This week the British Retail Consortium sent out a warning that the high street may become an even more desolate place in the next few years. According to them the blame is to be laid at the door of the National Living Wage and apprenticeship levy, described by the report as having sound intentions that ‘could fail on implementation’. The implication is that both businesses, especially small retail outlets that will not be able to afford the additional costs, and people who lose their jobs in retail and are unable to transition to other jobs, will be hardest hit.
Currently the retail sector employs around 3 million people but more than 250,000 shops are predicted to close, many in the North of England and Wales.
Certainly many high streets around the country are still relatively bleak places since the financial crash of 2008 and plenty of well-known names have disappeared.
Despite the doom and gloom, we have also witnessed the opening of an array of new shopping centres around Britain including Westfield in West London and the Bullring, Grand Central and the recently renovated Mail Box, in Birmingham. Of course, these are the flagship malls with big-name stores that attract visitors, but they are still retailers.
On the high street the situation may be more difficult and many commentators complain about the increase in charity shops and coffee bars. However, charity shops are providing a service and are usually quite fun places to visit, while coffee bars give people the opportunity to meet up and socialise.
Perhaps the really important development that is putting the squeeze on retailers and leading to the predicted loss of up to 900,000 jobs, is the growth in internet shopping. Internet shopping has been a boon and a bane to the retail sector. It benefits from initiatives such as Black Friday but savvy customers will often do some online, in-store, and even mobile app research before making a purchase and providing all of these platforms means that retailers’ costs have gone up.
The click and collect revolution has come at a cost, as we have already seen with John Lewis now charging to collect online purchases in-store. Nevertheless, the growth in internet shopping means that different types of jobs are also being created as websites need designing and maintaining, customer queries need to be answered and big data has to be analysed.
Another reason for the likely loss of retail jobs is that shops have become increasingly automated. In many large high street stores serving yourself has become the norm, but this is not without its drawbacks: managing your bags while scanning your goods; having to put your glasses on to read the instructions; finding someone to help when goods fail to scan. The expectation is that we will learn to put up with this – and of course we shall - but equally the stores could have eschewed the investment in self-service machines and invested in people. Human interaction can be a very positive outcome of shopping and can win loyalty from customers. So it is not all down to giving people a living wage, it is also about retailers investing in people as well as technology and continuing to put the customer first.
Professor Isabelle Szmigin
Professor of Marketing
University of Birmingham