Retail activity can be expressed as the sale of goods for personal or household use or consumption, traditionally via shops or markets. However, the boundaries have changed somewhat in recent years due to the significant growth in online retailing and the development of alternative formats such as farmers’ markets and travel retailing.
The UK retail industry covers the following activity:
- Retail sales in non-specialised stores (such as supermarkets and department stores)
- Retail sales in specialised stores (such as butchers, greengrocers and fishmongers)
- Retail sales of pharmaceutical goods (such as chemists and pharmacies)
- Retail sales of new goods in specialised stores (such as stores selling textiles, clothing, books, electrical household appliances, furniture and lighting)
- Retail sales of second-hand goods
- Retail sales not in store (e.g. catalogue and mail order sales, online and via stalls and markets)
Within retail, there are an estimated 295,000 businesses selling a wide range of products, employing from one person to thousands of people, all who have a number of functions.
The retail industry is represented by Skillsmart Retail Sector Skills Council.
Source: Skillsmart Retail LMI Report April 2010
- UK retail sales were approximately £287 billion in 2007.
- There has been a 21% increase in retail turnover since 2000.
- Retail accounted for 6% of UK Gross Value Added in 2007.
- There are 197,990 VAT registered retail enterprises within the United Kingdom, representing 9% of all enterprises.
- 83% of retail businesses in the UK are micro-businesses employing fewer than 10 people and 2% employ more than 50 people.
- 17% of UK enterprises are medium-sized and account for 12% of total UK retail turnover.
- Nearly 60% of all small retail enterprises are made up of just one person.
- It is a seasonal activity and Christmas is the most significant trading period of the year for UK retailers. Between 40% and 60% of turnover for large retailers is achieved in between November and January.
The UK’s four largest grocers (Tesco, Sainsbury’s, Asda and Morrisons) are the most significant force with margins in their core food retailing businesses squeezed, they have sought to expand their ranges of non-food items, which have greater margins. As a result these retailers now sell an extensive range of non-food items such as electrical goods, clothes, home insurance and banking. Retailers in this category account for just over a third of the retail sector’s workforce and 41% of turnover in the sector.
In UK department stores, the number of enterprises has fallen by 15% between 2005 and 2007 and the number of people employed has decreased by 4% and turnover has grown by 12% between 2005 and 2007.
Employment in specialist retailers has drop by 21% from 2002 to 2007. Retail sales of medical goods had a growth of 4% in employment and 4.7% in turnover in the period 2002-2007. Specialist non-food retailers, including retailers of clothing, household, books and newspapers, account for 52% of retail enterprises, 42% of retail employment (1.3 million) and 37% of the retail sector’s turnover.
The overall trend has been one of a reduction in the number of enterprises, but continued increases in employment and turnover. Between 2002 and 2007, there was an 8.5% increase in the number of stalls, markets and other not-in-store retailers.
Source: Skillsmart Retail Analysis 2008-09
The retail sector is the largest private sector employer in the UK, with 10% of overall employment. Over the last few years, the levels of retail employment have remained stable, with just over 3 million people employed in retail. However, approximately 48,000 retail jobs have been lost since September 2008 up until March 2009, representing 1.6% of the total retail workforce. Approximately 41,000 new jobs have been promised by retailers such as Sainsbury’s, Tesco, Asda, Lidl and Poundland.
The current economic climate is affecting all areas of retail business. Much of retail is going to have a difficult period, but certain sections of retail businesses, online and value/discount stores are showing signs of growth.
The continued growth in online retailing is having, and will continue to have, an impact on retail employment, work organisation and skills. The trend for advertising spend to be transferred to the upgrading of online websites has created a demand for additional IT roles in the retail sector.
Between 2007 and 2017, 214,000 new retail jobs are expected to be created in UK, while a further 1.2 million jobs will need to be filled as a result of people leaving the sector. This means a total requirement of around 1.4 million jobs.
The levels of retail employment broadly reflect the size of the regional populations. Wales had the greatest increase in its retail workforce (12%) between 1998 and 2007, while the North West experienced a growth in retail jobs of only 1.5% over the same period.
Large enterprises account for 65% of all retail employment and medium-sized enterprises account for 6%. The retail sector is renowned for its part-time employment opportunities, which can be regard as a key component of its competitiveness. While a quarter of people employed in the UK as a whole are in part-time jobs, half of those employed in the retail sector (1.5 million) are in part-time positions. This figure has been more or less constant for the past seven years.
Source: Skillsmart Retail LMI Report April 2010 and Skillsmart Retail Analysis 2008-09
- Economic crisis: In 2008, 83% of retailers were expecting the UK economy in 2009 to deteriorate, compared with 41% in 2007. Christmas 2008 can be recorded as the worst Christmas on record with retail sales declining from 2007 by -3.3%.
- Online retailing: Online retailing is now an established retail format. Online shopping during December 2008 grew by 14% compared with last December’s figures. This equated to £4.7 billion being spent online in December.
- The rise of value retailers: Since 2002, a number of value clothing retailers have reported excellent progress in profitability and market share. At the time, consumers are looking for the best value for their money and so are becoming more discriminatory in their choice between value retailers. Primark is the sector’s leading value retailer (18% of market share), although its growth has halved between 2007 and 2008 to 16%.
- Ethical retailing: To embrace consumer needs, eco-planning has been at the fore of the majority of customer orientated retailers, although the initiative has been slowed down due to the economic crisis.
- Shops are increasingly open for long hours and the task of managing both shops and the associated workforce is becoming increasingly complex. There is also constant pressure to reduce costs and prices.
Source: Skillsmart Retail Sector Skills Agreement 2007 and Skillsmart Retail Analysis 2008-09