Research and development (R&D) is a key driver of innovation and competitiveness in the retail industry. R&D spending can help retailers create new products, services, processes and business models that meet customers’ changing needs and preferences. R&D spending can also help retailers improve operational efficiency, reduce costs, enhance quality and comply with regulations.
However, R&D spending is not evenly distributed across the retail sector. Some retailers invest more than others in R&D activities, reflecting their different strategies, capabilities and priorities. In this article, we will compare the R&D spending of Selfridges, a leading UK department store chain, with the average R&D spending of its peers in the UK retail industry.
Selfridges: A Leader in R&D Spending
Selfridges is a well-known luxury retailer that operates four department stores in London, Birmingham and Manchester, as well as an online platform. Selfridges is part of the Selfridges Group, which also owns Brown Thomas and Arnotts in Ireland, Holt Renfrew in Canada and de Bijenkorf in the Netherlands.
According to its latest annual report, Selfridges spent £36.9 million on R&D activities in the year ended 1 February 2020, an increase of 8.6% from £34 million in the previous year. This represents 2.1% of its total revenue of £1.8 billion in 2020, which was slightly lower than £1.9 billion in 2019 due to the impact of the COVID-19 pandemic.
Selfridges’ R&D spending as a percentage of revenue is significantly higher than the average R&D spending of its peers in the UK retail industry. According to the Office for National Statistics (ONS), the gross domestic expenditure on R&D (GERD) performed by UK businesses in the retail trade sector was £1 billion in 2019, which was 0.4% of their total revenue of £252 billion. This means that Selfridges spent more than five times as much as the average UK retailer on R&D activities relative to its revenue.
Why Does Selfridges Spend More on R&D?
Selfridges’ high R&D spending reflects its commitment to innovation and differentiation in a highly competitive and dynamic market. Selfridges aims to offer its customers an exceptional shopping experience that combines quality, exclusivity, creativity and sustainability. To achieve this goal, Selfridges invests heavily in developing new products, services and technologies that enhance its brand value and customer loyalty.
Some examples of Selfridges’ recent R&D projects include:
- Launching Project Earth is a sustainability initiative that aims to change how people shop by offering more ethical and environmentally friendly products, services and experiences.
- Developing a new digital platform that integrates online and offline channels and offers personalised recommendations, seamless transactions and convenient delivery options.
- Creating a new beauty hall with over 200 brands, interactive displays, personalised consultations and experiential zones.
- Introducing a new food hall that showcases local and international cuisines, artisanal products and innovative concepts.
- Opening a new cinema that offers a premium viewing experience with state-of-the-art technology and luxury amenities.
What Are the Benefits of Selfridges’ R&D Spending?
Selfridges’ R&D spending has enabled it to achieve several benefits that enhance its competitive advantage and profitability. Some of these benefits include:
- Increasing customer satisfaction and retention by offering unique and memorable shopping experiences that cater to diverse needs and preferences.
- Attracting new customers and expanding its market share by offering distinctive and exclusive products and services unavailable elsewhere.
- Improving operational efficiency and reducing costs by adopting new technologies and processes, optimising resources and streamlining workflows.
- Enhancing brand reputation and loyalty by demonstrating social responsibility and leadership in sustainability issues.
- Stimulating innovation culture and employee engagement by encouraging creativity, collaboration and experimentation.
Conclusion
Selfridges is a leader in R&D spending among UK retailers, investing more than five times as much as the average UK retailer on R&D activities relative to its revenue. Selfridges’ high R&D spending reflects its commitment to innovation and differentiation in a highly competitive and dynamic market. Selfridges’ R&D spending has enabled it to achieve several benefits that enhance its competitive advantage and profitability, such as increasing customer satisfaction and retention, attracting new customers and expanding its market share, improving operational efficiency and reducing costs, enhancing brand reputation and loyalty, and stimulating innovation culture and employee engagement.