Lancashire County Council Logo | Listen | Home | A to Z | Feedback | Complaints | Your Council | Business | Residents | Visitors |

Retail Trades

October 2007

Photograph of a shopping trolley

Introduction

The retail trade (defined to include the repair of personal and household goods but not the sale of vehicles and motorcycles) is one of the nation's, and Lancashire's largest employing industries. The industry represents the final link in the distribution channel between the consumer and the product manufacturer for the majority of consumer goods. Traditionally retailing does not in itself create goods but increasingly it is endeavouring to add value to its products and services to enhance them in the eyes of consumers. As such, retailing has become an increasingly dynamic, competitive and complex sector involving a range of company types, of varying scale, operating in a variety of product sectors and through a diverse and changing network of outlets and selling techniques. Retailing is a sector that offers many people their first opportunity of formal paid employment and is often seen as a stepping-stone for entrepreneurs to start up in other business sectors.

Employment

The retail trades occupy an important place in the Lancashire economy. The sector comprises approximately 7,800 separate establishments and has an employee workforce of over 66,600 people. This represents about 11.1% or one in nine of all Lancashire employees – a share on a par with the Great Britain average. Only the Health and Social Work sector employs more people.

Employment within the local retailing industry is dominated by women (41,000 or 62% of the total), of whom more than 70% work on a part-time basis. Some 42% of the 26,000 male employees in the industry are also part-timers. In all, no less than 59% of the retail employee workforce work part-time (Table 1).

Bar chart showing the number of employee jobs in the retail trades for each of Lancashire's local authorities - see text for details Source ONS - Annual Business Inquiry

Reflecting their size and importance as sub-regional shopping centres catering to consumers from beyond their immediate localities, about 44% of all Lancashire retail jobs are based in the larger urban centres of Preston, Blackpool, Blackburn and Lancaster (Figure 1). Within local districts the importance of retailing as a source of jobs ranges from shares as high as 17% of the total in Hyndburn (which has a sizable mail order/home shopping sector) to under 8% in Ribble Valley and South Ribble.

Map showing the percentage of all employee jobs that are in the retail trades for each of Lancashire's wards - see text for details Source ONS - Annual Business Inquiry, 2004

The distribution of these retail jobs across Lancashire by wards is illustrated in Figure 2. As might be expected, the shares of retail employee jobs (as a percentage of all jobs) are highest in town centre areas but also in numerous out-of-centre and urban fringe areas where they are associated with out-of-town retail park developments. In a handful of other areas high retail job proportions are often associated with particular single site operations such as the presence of a mail order/home shopping business for which shopper accessibility is not a primary consideration.

The average size of retail establishment is statistically under 9 employees. The sector is indeed still dominated by small establishments of both independent and multiple outlets but there is an increasing larger company presence. Some 88% of all establishments employ fewer than ten people and account for nearly a third of all retail employees. However, the top 41 (or 0.5%) of retail establishments (with 200 or more employees) account for more than 30% of the retail employee workforce (Table 2).

By far the largest single component of the retail trades in Lancashire is sales through non-specialised stores in which sales of food and drink predominate (i.e. mainly supermarkets). These alone provide some 24,600 jobs or more than 37% of all retail jobs in the sub-region. Other retailing of food and drink, etc. through specialist stores add a further 5,000 jobs. About, 4,900 are employed in general non-specialist stores (e.g. department stores) with much of the remainder of the retail workforce employed in a wide range of specialist outlets from the sale of clothing, shoes or textiles to sales of electrical appliances, household articles, hardware, books and newspapers, pharmaceuticals, and cosmetics and toiletries. Retail sales of clothing alone employs more than 7,700 people. Between 400-500 people are involved in the repair of personal and household goods and a similar number in the retail of second hand goods. One particular retail sector with a well above-average representation in Lancashire is mail order or home shopping. Despite recent rationalisation within this sector together with some reclassification to call-centres, it still provides about 4,100 jobs, and is represented locally by such companies as Littlewoods and Express Gifts as well as by a number of smaller operators.

Employment Trends

Graph showing how the number of employee jobs in the retail trades has changed from 1950 to 2005 - see text for details Source Ministry of Labour/ONS - ERII Employment Records

As a basic local service retailing has long been a relatively large activity in Lancashire and employee numbers in the sector have more than doubled over the past fifty years (Figure 3). Retail job numbers grew steadily over the post-war period on the back of demographic trends and rising disposable incomes. Expansion was especially strong over the late 1950s and early 1960s and again over the mid to late 1980s associated with major new store and out-of-town shopping developments. The end of the consumer boom post-1990 brought about a pause in growth and in a few areas even some job reductions before renewed expansion at an even faster pace in the second half of the 1990s, partly tempered over recent years by a reduction in new out-of-town developments in many areas, strong competition from new "regional" shopping centres (and possibly from internet sales) and some cut-backs in the hitherto large mail order sector.

Both classification revisions and methodological changes in estimation procedures mask longer-term sectoral trends within retailing but over the ten-year period to 2005 the strongest jobs growth (mainly of part-time employees) appears to have been amongst retail in non-specialised stores like supermarkets and department stores (Table 3). Some jobs growth in this sector has probably been at the expense of other parts of the retail industry as supermarkets in particular, as well as extending their footprint have steadily widened the range of both food and non-food goods on offer in their stores. Indeed, amongst specialised selling food and drink products, employment has generally remained static or fallen, most notably in the retail of bread and flour confectionery and in meat and meat products. Within the more specialised non-food retail store outlets, most exhibited a degree of stability in employment terms. The main exceptions were in the retail sale of clothing where employee numbers increased by 75% (partly due to the general buoyancy of this sub-sector but also to the presence of the Matalan headquarters and distribution centre in Skelmersdale), and in the retail of books, newspapers and stationery and of pharmaceutical, etc. goods where job numbers fell, presumably reflecting competition from supermarkets. Growth in non-store sales (mainly in mail order) was particularly strong over much of the period and was associated with revived growth in catalogue sales and the development of "call-centre" fulfilment operations. However, job numbers in mail order especially appear to have fallen back over recent years. In part this reflects some rationalisation in a sector that also depends heavily on temporary or short-term jobs to meet seasonal demand patterns. It may also be partly due to a revision in the Standard Industrial Classification (SIC, 2003) which has introduced for the first time a new heading for "call centre activities" into which some of the mail order jobs – particularly telephone sales, may have been re-allocated.

General Characteristics

Photograph of the Miller Arcade in Preston town centre

Still a relatively labour intensive and typically lowish wage activity associated with modest skill requirements, retailing is nonetheless a dynamic and challenging sector making a substantial contribution to the national and local economy. It is one of the UK's top service sectors with annual turnover of about £265bn and gross value added of £61bn, accounting for about 8% of the UK economy (2005). Over a third of consumers' expenditure is spent in shops, the remainder going on consumer services (leisure, transport, utilities, etc) The industry has long been a major contributor of new jobs, albeit often of a part-time and flexible nature, although in general, the industry is a mature one with no obvious significant changes in long-term growth rates. Expansion over the past decade and more has been buoyed by a long period of rising consumer expenditure (over a third of consumers' expenditure is spent in shops), de-regulation (e.g. the introduction of Sunday trading and longer opening hours and the demise of the Net Book Agreement), technological developments and a change in social habits which has seen shopping become more of a leisure or enjoyable social activity with consumers becoming both more demanding and more price sensitive.

Retailers also operate in a fiercely competitive and low margin environment in which there has been growing market concentration with the market shares of supermarkets and other multiples increasing at the expense of independent retailers. Today, the top 500 retailers account for 85% of retail turnover. The openness of the UK market has also encouraged the entry of foreign-owned retailers (Wal-mart, Aldi, IKEA, Netto, etc). As part of this process of on-going structural change, many new superstores and town centre shopping centres have been opened and refurbished across the County over the past decade, more than helping to offset in employment terms the decline of the traditional independent retailer.

Photograph of Sainsbury's near Preston

The industry is currently passing through a period of profound change characterised by high investment, increasing use of information technology and the continuous search for increased productivity, cost reductions and new market formats. The sector has long been a major innovator and re-inventor of itself. The use of electronic data interchange, laser and self-scanning, and other point-of-sale equipment is now a standard feature. The use of loyalty cards and the provision of financial and other services, driven by consumer desires for one-stop shopping and convenience, have also involved the introduction of sophisticated computer-based systems. As the main outlet for a significant volume of UK-manufactured or processed goods, retailers were also to the fore in establishing partnerships with their suppliers and were early innovators in supply chain logistics now being widely adopted throughout industry to reduce operational costs and to increase service levels. The latest challenge to the traditional industry is increasing use of the internet, making it cheap and easy to buy goods, particularly of generic branded products.

Retailers remain under great pressure to create new ideas and to introduce more added value products and services into their operations to increase turnover and margins. This trend is likely to intensify as the age profile of the population continues to get older, as traditionally retailers have not generally targeted older age groups. For many retailers, diversification into home shopping via interactive television, the internet and old fashion catalogue sales offering "flick and click" together with home delivery services and into areas like financial services are the latest initiatives to make retail brands more appealing to customers as consumer demand continues to shift steadily away from goods per se and towards services. Multi-channel retailing, entailing the use of many retail formats in imaginative ways is likely to emerge as an attractive proposition as it provides one of the few high growth opportunities, particularly as retailers now find it more difficult to open new large stores because of lack of suitable space and land use planning constraints on out of town developments.

Information on retail floorspace and rateable values in Lancashire can be found in the Retail Floorspace Research Monitor .

This page was compiled by Peter Kivell .

All enquiries from the media should be sent to Corporate.Communications@lancashire.gov.uk .

Any other questions about the content of this page may be sent to EconInfo@lancashire.gov.uk .

For all enquiries about the county council's services , contact the Customer Service Centre on 0845 0530000 (01772 530000) or at Enquiries@css.lancscc.gov.uk .

Change Text Only Settings