SMEs in the South East are planning to invest more in product innovation over the next 12 months, according to new research from B2B e-commerce platform Alibaba.com.
The research of 1,000 decision makers across UK SMEs revealed that nearly one in two (48%) in the South East are planning to spend more on product innovation and research and development, despite economic uncertainty and rising costs.
Eight in 10 (80%) of SMEs in the South East 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 SMEs in the South East planning to invest more in product innovation, more than a third said their investments would focus on improving the quality of existing products (38%) alongside gaining a competitive edge over other businesses (31%). A quarter (24%) are hoping to leverage product innovation to respond to customer needs (25%).
While SMEs in the South East demonstrate a strong innovation mindset and determination to differentiate themselves, they face several barriers. Nearly half (47%) said that the cost of innovating or financing innovation is too expensive, and nearly three in five (59%) cited high costs as a challenge to sourcing new products.
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 SMEs in the South East (35%) said that struggling to keep up with the pace of change and a lack of in-house capabilities (30%) were barriers to product innovation. Just under a quarter (23%) said they don’t have the necessary expertise or knowledge.
To address this, some are turning to AI tools to support product innovation. According to the research from Alibaba.com, more than two-thirds (67%) confident using AI tools for product innovation.
The new findings come as Alibaba.com prepares to host CoCreate Europe in London on 14 November. 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.
Kuo Zhang, president of Alibaba.com, said: “Our findings underline a simple truth: for SMEs, product innovation is the path to growth. They’re pushing ahead despite costs and resource pressures, asking us to take the friction out.
“With CoCreate Europe in London this November, we’re answering that call, bringing entrepreneurs, SMEs and manufacturers together with practical, hands-on advice for 2026: quicker supplier discovery, lower-risk pilots and AI that amplifies small teams, enables faster concepting and smarter supply matching.
“London’s creative heartbeat and Europe’s ingenuity make this the ideal place to learn, test and build, together.”
