Retail Sector in Uk

THE UK RETAIL SECTOR Retailing is nonpargonil of the major(ip) economic sectors of United Kingdom, with retail sales of ? 221 billion, employing around 3 million pack and operating everyw present 300,000 patronizes. Within the sector in that take note is a scale polarisation at twain the business and the fund level. The leading retailers be huge, multinational businesses which dominate the sector. They operate a determine off of farm animals from major hyper food marketplaces and supercentres with to small convenience stores. Retailing is likewise earthshaking it its social dimension as well.Whilst economically sell bridges exertion and utilisation, in social terms it effects or so of the population every day. It is the r atomic number 18 person who does not go obtain, or indeed has not worked in retail or been involved in it in round way. For around, retailers offer their major social inter bank line of the day or hebdomad and act as a social network, setti ng or centre. The step of UK retailing and its locations thus has both an economic and a social stroller on the perceptions of the country.COMPETITIVE ANALYSIS 1. 1 Political social organisation and Trends The activities of retailers and thence bewraypers are feigned by the political social structure and trends in a sum up of ways. It would be wrong, however, to see this as a direct relationship derived through a dead body of decree specifically targeted at retailing or shop. Instead, trends in retailing and shopping are more than than than dependent on a estimate of national debates and initiatives that slang been developed recently by various levels in the political process.The briny direct effect that politicians rush on retailing and shopping is through their exercise of power all oer location through the levers of the land- character planning system. Whilst land-use planning is a local place activity, national government bath intervene to provide directions and guidance on the assessment of reading opportunities and proposals. Whilst land-use planning towards retailing in the 1980s allowed decentralise activity, since the early 1990s on that point has been a growing consensus on the modify of restrictions on off-centre and green field evelopment. indeed it has lead a great deal harder to generate planning permission for developments away from subsisting town centres and tenderer forms of retailing much(prenominal) as factory let onlet centres and regional shopping centres wealthy person be father harder to accommodate. This consensus has emerged through a general concern with the health of town centres and a desire to see town centres as vital and viable part of the urban structure, fulfilling handed-down nodal activities, including providing a focus for shopping.Whilst land-use planning affects the location of retailing, other(a) instruments of government thatt joint affect the operations of the business, although a s we note in that respect is no boilers suit retail trading legislation. Instead, shoppers are affected by a battery of public policy which attempts variously to regulate ambition, care consumer interests and to regulate trading conditions. Recent switchs in this orbital cavity feature seen an stand-in of restrictions on trading hours for deterrent example unless a strengthening of powers over retail selling and employment practices. Concerns over public health abide led to tighter regulation on food stores.In essence the approach could be summed up as ensuring that retailers do their jobs properly and that there is as much a level playing field as possible. Again there is no power to suspect that this entrust change, though the scale of the legislation give change as orbicularisation extends in this market. Big retailers give be created on a pan-European level and allow be subjected to ideal operating conditions across for example Europe, which safeguard consume r interests. The European dimension evidently has well-nigh other political aspect as well, to the highest degree notably in terms of the Euro.Whilst decisions to the highest degree the Euro are beyond this report, retailers as a notice service sector, will have to deal with its introduction (or not). For some this is already anticipated through their acceptance of Euros in the UK, their Irish and continental European experiences and in their forward planning of technological (eg POS) investment. Smaller retailers in event however whitethorn be less prepared for any corroboratory decision. Overall there will be costs in implementation, as well as potential trading disruption depending on clock of introduction. 1. 2 Economic Structures and TrendsTo a witnessable extent, the economic structures and trends driver for change operates at such a macro-level of the economy that it is very hard to consider it in any detail. The general economic position of the country will conditi on to a great extent the outcomes retailers experience from the shopping activity. Thus the volume and value of retail sales is of importance in this arena, exactly it is hard to be certain of magnitudes looking forward. Political policy arse have an allude by its promotion of certain sectors and locations in the economy, in pursuit for example of greater social inclusion and a fairer scattering of wealth.However alternative policies could equally be considered. The economic structure also has an affect on the retail landscape through the supportment or otherwise of the crook of landscapes for consumption. Businesses have to be willing to invest in the create environment and to feel comfortable that such investments will make a return. Probably the only safe assumption to be made is that the spacious(a) economic structures will remain in place and that in the appear Britain will be economically approximately ranked similarly to where it is flat in the world.Taking this assumption, then it would seem that we can expect many of the trends we have seen in recent years to continue. Thus, there would seem to be range of a function for further growth in retail sales, if we tear a broad definition of retailing. There will be developers wishing to invest in the UK in commercial property, but much of this development may take the form of redevelopment or enhancement of existing locations. The exceptions to this business leader be purpose built vernal facilities in areas of set deprivation, though the adopt form of these facilities will be informal to question.The economic structure has an impact on retailers and retail structure. British retailing is dominated by legislatesome bodied chains, many of which are head-quartered orthogonal the country. Whilst there is in a sense a requirement to improve local knowledge to twin consumer needs, large retailers have demonstrated that computing power can be used to understand markets. Knowledge managem ent becomes a pick up portion in the early economy. There does not seem therefore to be any particular reason why reliable trends towards bigger and external retailers (eg.Wal-Mart) dominating more of the market should not continue, although they will probably structure some of their activities on a national (ie. local) basis. There will be opportunities for local and revolutionary retailers, but overall the market structure is promising to remain dominated by such big and increasingly global players. The interaction of the political will and the economic situation of the country and locations and exclusives deep down the country will be important in determining the fullness of otherwise of the population, and hence the attractiveness of places for retailers.This personal useable income is critical to the futurity of locations, though it is tempered by the aspirations and lifestyle choices, and the costs of these eg. monthly lease of satellite television reduces out-o f- ingleside shopping. Most recently there has been announced major investment in the countrys infrastructure, funded in part by enlarged tax and NI revenues. This could affect perceptions of affluence and personal disposable income for years to come. More worryingly possibly is the possible pensions timebomb which is currently world exposed through the switch out of final-salary schemes.Continuing concerns over mortgage payments base upon endowment policies and the high level of credit in the economy repay these worries. Socio-Cultural and Lifestyle Aspirations Changing socio-cultural and lifestyle considerations have fuelled much of the change in shopping and retailing in recent years. Attitudes and beliefs as well as wants and needs have been transformed. They continue to develop and further change can be expected. In particular, attitudes to work and unfilled are worth identifying on an individual basis as they are potentially so important.Modern consumers are a sens of contradictions, many of which are inexplicable on any rational basis. more or less fail miles by car, damaging the environment, to refill a plastic bottle which costs realisticly nothing, or to place bottles in a bottlebank primed(p) on a superstore car park. Branded yields with a conspicuous logo are purchased in preference to identical generic products selling at a vastly trim back price. People pay 50% more for a 30% smaller microwaveable pot of baked beans rather than have to sensory(a) a tin and heat the product normally.Ready-washed salads or chopped vegetables in their millions are purchased to save time or to wrap up up for lost culinary skills. Understanding and auspicateing change in this arena is therefore a little difficult. What can be said is that there is a tension in this aspect of shopping. On the one hand consumers have ever broader experiences and expectations that have been increased by their exposure to new events, horizons, ways of doing things etc. S o holiday experiences are brought back and unite with UK products and conducts. Things that are seen in TV programmes become available in local stores.On the other hand, the very temperament of the global experience, in particular through leisure products such as TV and cinema, tends to reduce things to the lowest common denominator Pringles, Coke, Gap, Nike and it is no coincidence that the majority of exemplars are American. This oppositeiation/similarity paradox will also emerge in other ways, and in particular in terms of the attitudes and belief statements of individuals and the way they translate these into shopping actions. Single-issue causes are fundagenially important now and look set to remain a force.Attitudes to corporate or government activities may lead to both small-scale individual behaviour changes but possibly to more aggregate corporate behaviour changing movements. The battle over GM foods and the rapid development of constituent(a) food sales are examples of the start of this rather than the end. Consumers and businesses will come about a lot of time in the future working out their positions on issues and changing behaviours permitly. However, the number of individual positions by their very nature will outnumber choices available.This points to a continuing fragmentation of much of consumer demand, but overlain by certain common themes. For retailers, identifying these themes early will be critically important and reacting quickly will be vital. The issue of mobility is complicated. It is clear that peoples understanding of mobility has been transformed in a number of directions. The overall perception of mobility has extended materially. This extension is both in terms of the mental view of locations and travel and a dramatic extension of what may be possible and also a willingness and ability to actually travel.The location of holidays and the act this has on price perception and product purchase is one example of this. The willingness to travel longer distances to shop on a regular or an irregular (shopping centres) basis is another. It is also the case that as we are disbursement more time on the move, our needs in consumption terms have changed. We need to be able to consume as we go (food, medicament, information etc) and retailers have changed locations, products and shop formats to adjust to this. 1. 4 demographic Structures and TrendsShopping and retailing are obviously heavily dependent on people, both as an industry, but also as the basic consuming unit. Changes in the population structure and the location of this population, as well as the steady down of the households in which people live, are fundamentally important to retailers and to understanding the shopping future. For example, population growth in specific locations or of age- assorts of people encourage or discourage retailers to construct the retail environment differently.The baby-boomers or coevals X concepts have their realit y in the shopping behaviour severally group carries out and the demand for experiences and products they exhibit. Similarly, the growth of children as consumers and acknowledgement of the outlay power of the tweenies represent new foci for retailers and service providers. Similarly, the breakdown of the nuclear family and the mount of single person households changed the consumption landscape, both in non-food because of the absolute number of households, but also in food overdue to pack size of it issues and so on.More but smaller households will have an effect on the character reference of products and services purchased and the shopping trips undertaken. In short, understanding homogeneously future demographic structures and trends provides a good base from which to examine future shopping, and because of the nature of population dynamics provides us with a solid foundation of understanding. unfermented births notwithstanding, we have good estimates of population demograp hy for the next twenty years.Population estimates for the UK extract that there will be in the next twenty years an extra 4 million people in the country on the current base of 58 million. It is forecast that current trends will continue leading to a substantially cured composition of the population than at present. There will be significant growth in the 45+ age groups, many of whom will be infantile in body and mind and will be able to finance their consumption (a group of time rich/cash rich). There is at heart this also an increase in the 75+ age group which will present significant issues for the delivery of shopping opportunities.The ageing of the population will present an chance to target older consumers, but it would seem to be likely that the differences within this group will be as great as differences surrounded by the 45+ age group and other groups. The ageing of the population has another dimension of interest to retailing. Retailing is a traditional user of you ng people and the workforce in retailing has been seen as universe more youthful and transient than many other sectors. With a decline in the youth cohort and a large increase in older consumers, retailers are dismission to have to question their hiring policies.Some retailers have been aware of this for some time, but it is going to become a wider phenomenon. Older consumers are going to want to be served by older well-informed staff and retailers are going to have to draw on this older workforce in magnitude to keep their stores staffed in the first place. Willingness to work and the expectations of work for these groups may be much changed in the future. 1. 5 Product and Process existence Of all the drivers of change, the one that is most obviously in the news with respect to shopping and retailing is that of product, or more particularly, process conversion.The rapid development of the digital revolution, linked on occasions to the development of electronic trading has cau ght the imagination of many, but perhaps blinded them to some of the pit snuff its. Despite the fall from grace of the B2C net income, most large retailers have a web site and are seriously exploring the opportunities or dangers of this new channel. The implications of this wave of experimentation for category delivery and for the very nature of retail organisations needs to be considered.In short, is the Internet the new way of shopping and retailing, which will eventually conquer all, or is it a small additional channel of limited impact? Whilst it is important to consider the possible implication in this area, it is important to emphasise (unlike perhaps the UK Foresight process) that retail futures are not all technologically establish or driven. Product innovation is almost impossible to scream due to the rapid development and innovation of technology and other components. There are some possible straws in the wind associated with developments in miniaturisation, communicat ions and digitisation.Books, characterisations, films and music may all be transformed by product changes associated with new mechanisms for making, storing and communicating such material. Beyond that however it is almost impossible to predict what new products will be around and futile to attempt to predict in any detail what we will be buying. Process innovation is however another matter. The process of shopping has for well over a century been composed of multiple channels, but process innovation in the form of e-retailing is challenging the balance amongst these channels, chiefly because the nature of the medium has changed.In addition, the current implementation of e-retailing has the scope to change the nature and cost structures of retail activities. The traditional model in which the customer via self service undertakes most of the shopping tasks (and bears the costs) -changes with many tasks and the associated costs transferred to the retailer. The retail business econom ics of e-retailing differ from those of store based retailing. Predicting the extent of Internet or e-retailing take-off is foolhardy given the width of experimentation and the chiliad of change. It is however worth reflecting on the use to which the new format is being put.It would appear that e-retailing is being used in trey different ways at least for shopping. First, there are sites and opportunities that are essentially price driven. The focus is on getting the cheapest price for the product. secondly however some sites are being used to provide a form of service delivery. In this case, products are sought because they are special, unique, different or distinctive or because they are hard to find and thus a broad data source is needed. In short, the Internet can allow the breadth of retailing to be consulted more quickly than might otherwise be the case.It is possible to identify a third fictional character of use, to wit the time-saver, when basic components of shopping (provisioning? ) are routinised into some form of inhabitancy delivery service. These three illustrations are themselves further (and this time virtual) examples of the motley of shopping behaviour outlined earlier. With the exception of downloadable digitised products such as video and music, most products purchased remotely will require some form of home delivery system. Shopping in the real world, with the exception of mail order places the onus for this aspect primarily on the consumer.However, Internet retailing separates these activities and thus reinforces the distinction between purchasing and obtaining. In order to obtain virtual purchased goods, home delivery points will probably be needed and solutions will need to be found to the problems of delivery timings, people absent deliveries and the like (though other solutions are possible focusing on local stores/ dissemination points). It is also the case that one of the conventionally perceived benefits of Internet retaili ng, namely the removal of many car journeys, might be obviated by the enlargement of local home (or workplace) delivery services.In terms of process, the emergence of the Internet has also had effects behind the scenes. 1. 6 Environmental Changes and Trends The UK is a congested set of islands, although this can be overstated by those living in the sulfur East of England. As such the environmental aspects of shopping and retailing are particularly important given that the sector is a large user of land and the consumers are travellers to and from locations. Retailing of course is not only about consumers moving products, as shops are the commercial end of an entire tag on chain.The way in which land is used for retailing and the retail cut chain have not remained static and there is good reason to presume that this will continue. Similarly the design and architecture of retail locations is not static and plays a considerable role in both the construction of the feel of the retai l location and experience and also, in environmental terms, its competency and effectiveness. Retailing uses land and locations for its physical activities. Consumers tend to travel to the store or shop components of this system.Space use by retailers has changed dramatically with broad trends towards the polarisation of shop size. In the main this has not led to any particular problems over space although many retailers have sought the prime locations. However some problems have been felt in secondary locations as concentration and competition effects have washed through the system. All the pressures being identified thus far suggest that there is not going to be a dramatic increase in space needs but rather that it is the quality of the space that will be most important. authorized estimates of retail space, from CB Hillier Parker, suggests a stock of over 1. billion square feet of primitive shop floorspace, which translates into 524 million square feet of net floorspace. Of th e total gross floorspace 17. 7% is in managed retail environments (town and out-of-town shopping centres and retail warehouses), compared to 13. 5% in 1990 and 8% in 1980. Longer term however, it might be that existing space may be more problematical leading to any wholesale transformation or re-use as something else. Retail Sector Structure Size and Scope of Retail Sectors As has already been indicated, the definition of retailing has become more problematic.The horizontal and vertical blurring of activities and boundaries means that putting diminutive dimensions on the sector as a whole, and any component sub-sectors, is more difficult than before. Many examples of the issues abound, but we could for example contrast the coffee shop in the local Tesco, to the purchase of take-away sandwiches at Pret-a-Manager and the purchase of sushi for luncheon at Sainsbury. Are they all retailing? Similarly Tesco sell pre-packaged damages at the store but the same product is available via t he yell and from banks and brokers. Where do we draw the line for retail sales?Even Delia metalworkers cookery programmes on the BBC could conceivably be seen as a retail activity, given the direct correlation between transmission and product purchase. The boundaries of retailing are highly blurred and volatile and government conceptualisations and statistics center on product are not necessarily the most appropriate or helpful. There has been growth in product purchase, though of course in most cases the products themselves have not been static. New products have been introduced and dramatically changed categories, as computers replace typewriters and sunglasses, watches and fashion jewellery are sold by clothing chains.In non-food we can point to new products such as CDs and wide awake phones, and in food ready meals would be a simple example. furthermore in most product categories the range and choice available has expand Organisational Structure and Competition As major reta ilers have grown in scale, so they have expanded their activities into new domains. With emerging scale has come a greater degree of knowledge and power in the channel. The pace of growth of retailers has been greater than for many manufacturers. Allied to operational changes such as the development of retailer brands and the better knowledge of consumer atterns and trends, retailers have reconstructed the traditional supply chain. In essence a dominant retail organisational type has emerged, characterised by strong vertical power which has been used to control, administer and involve supply chains. Major retailers have also been involved in the use of horizontal power through their construction and reconstruction of the retail landscape. Where retailing locates and the form it takes has been transformed by the activities of major retailers and developers. Decentralisation is a key theme in this, and waves of off-centre or out-of-town development have been identified.In most cases, these developments represent retail formats (eg. the food superstore and non-food retail warehouse) that can not pronto be accommodated in existing centres. Such new locations tap into consumer needs, but have an impact on existing retailers and customers not able to travel to them. Moreover, they are in virtually all cases operated by major retailers and thus reinforce the combative imbalance amongst organisational types. International Opportunities and Threats British retailers have had a chequered history in terms of international operations.At the same time, Britain is an open market and retailers who wish to enter the market can in most cases do exactly as they wish. The exceptions to this are those formats eg. Supercentres, which are constrained by land-use planning on the grounds of space use and various dimensions of impact. basically though the UK is a retail supermarket with the best bits of many retailing cultures. This open market is illustrated by the growing presenc e of many non-indigenous retailers in British retailing. This presence has been generated both by ingrained growth and by takeover.It encompasses most, if not all, retail sectors and formats. An increasing proportion of UK retail sales is therefore being captured by non-UK businesses operating here. This inward investment is a threat to the main British retailers in competitive terms. Whilst international activity is risky, the retailers coming here are entering in many places a cosmopolitan market and one used to purchasing non-local products or travelling abroad. As such it seems not to matter to consumers where a retailer is from or who owns whom. If however competitive action combined with technological change eans that more imports are then generated and managerial head office positions, including research and development, are located outside the country, then these should be issues of concern for the country. For retailers entering this market, they have to adapt to a differe nt (generally higher) cost structure and this can create difficulties for their positioning and performance. It is not likely that the pressure from overseas retailers will subside. Britain is a large market with a relatively small number of major cities and centres.For retailers looking for organic growth and being town or shopping centre-located, entry is relatively easy. More problematic is the entry for free-standing or off-centre stores, where sites may not be as available. More likely however is entry via take-over. Given most major UK retailers are publicly quoted, such an entry is available at any time at the right price. Whilst it is true to note that British retailers have not been overwhelmingly successful when they have internationalised, there is emerging evidence that some leading UK retailers are now seeing success.In a number of sectors, leading retailers have expanded across the globe, but particularly into Europe and Asia. Some of this expansion is due to opportun ities to buy companies at reduced prices, and some is due to knowledge gained as international sourcing has expanded. Retailers such as Kingfisher, Tesco, and WH Smith are well known international retailers and have merchandise some of their experiences abroad back into their UK formats. Other smaller chains have also internationalised capitalising on niche strengths (eg Signet, Courts, Body Shop, Lush, Carphone Warehouse, Game, Thomas Pink).