UK retailers are planning to invest more in product innovation over the next 12 months, according to new research from Alibaba.com, a leading platform for business-to-business (B2B) e-commerce.
The research of 1,000 decision makers across UK SMEs and retailers revealed that more than one in two (51%) are planning to spend more on product innovation and research and development, despite economic uncertainty and rising costs. More than 9 in 10 (91%) of UK retailers surveyed said product innovation was an important factor in the growth and success of their business, underlining the positive impact of coming up with new ideas and making those ideas a reality.
Of those retailers planning to invest more in product innovation, nearly half said their investments would focus on improving the quality of existing products (43%), while more than a third said it was in response to customer needs (34%). Just under in one in five (19%) of retailers are hoping to leverage product innovation to gain a competitive edge over other businesses.
While UK retailers demonstrate a strong innovation mindset and determination to differentiate themselves, they face several barriers. Nearly two thirds of UK retailers (59%) said that the cost of innovating or financing innovation is too expensive and also cited high costs as a challenge to sourcing new products (61%). This reflects broader macroeconomic challenges facing UK SMEs – according to the British Chamber of Commerce, 57% of UK businesses are concerned about inflation.
A lack of resources was also a noticeable barrier to product innovation. More than a third of UK retailers (37%) said that they struggled to keep up with the pace of change which deterred them from focusing on product innovation in their business. Meanwhile, nearly a quarter (23%) lack the in-house resources to drive it forward, and almost one in five (19%) said they don’t have the necessary expertise or knowledge.
To address this, some UK retailers are turning to AI tools to support product innovation. According to the research from Alibaba.com, nearly two-thirds (58%) of UK retailers feel confident using AI tools for product innovation.
The new findings come as Alibaba.com prepares to host CoCreate Europe, its flagship B2B event in Europe. After several successful editions in Las Vegas, Alibaba.com will host the event in Europe – taking place in London on 14 November – for the first time. This will bring together retailers, SMEs, entrepreneurs, manufacturers and investors for a full-day programme of product innovation and business building, offering advice on how to cut business costs, build resilient supply chains, and harness AI for growth.
CoCreate Europe will also host CoCreate Pitch – the world’s largest product-based pitch competition. On the 14th November, 30 finalist SMEs will pitch their most innovative product innovations to a judging panel. Ten winners will receive $20,000 worth of prizes, while the grand winner will receive $200,0001 to help develop their product, out of a total global prize pool worth $400,0001.
Kuo Zhang, president, Alibaba.com, said, “Our research highlights a recognition from UK retailers of the importance of product innovation, which we see as the driving force to unlocking growth and achieving success. As UK retailers continue to navigate a challenging economic environment, their commitment to product innovation is unwavering.
“In light of this, we are really excited to be hosting our CoCreate Europe event in London in November, which, alongside acting as a platform for SMEs to connect, will offer meaningful and actionable advice on how to get ahead in 2026.”
CoCreate Europe will take place on 14 November 2025 at the InterContinental London at the O2. Tickets are available to purchase at wwww.alibabacocreate.com
