Posted onNovember 27, 2016
Overview of the research
This report is one in a series examining sector skills and performance challenges, with an emphasis on the skills mix needed in specific occupations. It also investigates current levels of use of, and interest in, National Occupational Standards (NOS).
This report focuses on the retail sector, identifying the outlook for jobs and skills as well as looking at trends affecting the sector, employer perceptions of the skills needs of specific occupations, and the implications for skills supply and workforce development. It builds on a previous study which investigated skills and performance challenges across both the wholesale and retail sectors.
The report looks at five occupations in detail:
• customer services/sales assistant;
• customer service manager;
• marketing associate professional;
• human resources manager;
• SME1 owner/manager.
The research was conducted using a mixed method approach of interviews with stakeholders and retailers, combined with secondary analysis of survey data and literature.
The retail sector has seen year on year growth since 2008, and contributed £90bn to the UK economy in 2014 and has seen year on year growth since 2008. The sector is dominated by small businesses, but large retailers make a significant contribution to the workforce size and economic performance of the sector.
Over three million workers were employed in the retail sector in 2013. The workforce is dominated by customer service assistants who account for almost half of the workforce. The total sector workforce is predicted to increase to 3.2 million people in 2020.
Online retailing is transforming the sector, and the past growth of out of town centres and hyper-markets has changed the profile of town and city high streets. In 2014 online sales represented 11 per cent of all retail spending and this had increased by one percentage point by May 2015.
The age profile of the sector is changing. Evidence suggests that as older workers retire they are not being replaced by younger workers at the same rate as in previous years. Roles such as sales/customer service assistants are increasingly being filled by graduates alongside older workers. New technology requires workers to have up-to-date IT skills, which can be a challenge for older workers who are less likely to have good IT skills than younger workers.
Currently, the wholesale and retail sector has a comparatively low-qualified workforce, with only 22 per cent holding a qualification at or above QCF level 4/SCQF level 8-92 in 2012 (compared to an all-industry average of 41 per cent). Predictions suggest that by 2022 holding qualifications at this level will be a pre-requisite for 34 per cent of wholesale and retail jobs and half of jobs across all industries. In order to meet the predicted skills demand retailers will need to upskill existing workers and attract appropriately skilled new entrants.
Results from the UK Commission’s Employer Skills Survey 2013 show that 55 per cent of retail establishments with skills gaps identify gaps in the customer handling skills of their existing staff (compared to 47 per cent across all industries). Furthermore 60 per cent of sector employers with skills shortage vacancies have difficulty recruiting employees with these skills (compared to an average of 43 per cent across all industries).
Although the sector suffers from a perception of a lack of training opportunities, approximately 60 per cent of retailers invest in some kind of training, compared to an average of 66 per cent of employers across all industries. On the job training is the most common form of training offered in the sector (and is offered by around half of all companies). Approximately half of retail employers that provide training focus on the use of new technology, and overall a higher per cent of sales and customer service staff received training when compared to managers.
Skills gaps were reported by 18 per cent of retail establishments, which is comparable with the UK average. Where skills gaps exist, being new to post or incomplete training is the most commonly attributed cause. However, a perceived lack of staff motivation and insufficient improvement following training were also reported by 40 per cent of employers.
Whilst only a minority (less than 10 per cent) of the retail workforce were described by employers as not proficient, there was some variation across occupations. Lower proportions of managers were described as not fully proficient than associate professional level staff (which includes marketing associate professionals) or sales and customer service staff.
Current skills issues facing key occupations
Current skills challenges for customer service/sales assistants include: a need for better product knowledge; working with new technologies; and challenges in retention. For customer service managers challenges include developing appropriate management skills; managing diverse skills and staff requiring technical knowledge; and overseeing an omni-channel3 retailing approach.
Human resources managers face challenges recruiting to a changing sector, which includes recognising changing skills needs across occupations. A significant challenge for individuals in this role is overcoming the negative image of retail careers among potential recruits.
Recruiting marketing associate professionals is recognised by employers as a challenge because retail faces strong competition from other sectors in attracting suitably skilled individuals.
SME owner/managers face skills challenges in mastering management skills as well as understanding the benefits of, and adopting, multi-channel and omni-channel retail approaches.
Working Futures predicts net sector employment growth between 2012 and 2022 of almost four per cent. The sector will need to recruit over 2 million people by 2022 to fill new jobs as well as replace workers leaving the sector. There will also be an increase in the demand for workers qualified at QCF levels 4-6/SCQF levels 8-12, alongside a growth in the number of associate professionals and technical roles.
In the short term, retail sector employers are most likely to predict that technical, practical and job specific skills need improvement over the next 12 months, along with planning, organisation and customer handling skills.
The development of new products is the most powerful driver leading to a need for upskilling, with the impact of new technology also a factor. Pressure to upskill is most pronounced for managers (including HR, customer service and SME owners/managers) and for customer service staff.
Stakeholders and employers identified a range of skills as being of importance to the key occupations: • Future skills needs for customer staff include adapting to new technology; communication; English language skills and general literacy; numeracy; product knowledge; and softer, employability skills. Faced with better informed customers, sales skills (negotiation and persuasion) are also likely to become more critical. • Customer service managers will need a sound understanding of the retailer’s different channels (marketing and e-commerce); excellent interpersonal skills to respond to increasing customer demands; and well-developed general retail management skills. Keeping the skills and knowledge of customer service/sales assistants up to date will also be a key challenge in a dynamic sector.
• Marketing associate professionals will require more advanced and broader skills in data-handling and analysis to effectively use customer data. Other skills include: exploring information and generating findings; and understanding current and identifying future trends. • Strategic management skills will become increasingly important for human resources managers. However, competition from other sectors for these professionals may impact how well the retail sector can manage the major demographic and skills challenges predicted over the next decade. • Training in financial management is identified as the most pressing need for SME owners/managers to enable them to respond more effectively to competition. Many SMEs could benefit from identifying training needs and investing in training. Behaviour change and confidence-building is also recognised as a requirement to encourage individuals in these roles to think more strategically.
National Occupational Standards
Approximately a third of sector employers reported that they were familiar with National Occupational Standards (NOS), slightly lower than the 39 per cent average across all industries. Small businesses are least likely to be aware of NOS. Where NOS are used by sector employers, this is for HR purposes such as for developing quality standards, external staff recruitment and for helping with writing job descriptions.