Online titan Amazon announced on 19 October that it will be opening a corporate office in Manchester in 2019 in a further boost to the city’s credentials as an emerging digital and e-commerce powerhouse.
Manchester’s historic Hanover Building situated in the city’s Noma district will provide a home to at least 600 new corporate and research and development (R&D) roles in a move secretary of state for digital, culture, media and sport, Jeremy Wright, described as “a vote of confidence in [the UK’s] world-leading skills in tech innovation”.
The six-storey, 90,000ft2 site will house staff working on software development, machine learning and R&D, complementing existing Amazon UK development centres in London, Cambridge and Edinburgh.
Amazon’s announcement came just days after online cards and gifts retailer Moonpig revealed that it will be opening a tech hub in Manchester in November, where it will develop an e-commerce, data and personalisation platform.
Both Amazon and Moonpig follow in the footsteps of several other retailers and businesses in the digital and e-commerce space launching in Manchester or making plans to move there.
From Boohoo.com, InTheStyle.com, ISawItFirst.com, and Missguided choosing to start their blossoming fast fashion operations in Manchester, to beauty player The Hut Group’s commitment to invest £750m in the area with a huge new facility, Booking.com’s decision to open a European headquarters, and Vodafone confirming it will use the region to test 5G capabilities, there’s a clear digital drive in the city.
Moonpig chief technology officer (CTO) Peter Donlon says he is looking for “the best engineering talent out there to turbo-charge the Moonpig business”, and cites Manchester’s “thriving tech scene and wealth of exceptional talent”. But what else is fuelling the digital economy in Manchester?
According to Lou Cordwell, founder of Magnetic North, chair of Design Manchester and board member for Greater Manchester Local Enterprise Partnership, it is a combination of factors. She says the city has astute leadership in the form of mayor Andy Burnham, but the positive commercial situation is more than 20 years in the making.
She acknowledges the city is benefiting from leading the way in terms of operating with a devolution of powers and budgets from central government, which give it a certain freedom in decision-making that avoids “Whitehall’s cookie-cutter approach”.
“The things Manchester has done well – which aren’t easy to emulate, but if other cities can do them it’s the secret to success – is in laying out long-term foundations for some of the things we’re now seeing,” she says, listing affordable housing and commercial property, and an extended tram network as factors in the city’s success.
Cordwell argues that, generally speaking, people want to live in places where they can have a good quality of life relating to jobs, cultural stimulation, affordability and accessibility, adding: “Manchester has had that 360-degree view for a long time.
“The city has a very sophisticated mechanism for the private and public sector to work together with clear leadership, such as through initiatives like the Greater Manchester Strategy. We recognise all of those things influence one another.”
The BBC’s decision to relocate so much of its national operations to neighbouring Salford has also fed into pockets of digital innovation kick-starting across Manchester, she adds.
Manchester still has its problems, of course, with violent crime a significant issue, train and road transport systems to the north of the city heavily criticised, and seemingly high levels of homelessness evident from just a brief walk through the city centre, but the “joined-up” landscape Cordwell mentions is certainly helping business boom.
“E-commerce has obviously emerged as something we’re clearly very good at in Manchester,” she says. “The old rag trade that was here has evolved and morphed into something that is world-class in terms of fashion and e-commerce. It’s a very strong, world-class, large-scale e-commerce capability emerging here, which puts us on the world stage.”
Rags to new riches
Manchester and commercial prowess have been closely linked, historically, with the city developing considerably at the turn of the 19th century thanks to a booming textile manufacturing trade that helped drive the UK’s industrial revolution.
This industry has been repackaged for the 21st century, according to Jonathan Wall, a prominent figure in the north-west digital scene.
Former Shop Direct e-commerce director Wall, who now has multiple digital commerce investor and non-executive roles, including as board member for Manchester-based room planning and visualisation software startup Digital Bridge, says the set-up is helping keep great talent in the city.
“Manchester’s rag trade has gone through the universities, running good design and buying and merchandising courses, which then feed the fast fashion, general technology infrastructure really well,” he says.
“You only have to look at the average age of the people working at the fast fashion players in the city to realise these businesses are the first port of call for people’s careers in Manchester.”
The numbers support the fanfare around Manchester’s e-commerce strength. AIM-listed online shop Boohoo – which since forming in 2006 has acquired fellow Manchester online fast fashion purveyor Pretty Little Thing and US counterpart Nasty Gal to become a house of brands – recently reported encouraging trading figures.
Group revenue in the six months to 31 August was up by 50% to £395.3m, with pre-tax profit up 22% to £24.7m. It’s expecting revenue growth of 38-43% for the full 12 months to 28 February 2019, after generating £579.8m last year.
Meanwhile, Missguided’s sales soared by 75% to £205.8m in the year to 26 March 2017, although the company’s move into bricks and mortar retailing contributed to an overall loss for the year. Despite the expense incurred through opening two stores, the business is regularly used as an example to the wider retail industry in terms of mobile and digital strategy, and it is one of the UK’s fastest growing retailers in terms of sales.
City collaboration and incubating talent
Like Cordwell, Wall suggests there is a culture of collaboration in Manchester which is helping the digital industry thrive – be that in healthcare, science or online retail circles.
“What a startup or an online business requires is in the city today,” he says. “Whether you need to outsource to a team of UX designers or you need a creative agency or actual developers, the businesses are in place to support startups.”
He says there’s a lot of knowledge share in the Manchester area, adding: “The Co-op, Thoughtworks and, to a certain extent, AND Digital are very good at hosting knowledge-sharing sessions. People aren’t afraid to knowledge share in the Manchester area as they know what a positive impact it can have.”
Doug Gurr, UK country manager at Amazon, described his company’s decision to open new facilities next year in Manchester, Cambridge and Edinburgh – which between them should create around 1,000 jobs – as providing “Silicon Valley jobs in Britain”, and the idea of Manchester fostering a tech hub environment on a smaller scale to the US West Coast rings true with many in the city.
There are innovation hubs aplenty in Manchester. They include the creative and digital-focused Allied London business development at St John’s, which is emerging off the back of the already well-developed commercial Spinningfields area, where Moonpig will reside.
There is also the artistic Northern Quarter and Noma districts, where Co-op is situated and where Amazon is moving in next year. In addition, property firm Bruntwood is constructing Circle Square, while just out of town, city-backed The Sharp Project is making it affordable for startups to grow up.
“You can walk from the Northern Quarter to Noma in 30 seconds, and from St John’s to Circle Square in five minutes,” says Cordwell. “We’re one big petri dish – there’s loads of stuff going on here and it’s never too far away, but there are definitely areas of specialism starting to emerge.”
Not wanting to miss out on the flourishing digital scene, The Co-op, a Manchester mainstay for more than 150 years, is showing that innovation is not just for digital-era businesses.
Co-op Digital is an internal-looking operation based just across the road from main Co-op headquarters, which is focused on building new products, services and platforms to aid the business. Out of that initiative, Co-op Ventures was formed in 2018, with a central aim to talk to startups and forge partnerships that might have mutual benefits for those involved, and to drive innovation in the consumer space.
It recently acquired prescriptions technology business Dimec, and health and wellbeing is where it envisages huge digital disruption potential. The wheels are in motion to launch an as-yet-unnamed online pharmaceutical play in spring 2019, and the organisation is on the hunt for further startups and digital talent to aid the process.
Tim Davies, director of Co-op Ventures, says the online pharmacy site will represent a 21st century version of the 780-strong Co-op Pharmacy business, which was sold to Bestway in 2014. It could spawn online doctor and healthy eating initiatives thereafter.
“I’m a big believer in Manchester as a tech hub,” says Davies. “You hear a lot about London – and Manchester is up and coming in comparison – but we’re spending a lot of time hiring new developers, interaction designers and various other digital roles, both in Ventures and in Digital.
“We have a need for that type of talent as we build out digital product, when historically we would have been hiring pharmacists and logisticians.”
Davies talks of Manchester as “a buzzing place” and uses phrases such as “confidence”, “bravery” and “entrepreneurial spirit” to describe the city, adding that he often mixes with senior leaders from digital businesses in the city to share innovation ideas.
And it is that which so many digital and e-commerce organisations, including Amazon, are buying into as they open up space in the city. In theory, as more digitally-led companies arrive, the more support there’ll be for like-minded businesses, with Davies describing Amazon’s arrival as “a net good thing for the whole area”.
“The challenge is talent, but if you look at Amazon’s move, it’s a ‘net good’ because it will attract a lot of people and digital talent here,” he says.