The digital sector is estimated to be contributing £100bn to the UK economy, a figure which continues to grow. At the center of it all is London’s Tech City, overflowing with ideas, innovation and collaboration, with a huge amount of influence. International investors are increasingly investing in London’s Tech City, so we ask why?
London has changed from a city that has been dependent on the financial services industry to a city which has a technology hub large enough to rival Silicon Valley and New York. “According to a Telefonica/European Commission Report, London has 32 accelerators/incubators for start-up companies, out of 50 in the UK as a whole.” [ii] Establishing itself as Europe’s digital capital, London’s East End has gone from strength to strength – drawing international investors at a staggering rate.
Figures by London & Partners, the Mayor of London’s promotional company for the capital, indicated that “London-based tech firms attracted $795.2m from US investors in 2014, more than doubling the previous record figure from 2012 of $296m.”[iii]
As technology has become more accessible and the price has steadily decreased, investors are in a position to spread their bets across many different start-ups. Previously, investors needed a significant amount of money to invest in start-ups which took a longer time to prove fruitful. Tech companies now have a culture of failure in which they live by the mantra “Fail fast, fail often”[i]. Failure is celebrated and investors can rest assured that start-ups can now ‘fail fast or win big’.
With governmental support, The Enterprise Investment Scheme (EIS), “boosted upfront income tax relief for private investors from 20% to 30%. This means that the amount that any individual can invest through EIS has doubled from £500,000 to £1 million a year. Government incentives continue to ensure that London and the entire UK is the easiest and most attractive place to start and grow a digitally enabled business”.
Joanna Shields, Chief Executive of London’s Tech City has this to say, “We are living through an amazing period of technology-driven creativity and innovation that holds the potential to transform society, culture and business on a mass scale”. We know what you’re thinking, what does all this mean for retail?
Many sources including the Guardian and the BBC have indicated what the impending changes to retail will be, mostly in the form of store upgrades and alterations. The addition of cutting edge technology will see the in-store experience modified, bridging the gap between the digital world and the physical store. In an interview with BBC Breakfast, James Galton of IGD noted that technological advances will see retailers attempt to make “shopping fun, the element of play is incredibly important” . Online stores have added convenience to shopping and stores will have to improve the customer experience and continue to give customers reasons to shop offline.
An example is Burberry’s flagship store in Regent’s Street, launched in 2012 and dubbed Burberry World Live. Complete with integrated features, and iPad’s instead of tills, the 44,000 square foot store sees the high-end retailer leading the way in utilising digital innovation. “The store includes the world’s tallest retail screen, 550 hidden speakers, screens which turn into mirrors when needed and a hydraulic stage for performances. It also features RFID microchips in some items of clothing which when worn, transform mirrors into screens showing how the clothes look on a catwalk.”
The future of retail lies in utilising data in order to provide a more seamless in-store experience. Brands will need to bridge the gap between the online and offline retail experience – and the best method to this is via the mobile platform. Attending Truestart’s R:Evolution event earlier this month demonstrated the impending collaboration between retailers and start-ups, with Microsoft’s JC Oliver, reminding the attendees to focus on innovation and surprise customers. Truestart have proved themselves to be a driving force for change, “investing in retail, consumer and fashion start-ups and providing sector specialist support to accelerate the growth and trajectory of companies.”
Truestart R:evoution, March 5th 2015. <http://revolution.truestart.co.uk/>
[ii] Tech Powers the London Economy – The Tech City 3rd Anniversary Report < http://www.techcityuk.com/investors/#investor-top
[iii]PWC. If Stores Had a Voice. <http://digital.pwc.com/if-stores-had-a-voice/>
[iv] Roy Carroll, Silicon Valley’s culture of failure … and ‘the walking dead’ it leaves behind. The Guardian <http://www.theguardian.com/technology/2014/jun/28/silicon-valley-startup-failure-culture-success-myth>
[v] IGD. The impact of technology on retailing. <https://www.igd.com/Research/Retail/Innovation-digital/26691/The-impact-of-technology-on-retailing/>
[vi] Dharmendra Patel. Luxury retailers leading the way with in-store technology. The Guardian < http://www.theguardian.com/media-network/media-network-blog/2013/jan/15/luxury-retailers-in-store-tech>