Headlines about shop closures might give the impression that retail’s decline is a relatively recent phenomenon, but in fact retail’s share of employment has been falling for the past 15 years. This report digs behind this long-run trend, driven by changes in what we spend and how we spend it, and focuses in on what really matters when it comes to economic change: people and places.
- The share of employee jobs that are in retail has fallen from 10.8 per cent in 2003 to 9.5 per cent in 2018. This implies that there are over 320,000 fewer employee jobs in retail today than if the sector had maintained its 2003 employment share.
- This has not translated into a significant reduction in the number of jobs in the sector. Between 2003 and 2018 the number of employees working in retail fell by just 28,000; over the same period the number of employees across the labour market increased by over three million.
- Retail employees have enjoyed relatively fast increases in pay in recent years. Typical real hourly pay in the sector has increased by over 5 per cent since 2009, compared to an overall fall of 4 per cent. This is in part driven by the introduction of the National Living Wage in 2016. Productivity has increased by 40 per cent in retail since 2000.
- There’s no shortage of jobs, overall, for retail workers to move in to. Occupational upgrading has continued over the past 15 years and jobs growth in other sectors in which retail workers, either actual or potential, may instead work has more than compensated for the slowdown in retail employment. For example, the number of employee jobs in hospitality alone has increased by 28,000 a year between 2003 and 2018 – equal to the total decline in employee jobs in retail over that entire 15-year period.
- However, retail has recently become the sector with the highest redundancy outflow rate and it also has the highest outflow rate to unemployment of any sector – 31 per cent of retail leavers exit to unemployment, compared to a cross-sectoral average of 26 per cent. On both these measures, retail was in the middle of the pack in comparison to other sectors in the late 1990s.
- Further, having had among the lowest unemployment durations of any sector during the 2000s, unemployed ex-retail workers are now more likely to have been unemployed for six months or more (41 per cent have been, compared to an average of 38 per cent across sectors) than unemployed exiters from any other sector except energy, agriculture & construction.
- People leaving retail to unemployment or after redundancy are equally as likely to be male or female. But they are disproportionately young, with three-fifths of those exiting to unemployment aged under 30 despite barely one-third of retail’s workforce being in this age bracket. This reflects retail workers being younger than those in other sectors, but is also driven by the fact that outflow rates from retail to unemployment have risen most in absolute terms for those aged under 30.
- That negative outcomes are becoming more common for retail’s leavers is more of a living standards issue today than it once was. This is because the share of the retail workforce that work more than or the same hours as their partner increased over the past 15 years from 30 per cent in 2002 to 34 per cent in 2018. This implies that retail earnings have become a bigger deal for households with a retail worker in them.
- To date, retail’s decline has been diffuse. In 72 per cent of the 380 local authorities for which we have data, retail’s employment share fell between 2009 and 2017. This is good news – while it means nearly every area is affected by this shift it means the chances of places adjusting successfully are higher.
- However, in just over one-third (36 per cent) of local authorities the absolute number of retail workers has declined since 2009. For example, the number of people working in retail in Wakefield has fallen by 5,000 since 2009 – one of the largest absolute falls recorded at a local authority level.
- There are 26 local authorities that are most ‘at risk’ from retail’s decline. These are places in which retail’s employment share was sizable to start with and has been declining; in which labour markets are weak; and in which hospitality and social care’s share of employment are growing relatively slowly. This set of local authorities includes places as geographically diverse as Plymouth, Falkirk and Oldham.