into account. Therefore, it can be implied that seven out of ten

customers would choose to shop in stores and believe that online shopping provided by

retailers is useful. With this statistical evidences, it can be discussed that even though

customers seem to like in-store shopping, still there is opportunity for retailers to gain

more market share through online shopping by improving the accessibility of online

shopping for customers as a majority of them believe that online shopping is beneficial,

and it helps guiding their decision to choose retailers. Plus, this implication also reveals

the importance of how innovations influences retailers’ business.

Specifically, regarding the mobile app, the finding shows that there is only 10% of the

respondents are fully aware and have accessed to the supermarket mobile app. The reasons

behind this could be the lack of awareness of the technology and the lack of understanding

towards the technology. Therefore, it reveals a significant opportunity for retailers to take

advantage of the technology since it allows retailers to improve their operations and

increase their market share by increasing the awareness and understanding of the

technology to customers, and make use of the technology benefits. Also, with the

development of technologies from retailers like online shopping, self-checkout tills, and

mobile apps, it can be discussed that technologies, which are being adopted by retailers,

influence customers’ purchasing decision.

Concerning about how clients choose to shop at a particular store, the result of the finding

signifies that there are six reasons, which are price, location, friendliness of staff,

promotions, the variety of food, and quality of food, are considered when customers

choose to shop. Numerically, the finding indicates that price and location factor are

accounted for 60% of the total responses. By this means, it entails that customers consider

the price and location factor to be important factors when they shop. In other word, it can

be said that six customers out of 10 customers would choose to shop at retailing company

that has more reasonable price and convenience location over the others. As it is

mentioned above that retailers are now investing heavily to innovate their business models

and strategies by improving the multichannel systems and investing in pricing strategy, it

can be analyzed that there is a connection that between the customer’s preferences on how

Page 66 of 93

they choose to shop at a certain store and innovations that currently adopted by retailers.

For example, in case that Asda has improved their multichannel systems and offered lower

prices compared to other retailers, customers will tend to choose Asda over the other stores

when they shop. Therefore, with the implication, numerical evidences and the link with

innovation evidences, it can be understood that innovations that are currently adopted by

retailers have influential impacts on customers’ buying decision in term of store selection.

In nutshell, with the previous literatures and analysis, it can be understood that innovations

in big industries like financial, telecommunication, manufacturing and retailing industry

are ranged from the adoption of new technologies to the innovation and implementation

of new business models and strategies. Specifically, in the UK’s retail supermarket,

technological and non-technological innovations are being adopted by retailers in order

for them to stay competitive in the market. Last but not least, with the survey data analysis

and secondary source, it can be scrutinized that innovations that are currently adopted by

retailers in the United Kingdom have an influential impact on customers’ buying decision

in term of store selection.

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Chapter 6: Conclusion

In conclusion, the first central commitment of the dissertation is to gain an understanding

about innovation in the service sector which is described in literature review chapter.

Explicitly, innovations in financial, telecommunication, manufacturing and retailing

industry are ranged from the adoption of new technologies to the implementation of new

strategies and business models; for example, the introduction of ATM in financial sector,

the outsourcing strategy in telecommunication and manufacturing and the usage of self-

service checkout technologies in retail sector. In addition, another main purpose of the

dissertation is to examine the impact of innovation in the UK retail supermarket and to

find out innovations that are currently being adopted by retailers. In this respect, the result

shows that retailers are adopting and investing heavily on both technological and non-

technological innovation in order for them to be competitive in the market. Finally, the

purpose of the dissertation is also to investigate how innovation in the UK retail

supermarket influences customers’ buying decision. The outcome indicates that

customers’ decision to shop in a certain store is influenced by innovations adopted by

retailers.

In term of the contribution of the dissertation, the dissertation contributes to the current

state of innovation literature by focusing on the impact of innovation in the UK retail

supermarket on customers’ buying behavior in the United Kingdom. What is more, the

dissertation is one of very few pieces of research done specifically on the role of

innovation in the United Kingdom’s retail supermarket. Additionally, the study makes a

useful contribution to the business environment, especially to the UK’s retail competition.

By this means, it helps to raise an awareness of the management on how important

innovation is. Retailers should take a look at their innovation strategies and plans as the

innovation will affect the value of their companies. Gunday, Ulusoy, Kilic and Alpkan

(2011) asserted that having a firm understanding of the exact nature of innovations will

help companies to prioritize their market, production and technology strategies, to be

followed by appropriate subsequent action plan. Furthermore, the dissertation allows

Page 68 of 93

firms to understand how significant innovation is when dealing and connecting with their

customers.

On the other hand, it should be pointed out that this dissertation is limited by several

factors. First of all, the limitation of the research instrument. The research was initially

planned to use interview method to extract in-depth information from respondents;

however, the method was limited since respondents disapproved to participate. Therefore,

quantitative method and secondary source were used in respond to the limitation. In

addition, another limitation of this research is the scope of its sample. The study focused

only on the four big retailers in the United Kingdom due to the limitation of adopting a

secondary source. Moreover, the population of the survey was 100, so it is hard to

generalize the customers’ buying behavior internationally. Nevertheless, the study has

attempted to contribute to this highly important topic by providing empirical evidence on

UK market.

Last but not least, this dissertation has revealed that the role of innovation in the UK’s

retailer supermarket is looking for further studies. This topic is very interesting, and it

should get more attention from academics. Importantly, further studies should look at

impact of innovation on retailer’s performance. What is more, further studies should look

at the impact of innovation on retailer’s competitiveness by measuring financial

performance. Finally, further studies about the topic can be improved by using mix-

methodology in respond to the limitation of this dissertation.

Page 69 of 93

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Page 82 of 93

Appendix 1

Questionnaire

1. Which of these major supermarket do you frequently shop at?

Tesco Asda Sainsbury Morrisons

2. Why do you like to shop there?

…………………………………………………………….

3. Between the four big companies mentioned above, which one do you think that

has more innovative technologies to assist while you are shopping?

Tesco Asda Sainsbury Morrisons

4. When checking out, do you prefer to use self-checkout service to the traditional

checkout service?

Yes No

5. How often do you use self-checkout service when you do the grocery shopping?

Very Frequently Frequently Occasionally Rarely

Never

6. Would you prefer to visit a retailer with self-checkout kiosks than others?

Strongly Disagree Disagree Neutral Agree Strongly

Agree

7. Do you like to shop online or shop in-store?

Shop online Shop in-store

8. Do you think online shopping provided by the retailers is useful?

Strongly Disagree Disagree Neutral Agree Strongly

Agree

9. Does the ease of online shopping provision guides your decision to choose the

retailer?

Strongly Disagree Disagree Neutral Agree Strongly

Agree

Page 83 of 93

10. Do you have loyalty card? If no, please skip question 11.

Yes No

11. Do you find that loyalty card provides you plenty of benefits when doing the

grocery shopping?

Strongly Disagree Disagree Neutral Agree Strongly

Agree

12. Have you ever used the grocery supermarket mobile app to do grocery shopping?

If no, please skip question 13.

Yes No

13. Do you find using mobile app to shop is useful?

Strongly Disagree Disagree Neutral Agree Strongly

Agree

14. What is your gender?

Male Female

15. How old are you?

Under 18 18-25 26-34 35-54 55-64

Over 65

Page 84 of 93

Appendix 2

Initial Report Last Modified: 12/08/2014

1. 1. Which of these major supermarket do you frequently

shop at? # Answer

Response % 1 Tesco

26 26%

2 Asda

28 28%

3 Sainsbury

27 27%

4 Morrisons

19 19%

Total 100 100%

Statistic Value Min Value 1

Max Value 4

Mean 2.39

Variance 1.15

Standard Deviation 1.07

Total Responses 100

2. 2. Why do you like to shop there?

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Text Response Its cheap

It is cheap

Groceries

24 hours

Because it's near to my house

Staffs are friendly

Close to home

close to my house

closed to my house and reasonable price

Cheaper

Promotion activity , convience and sometimes cheaper

it's close to my house

grocery shopping

It's cheap and near to my place.

The nearest shop in my neighbourhood

NEAR MY HOUSE

Near home

Many choices of food and things

Convenience

food and vegetable

Cheap

next to my house

it is near my house

Food

cheap and close by

Food

close to my school

quality

Near home

Near my house

Convenient

Its cheap

Near my house

Fresh Food

It's near

Its cheap

near my place

Close to school

It is close to my house

Its cheap

Its cheap

It has food that i need

Its close to my house

Fresh food

Fresh foods

Its close to my place

Its close to my place

It has food that I need

Its cheap

Its close to my place

Page 86 of 93

Its close to my house

Its cheap

Its cheap

Fresh Food

Its cheap

Friendly environment

Great choice

Environmental Friendly

There are variety of foods

There are many asians food.

Meat is cheap

convenience

cheap prices

Cheap meats

Cool store

Foods are cheap

It has asian ingredients

Fresh food

There are a lot of food

There are a lot of asian ingredents

It is the nearest shop and cheap.

Close to my house

Food are cheap

There are a lot of food

Its cheap

There are a lot of foods

My family always shop there

The location is friendly

There are a lot of food

Its cheap

its near my house

meat are cheap

Its near my place

Cheap food

Meats are cheap

Fresh meat

Fresh meat

Reasonable price

Close to my house

A lot of food

Close to my school

Its cheap

Fresh food

low prices

in neighbourhood

the nearest shop

Its cheap

variety of produts

get more discount

cheap product than other market

Page 87 of 93

Statistic Value Total Responses 100

3. 3. Between the four big companies mentioned above, which

one do you think that has more innovative technologies to

assist while you are shopping? # Answer

Response % 1 Tesco

35 35%

2 Asda

36 36%

3 Sainsbury

26 26%

4 Morrisons

3 3%

Total 100 100%

Statistic Value Min Value 1

Max Value 4

Mean 1.97

Variance 0.74

Standard Deviation 0.86

Total Responses 100

4. 4. When checking out, do you prefer to use self-checkout

service to the traditional checkout service? # Answer

Response % 1 Yes

77 77%

2 No

23 23%

Total 100 100%

Statistic Value Min Value 1

Max Value 2

Mean 1.23

Variance 0.18

Standard Deviation 0.42

Total Responses 100

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5. 5. How often do you use self-checkout service when you do

the grocery shopping? # Answer

Response %

1 Very

Frequently

17 17%

2 Frequently

54 54%

3 Occasionally

23 23%

4 Rarely

6 6%

5 Never

0 0%

Total 100 100%

Statistic Value Min Value 1

Max Value 4

Mean 2.18

Variance 0.61

Standard Deviation 0.78

Total Responses 100

6. 6. Would you prefer to visit a retailer with self-checkout

kiosks than others? # Answer

Response %

1 Strongly

Disagree

3 3%

2 Disagree

10 10%

3

Neither

Agree nor

Disagree

17 17%

4 Agree

59 59%

5 Strongly

Agree

11 11%

Total 100 100%

Statistic Value Min Value 1

Max Value 5

Mean 3.65

Variance 0.84

Standard Deviation 0.91

Total Responses 100

Page 89 of 93

7. 7. Do you like to shop online or shop in-store? # Answer

Response % 1 Shop online

28 28%

2 Shop in-

store

71 72%

Total 99 100%

Statistic Value Min Value 1

Max Value 2

Mean 1.72

Variance 0.20

Standard Deviation 0.45

Total Responses 99

8. 8. Do you think online shopping provided by the retailers is

useful? # Answer

Response %

1 Strongly

Disagree

3 3%

2 Disagree

4 4%

3

Neither

Agree nor

Disagree

16 16%

4 Agree

69 69%

5 Strongly

Agree

8 8%

Total 100 100%

Statistic Value Min Value 1

Max Value 5

Mean 3.75

Variance 0.61

Standard Deviation 0.78

Total Responses 100

Page 90 of 93

9. 9. Does the ease of online shopping provision guides your

decision to choose the retailer? # Answer

Response %

1 Strongly

Disagree

4 4%

2 Disagree

5 5%

3

Neither

Agree nor

Disagree

21 21%

4 Agree

61 61%

5 Strongly

Agree

9 9%

Total 100 100%

Statistic Value Min Value 1

Max Value 5

Mean 3.66

Variance 0.75

Standard Deviation 0.87

Total Responses 100

10. 10. Do you have loyalty card? If no, please skip question 11 # Answer

Response % 1 Yes

64 64%

2 No

36 36%

Total 100 100%

Statistic Value Min Value 1

Max Value 2

Mean 1.36

Variance 0.23

Standard Deviation 0.48

Total Responses 100

Page 91 of 93

11. 11. Do you find that loyalty card provides you plenty of

benefits when doing the grocery shopping? # Answer

Response %

1 Strongly

Disagree

0 0%

2 Disagree

0 0%

3

Neither

Agree nor

Disagree

4 6%

4 Agree

46 69%

5 Strongly

Agree

17 25%

Total 67 100%

Statistic Value Min Value 3

Max Value 5

Mean 4.19

Variance 0.28

Standard Deviation 0.53

Total Responses 67

12. 12. Have you ever used the grocery supermarket mobile

app to do grocery shopping? If no, please skip question 13. # Answer

Response % 1 Yes

10 10%

2 No

90 90%

Total 100 100%

Statistic Value Min Value 1

Max Value 2

Mean 1.90

Variance 0.09

Standard Deviation 0.30

Total Responses 100

Page 92 of 93

13. 13. Do you find using mobile app to shop is useful? # Answer

Response %

1 Strongly

Disagree

0 0%

2 Disagree

3 13%

3

Neither

Agree nor

Disagree

6 26%

4 Agree

13 57%

5 Strongly

Agree

1 4%

Total 23 100%

Statistic Value Min Value 2

Max Value 5

Mean 3.52

Variance 0.62

Standard Deviation 0.79

Total Responses 23

14. 14. What is your gender? # Answer

Response % 1 Male

69 69%

2 Female

31 31%

Total 100 100%

Statistic Value Min Value 1

Max Value 2

Mean 1.31

Variance 0.22

Standard Deviation 0.46

Total Responses 100

15. 15. How old are you? # Answer

Response % 1 Under 18

0 0%

2 18-25

67 67%

3 26-34

31 31%

4 35-54

2 2%

5 55-64

0 0%

6 Over 65

0 0%

Total 100 100%

Page 93 of 93

Statistic Value Min Value 2

Max Value 4

Mean 2.35

Variance 0.27

Standard Deviation 0.52

Total Responses 100