April 22, 2019

Retail – a Changing Industry

John Munro is a Senior External Affairs Adviser with the British Retail Consortium where he leads on the organisation’s work on careers in the retail industry.  John is also a core part of the media and communications team appearing regularly on television and radio programmes discussing the retail industry.

Retail – a changing industry

Retail is an important industry to the UK economy. It is the largest private sector employer, providing employment and services in communities across the country. It’s also a changing industry. Retailers are the most directly customer-facing of all businesses and as our behaviour as customers changes, so too do retailers.

Retailers are at the heart of local communities, delivering positive social and economic impact every day. Fierce competition has helped reduce inflation, keeping costs low for customers and supporting consumer confidence which is the engine of the economic recovery. UK retail businesses serve 60 million customers a week, generating £340 billion of sales in 2015.

The industry also employs over 3 million. More young people start their working life in retail than in any other industry and many go on to pursue long and rewarding careers. One in three employees is under 25. As the largest private sector employer in locations throughout the country, retail spreads wealth across the UK and sustains economies beyond London and the south east.

As an industry we expect the years ahead will see accelerating change. Numbers employed in retail have declined since 2008 and cost pressures have increased markedly at a time when growth in consumer expenditure has been subdued. In response retailers are developing better propositions and competing harder across an increasing range of business models from modern multi-channel formats through to discounters and online businesses. Recent policy announcements, in particular the National Living Wage and the introduction of the apprenticeship levy, will increase the pace of some of these changes.

In relation to the workforce the pace of change is also set to quicken as the digital revolution reshapes the industry, assisted by many more leases being up for renewal and accelerated by the diverging costs of labour versus technology. And though the retail industry is supportive in principle of the National Living Wage the effects on employment have been underestimated.

Together these effects could mean there are as many as 900,000 fewer jobs in retail by 2025 but those that remain will be more productive and higher earning. However, the effects will be uneven across the country and in how they impact on different sizes of business and groups of people within the industry.

Areas that are already economically fragile are likely to see the greatest impact of store closures and some of the people affected by changing roles will be those who may find it hardest to transition into new jobs that are created.

Retailers will work both individually and collectively to improve productivity and the customer offerings, and they will be working with Government both to ensure the successful implementation of policy and to mitigate the impact of the changes we expect to see in places and on people who may be most vulnerable.

There are three areas where this should happen. The first is to rebalance the burden of taxation. Second is to ensure the remit of the Low Pay Commission is strengthened and clarified with regard to the National Living Wage. Thirdly, there must be greater employer leadership of the apprenticeship levy including more discretion for employers over how and where it is spent. If we are able to engage effectively and tackle these problems head on retailers will be able to manage the changes they face and secure a bright future for the industry, its employees and the wider economy, too.



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