Retail – a tale as old as time

In one form or another, retail has been around since ancient times. It changed and
adapted to keep up with consumers’ needs and desires and today we find ourselves wondering
what the next chapter of this tale will bring.

To shed some light on the topic, the Oxford English Dictionary defines retail as “the sale
of goods to the public in relatively small quantities for use or consumption rather than for
resale”. In other words, retail is consumer’s playground and it includes shops, department
stores, supermarkets, market stalls, door-to-door sales people, internet retailers etc. Therefore,
it’s easy to understand why retail is an indispensable component of every country’s economy.

Looking back, but moving forward

We won’t begin this story with the classic once upon a time, but we do need to take a
look into the past in order to understand the present and also throw in some predictions about the
future of retail in the UK.

Archeological evidence shows that trading began more than 10.000 years ago when
farmers used animals as currency. Fast forward to the 13th century and the first small shops
emerged, known as “rude booths”. It wasn’t until the 17th century when markets and fairs were
substituted by permanent shops as the main retail outlet.

The 18th and 19th century represented a turning point for retail. Grand shopping arcades
– early versions of the modern shopping mall – began to appear all across Europe. In large cities,
the department stores emerged, permanently reshaping the experience of shopping. Customers
had the possibility to buy a large variety of products, all in one place and shopping became a
leisure activity, not just a necessity.

The industrial revolution marked the birth of the retail industry as we know it. With the
industrialization came mass-production which dramatically increased the availability of
consumer goods. For the first time in history products were available in great quantities, at very
low prices, therefore being available to a growing number of consumers.

And this brings us to the present day, when technology is able to bring the world to our
doorstep. Today, bricks and mortar shops compete with online retailers and consumers have
access to an astonishing number of products and services. We created a culture accustomed to
have easy and fast access to everything from anywhere in the world. The digitalization of retail
leads to constant changes and the future of the industry is bound to bring surprises.

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 Numbers speak volumes

Statistics offered by the House of Commons Briefing Paper, Retail sector in the UK, can
help us have a better understanding of the current state of retailing. In 2018, the retail sector
generated £368 billion worth of sales and it housed 319,000 businesses. 5% of the of the UK’s
total GVA comes from retail and 5.6% of all UK businesses are in retail.

In 2017, retail sales in the UK were worth £395 billion. For every pound spent:
• 39 pence was spent in food shops
• 12 pence was spent in clothing shops
• 9 pence was spent on automotive fuel
• 8 pence was spent in household goods shops (including electronics and furniture stores)
The remainder was spent in other types of shops, non-specialist shops or in non-store
retailing, such as market stores, catalogues and internet retailers.

In August 2018, internet sales accounted for 18% of all retail sales, compared to January
2008 when online sales accounted for 5% of retail sales. Internet retailing is more popular in the
UK than in any other EU country. In the UK, 82% of residents made at least one online purchase
in 2017.

In the year to August 2018, 28 retail companies with multiple stores have ceased trading,
affecting 2,085 stores and 39,000 jobs, according to the Centre for Retail Research (however, it
doesn’t mean that this many jobs have been lost).

There’s more than one side to every story

Retailing in the UK is usually described as a story of economic success. But we cannot

ignore the obvious: the retail sector is going through a period of radical changes and some
retailers are failing to keep up with the times. Various factors such as changing consumer
behavior, ongoing shift towards online shopping, difficult economic conditions (decline in sales
volume, business debt etc.) are bringing new challenges for the retail sector. Retailers are being
pressured to change the way they run their businesses and interact with consumers if they want to
stay relevant.

In the first months of 2018, a number of large retail chains collapsed, including Toys R
Us and Maplin. Other big retailers such as Marks & Spencer and House of Fraser announced
significant store closures all across UK. Some speak of a retail apocalypse, predicting the
demise of the British high-street as a consequence of the increasing pressures on the retail sector.

However, the future of retail might not be so bleak after all. Although many bricks and
mortar retailers have reduced the number of stores and the digital world is fast expanding, online

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sales still only account for 18% of all retail sales in the UK, so a future where physical stores will
go extinct is highly unlikely. Bricks and mortar retailing is still dominant and analysts argue that
a large number of people still want the experience of going to a shop and the level of customer
service that comes with it. After all, shopping therapy is a real thing and it’s much more effective
when it involves physical interaction rather than clicks in front of a screen.

The debate now revolves around adapting to the new shopping trends and many
specialists in the domain agree that the key lies in understanding consumer behavior.
Consumers nowadays are savvier than ever. They are autonomous customers – well informed
consumers, less loyal to brands, having the possibility to shop when and where they want and a
vast number of options to choose from. Customers have more power and their expectations of the
retail sector are increasingly higher.

For this new breed of customers omni-channel retailing is the norm and they expect
brand consistency across all channels. Retailers have to be present, both online and offline,
offering the same level of efficiency and high-standard customer service in order to provide a
unified brand experience for their customers.

Therefore, it’s not a matter of online vs. offline. Bricks and mortar stores are not in a war
with online players. It’s about how retailers are going to engage and connect with their
customers. Understanding how consumers think and feel is absolutely necessary in order for
retailers to adapt to these ever-changing trends and take customer engagement to a new level.

Consumers are no longer driven exclusively by low prices or the next best deal when they
make their purchases. Instead, they are searching for more meaningful experiences. What
retailers need to do is create unique personalized experiences that give people the feeling of a
more humane and profound interaction, thus encouraging loyalty.

Technological innovations can help retailers achieve deeper connections with the public,
both in-store and online. Digital methods offer retailers the possibility to get to know their
customers better and create tailored experiences for each individual, the basis for building long-
term relationships that feel genuine and enriching. The elements that will differentiate retailers
on the market will be the ones to guarantee their survival and success and help them step into the
future.

Behind the scenes – working in retail

The retail industry is UK’s largest private sector employer. There were 2.9 million people
employed in retail in 2018 (one in 10 people is working in retail), making it fairly obvious that
the retail industry plays an important role in the labour market.

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 There are various employment opportunities for those who want to start their career in
the retail sector:

• buying • online retail

• customer services • retail management

• loss prevention and security • visual merchandising

• merchandising and allocation • warehouse, distribution, logistics, supply

As the retail industry is facing major transformation, the workforce will also need to
adapt to the new order of things. Since bricks and mortar shops will fulfill different roles in the
future, their employees will have to change as well. Technology will make its presence felt in the
stores and getting the workforce ready to use digital innovations is going to be essential for every
retail business. Upgrading the skills of all employees must become a priority.

But the constant advances in technology can also represent a threat for those working in
retail. The British Retail Consortium, the retail trade association, estimated that nearly 57,000
jobs were lost over the past year. Predictions suggest that women will be the most affected,
considering they make up the majority of the workforce in the sector. Some analysts believe that
a decline in employment is an inevitable consequence of technological progress, but they also
claim that new jobs may be created in other industries. There is however one aspect on which
everyone seems to agree: if retailers will adopt a new business model, based on more profound
connections and genuine interactions, everyone from consumers to employees will benefit from
it.

Sources:

House of Commons Briefing Paper, “Retail sector in the UK”

Rob Waugh, “The future of retail”, The Telegraph

Norman Pickavance, “The future of British retail”, Fabian Society, 31 Jan. 2017

Jonathan Eley, Robert Wright, “How the crisis in UK retailing is reshaping employment”,
Financial Times, 30 Sept. 2019

en.wikipedia.org/wiki/Retail

www.great.gov.uk/international/content/industries/retail/

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