The UK productivity puzzle: Retailers must invest more in IT skills and supply chain

Press Releases

13 Sep 2016

Retailers must commit to effective strategies for selling across multiple channels, and invest more in IT and staff to improve productivity, according to a new report from the Institute for Employment Studies (IES).

The report identifies retailers’ top priorities for increasing future productivity, which include developing digital and 'big data' strategies, harnessing relevant skills, and developing vibrant retail communities.

The recent poor productivity performance of the UK economy has become a major concern for economists and policy-makers. The data differs from sector to sector, presenting a challenge to those trying to unpick the causes of the recent downturn.

A consortium of researchers carried out an in-depth investigation into the current ‘productivity puzzle’ in relation to different UK sectors and challenges. 

Their report on the retail sector reveals a shift in the agenda, with increasing emphasis on digital skills and using big data to target activity, alongside the need to build a reliable and seamless logistics and supply-chain operation.

The sector faces skills gaps in IT and planning and organisation, as well as a shift in the workforce profile with retailers likely to have a larger share of higher-skilled jobs and workers in future. This will partly be due to those entering the labour market having higher qualifications than those leaving but also because technology will replace some low-skilled jobs.

The authors recommend collaboration with higher education providers to develop relevant courses, and highlight the importance of making the sector attractive to specialists who may not typically consider a career in retail.

Additionally, smaller retailers often lack a digital presence and will need to develop this, while larger firms will find consumers expect to buy the same products and experience the same brand consistently across stores, mobile and desktop.

The authors highlight the need for larger retailers to help ensure the survival of local retail communities by supporting smaller retailers to embrace digital opportunities, thereby enabling them to retain their physical presence in town centres.

Annette Cox, lead author of the report and associate director at the Institute for Employment Studies, commented:

‘Retailers need to think carefully about their future workforce and changes they can make now in order to meet future needs. Customers expect to meet no barriers or delays in purchasing and returning products from any device or format. This means investment must be made in digital skills and supply-chain staff.’


Notes for the Editor

For a press release about the project as a whole and all the reports, visit:

The report

The report can be downloaded from:

The research

In 2015, the UK Commission for Employment and Skills (UKCES) commissioned a consortium of research organisations to prepare a series of papers investigating the current productivity challenges for UK businesses. The consortium, led by the Institute for Employment Studies and SQW, also included the Institute for Employment Research at the University of Warwick, and Cambridge Econometrics. The consortium was commissioned to prepare a series of strategic labour market intelligence reports on the challenges and opportunities for increasing productivity in four sectors and two cross-cutting themes.

The consortium has published a set of reports on these topics, which unpack the characteristics of productivity for each sector, outlining the major challenges, looking to the future, identifying priorities for change and how employers and government can help. 

The research consortium has now published six reports:

Productivity in the retail sector: Challenges and opportunities, Cox A, Hay G, Hogarth T, Brown G, Institute for Employment Studies

The relationship between UK management and leadership and productivity, Tamkin P, Hicks B, Institute for Employment Studies

Understanding the future of productivity in the creative industries, Brighton R, Gibbon C, Brown S, SQW

The future of productivity in manufacturing, Green A, Hogarth T, Kispeter E, Owen D, Institute for Employment Research, University of Warwick

The future of productivity in food and drink manufacturing, Hogarth T, Kispeter E, Institute for Employment Research, University of Warwick

State of digitisation in UK business, Mack-Smith D, Lewis J, Bradshaw M, SQW


About Annette Cox

Annette Cox has a broad portfolio of interests with a central interest on helping to improve the evidence base that policy-makers, employers and learning providers use in identifying and meeting workforce development needs.

This covers design and evaluation of skills and learning policies, use of mixed methods to forecast skills needs and research to understand the links between skills and organisational performance, employee involvement, dimensions of wellbeing and reward management.

About the Institute for Employment Studies

The Institute for Employment Studies is a leading independent, not-for-profit centre for research and evidence-based consultancy on employment, the labour market, and HR policy and practice.

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