Introduction
   The UK Commission is working to transform the UK’s approach to investing in skills to 
   help secure jobs and growth.  Key to our ambition is the need to encourage greater 
   employer ownership of skills, working to secure long term sustainable partnerships.
   This slide pack and accompanying evidence report present the case for more employers  in 
   this sector to invest in the skills of their people.  It does so by presenting real-life, skill-
   based business solutions that have been used by leading employers to tackle the performance 
   challenges they face and by drawing on examples of the investments being made by the UK 
   Commission through its investment funds.
   There are several determinants of employers’ skills needs and training behaviour including firm 
   size, strategy and location but it is by sector which the strongest variations appear.  Hence this 
   work focuses on the Retail sector.  Slide packs and reports are also available for a number of 
   other sectors from: www.ukces.org.uk Each of the sectors are important to the economy in 
   terms of employment, productivity or their future potential.
   For information about this slide pack and accompanying report please contact:
   Zoey Breuer, zoey.breuer@ukces.org.uk 
   Source information can be found in the notes section of each slide
        Storyboard
                    What key skills                 Why retailing is               The performance 
                 challenges are being             important to the UK                 challenge: 
                         faced?                  economy and labour                    Improving 
                                                     market today                management quality
                                                   The performance                  Growth through 
                  The performance                     challenge:                         skills: 
               challenge: raising skills            Attracting and                 Making best use of 
                 and investing in the              retaining talented             the existing training 
                      workforce                       individuals                     infrastructure
                Growth through skills:  
                  securing success              Benefits to Business: 
                   through people                Securing the future 
                    management                       of the sector
                                                                                                               33
     What key skills challenges are being faced 
     overall?
   Increasing consumer affluence which has given the consumer wider access to a range of 
   retailers especially so via the internet, made them increasingly demanding of customer 
   service, and made them less loyal to particular retailers.  
   The challenge to retailers is to provide a more enticing retail environment which will 
   attract and retain customers.  Whilst rising to these challenges is not solely a skills issue, 
   skills are a vital element in improving the competitiveness of retailers.
      The sector is dependent upon customer service workers.  Given the scale of  employment in 
      the sector, levels of labour turnover, and the projected growth in  employment over the 
      medium-term, the sector needs to attract a large number of people to work in the industry 
      every year.  The provision of training represents a win-win for employers:  it improves 
      the quality of labour available to the retailer, increases the attractiveness of the sector 
      to would-be recruits, and helps with labour retention.
         It is not just about sales and customer service staff.  The sector needs a supply of highly 
         skilled and qualified employees given increasingly sophisticated systems used by manage 
         supply-chains, logistics, internet shopping, in-store operations, targeted marketing, etc. 
                                       
             Skills lie at the heart of how retailers will respond to product market and 
             technological developments to ensure that the customer offer is one which continues 
             to appeal to the shopper, both in the UK and further afield.
                                                                  4
       Retail matters
       The sector today
    • Employs 2.8 million people (about 10 % of all employment) in almost 300,000 establishments
    • Contributes 10% to overall UK GVA and has a turnover of £1,211 billion
                      •  Retail contains some of the largest employers but also a long tail of micro-
                         employers -  with almost 2x the number of establishments found in other sectors
                      •  Provides initial entry into the labour market for many young people; and is an 
                         important employer of women and people from ethnic minorities 
                      •  But, it is a relatively low pay sector with employment sensitive to labour costs
                                   •                             rd
                                      The UK retail sector is the 3  largest in the world by sales 
                                      (behind the USA and Japan) . The UK  leads the world as the most 
                                      international retailer.
                                   •  Value of overseas shoppers in London alone is around £2bn 
                                      p.a. and many retailers in other locations benefit from tourism 
                                   •  The influence of retail extends beyond the sector: many large 
                                      UK retailers also engage in manufacturing own label goods; and 
                                      contribute to jobs in other parts of the economy e.g. logistics
                                   •  GVA per employee is £24,000 and sits well below both the all 
                                      economy average and wholesale and retail figure of £37,000
                                   •  Labour productivity is significantly lower than USA, France and 
                                      Germany
                                   •  The average R&D investment per retail firm in the UK top 1,000 
                                      was £15 million.
    •  Retail is changing...  UK online retail sales grew by 21%, reaching £50 billion in 2009.
     The sector today: international markets
                                                                                        CEO of Clarks International, Melissa Potter: 
             Clarks reveals plans for India expansion                                   CEO of Clarks International, Melissa Potter: 
             Clarks reveals plans for India expansion
                                                                                         “Among international brands, Hush 
        The Somerset-based retailer currently has five stores in                         “Among international brands, Hush 
        The Somerset-based retailer currently has five stores in                          Puppies (managed by Bata) is the 
                                                                                          Puppies (managed by Bata) is the 
    India and the firm is stepping up its expansion into the emerging                   only brand with a strong presence in 
    India and the firm is stepping up its expansion into the emerging                   only brand with a strong presence in 
    market country. Clarks has entered into a 50/50 joint venture with 
    market country. Clarks has entered into a 50/50 joint venture with                  the premium segment. This leaves 
                                                                                        the premium segment. This leaves 
      Future Group and hopes the complementarity of the group’s 
      Future Group and hopes the complementarity of the group’s                          a huge untapped opportunity 
     knowledge of the Indian consumer and real-estate know-how, will                     a huge untapped opportunity 
     knowledge of the Indian consumer and real-estate know-how, will                                for Clarks."
                      see  Clarks’ India expansion flourish.                                        for Clarks."
                      see  Clarks’ India expansion flourish.
          In Tesco’s stores in China,                                                           Asia is shaping up to be the 
          In Tesco’s stores in China,                         Tesco now offers 
                                                              Tesco now offers               crucial engine room of growth for 
     shoppers can buy pigs heads, chicken feet, 
     shoppers can buy pigs heads, chicken feet,               graduate traineeships 
                                                              graduate traineeships             the world's third largest 
           sea cucumbers and turtle. Tesco                   which include working 
           sea cucumbers and turtle. Tesco                   which include working           retailer - already contributing 16 
         announced plans to quadruple                           abroad through its 
         announced plans to quadruple                           abroad through its           per cent to Tesco sales and 13 
                                                              Graduates China 
     sales in China to £4bn within five                       Graduates China 
     sales in China to £4bn within five                                                         per cent of profit after just 11 
                                                                  programme.
                          years.                                  programme.
                          years.                                                                             years. 
      Since 1905, TM Lewin has been sending its shirts                       “Mail order has always               “Our first store 
         around the world by mail order. Over the years, the                   been a core part of our         outside the UK was 
     company’s range of work wear became popular in Japan,                    business, and currently           in Dublin, followed 
      Australia, the US and Europe and by 2009 its home                      accounts for 15% of our              by five stores 
                                                                                     turnover,”                     through our 
       shopping department was shipping to 163                               (Robert Isaac, Director at TM     franchise partner in 
                                                                                                                                6
                    countries around the world.                                          Lewin)                     Singapore.”