The Retail Sector - Business, Innovation and Skills Committee Contents

4  Skills

Retail is an entry-level occupation for significant numbers of workers, but it is also an occupation that people progress through. [Fiona Wilson, USDAW][62]

General skills

43. Retail is the largest private sector employer in the UK. Around three million people are employed by the UK retail sector (which equates to around a tenth of the UK workforce), and retail is the largest private sector employer.[63] The British Independent Retailers Association carried out a survey of 4,000 of its members, which indicated that "the average small shop sustains eleven jobs. Even if this was twice the norm it would indicate that independents provide more than a million positions".[64] The British Retail Consortium stated that retailers' investment in staff training "is equivalent to £1,275 per employee each year".[65] Fiona Wilson, from USDAW, told us that "in the retail industry, the workforce is the greatest asset, and therefore it is very important, from an inquiry point of view, to consider the workforce—their terms and conditions, their pay and, particularly, the skills that they need to keep the sector growing".[66]

44. Boots UK wrote of the common misconception that retail is a low skill and low cost sector, when the reality is that the sector often offers rewarding careers, with a good career progression:

    The retail sector invests heavily in its staff and provides many people with skills and experience that they utilise throughout their life. […] As retail changes and the store-online experience become more seamless and integrated, staff within the retail sector will need to have the skills to operate across multiple platforms whilst still engaging with customers in a face to face conversation".[67]

45. Fiona Wilson, from USDAW, described the career progression available for staff, and the way in which employers and unions support that progression:

    Retail is an entry-level occupation for significant numbers of workers, but it is also an occupation that people progress through. It is often a case of starting on the shop floor and working your way up. That is a very common pattern for employment and skills within retail. […] What we do as a union is important, in that we develop our lifelong learning work. We have funds from BIS through the Union Learning Funds. […] We support our members: more than 7,000 of our members last year had some skills training, such as skills for Life courses, IT courses, literacy and numeracy levels 1 and 2, and accessing National Vocational Qualifications 2 and 3.

She went on to describe the training that the Union and employers run jointly:

    There are lots of situations where there are Union Learning reps, and those reps work with the employers there through formal agreements to help to skill workers who are already there. We find that the Union Learning Fund is exceptionally valuable from a joint point of view, in terms of giving workers who are already in that employment the skills to continue to work and develop themselves.[68]

46. The Rural Shops Alliance criticised the BIS strategy document for listing more specialist skills and knowledge needed in the retail sector, while not mentioning more general skills and development.

    The BIS strategy document mentioned knowledge transfer between various stakeholders, research into assisted living products and a skills gap analysis. These disparate approaches fail to address more mundane needs that would nevertheless have a large impact on the quality of retail management in the UK. Independent retailers often enter the profession after a career elsewhere. The barriers to entry into the retail industry are fairly low and it is possible to run a shop with very few retail skills. There is a massive need for specialist consultancy and training support for small independent retailers.[69]

47. We recognise the important work that employers, unions, and the Government do in supporting people already in the workforce to continue to work and develop their skills. We were therefore disappointed that the Department did not highlight this work in its Retail Strategy. We recommend that the Department commits to continued financial support for the Union Learning Fund, which enables unions and employers to work together, providing employee training and support. LEPs could provide valuable assistance in this work.


48. Apprenticeships are being used more and more in the Retail Sector in England, which the Government's evidence highlighted:

    Retail is one of the largest users of Apprenticeships. In the 2011/12 academic year there were 108,300 Apprenticeship starts in the 'Retail and Commercial Enterprise' Sector Subject Area, up by 5.4% on 2010/11 and up by 75.7% on 2009/10.[70]

Apprenticeships offer more long-term opportunities than in-house training. Martin-Christian Kent, from the National Skills Academy, explained the difference:

    Ultimately, if somebody is starting in the sector, then they have got a longer journey to reach that professional standard, and that is what the apprenticeship is for. In other instances, in-house training and qualifications have a different role. They have got the same parity, but the critical thing is raising the aspirations and looking at these professional standards.[71]

Stephen Rydzkowski, from USDAW, told us that apprenticeships in retailing is one of the fastest growing. He said:

    All our major companies now operate apprenticeship schemes. We do not normally mention companies, but we will talk about the Co-op group […] because that is an area where there is a range of apprenticeships throughout the sector. You have got retail apprentices; you have got clerical apprentices; you have got motor mechanic apprentices; and you have even got apprenticeships in the farming industry.[72]

49. Morrisons highlighted the support that it gives to its staff, including those who leave school without any qualifications:

    To date, over 110,000 Morrisons colleagues have completed a QCF/SVQ Level 2 qualification in either retail skills or customer service (equivalent to 5 GCSEs at grade C or above). Almost a third of these colleagues left school without a single qualification. So the training we are offering is repairing gaps in knowledge left by the education system and building confidence, as well as setting colleagues on the first step towards the fulfilment of career goals.[73]

Similarly, the Association of Licensed Multiple Retailers wrote of the high proportion of apprenticeships provided by licensed hospitality:

    Licensed hospitality is the fifth largest providers of apprenticeships and properly configured, they offer robust, transferable skills, which are beneficial to both employee and employer. Currently, 3% of our workforce is on an apprenticeship, but our ambition is to offer that to 5%. On average, 80% of our school leavers starting a pub and bar apprenticeship go on to enjoy a career with the business after finishing the programme, meaning stability for learners and company alike.[74]

50. Martin-Christian Kent raised the point that the changing nature of retail means that the content of apprenticeships in the sector needs to evolve: "We are working with employers to embed multi-channel and omni-channel skills within the current apprenticeships. It is part and parcel of what their staff need for our sector at this moment. Many of our national businesses are really recognising that as they move into this new world of global retailing and not just local retailing".[75]

51. Apprenticeships are being used more frequently in the Retail Sector. They allow retail staff, who often leave school with few qualifications, to gain transferable, interpersonal skills. However, retailing is becoming a much more sophisticated industry, and those who work in the sector need to be more comprehensively trained. We support the work that employers do in training their workforce. The retail sector should be more ambitious about skills training, encouraging more staff to be trained at Level 3 and above. Furthermore, given the importance of tourism to the United Kingdom, consideration 0should be given to developing language skills to enhance the international consumers' retail experience.

Digital skills in the Retail Sector

52. Our evidence highlighted the need for skills in the retail sector to keep up with its changing retail landscape.[76] With the rapidly changing nature of the retail sector, the National Skills Academy for Retail described the corresponding changing nature of skills:

    To respond to these changes, retailers must be increasingly willing to engage with customers across multiple channels, combining traditional bricks and mortar and online presences, with the single objective of enhancing the customer experience. This had profound implications for shops and for those who work in them—click and collect will become commonplace and returning goods will become a major issue. There will be major changes in the way retailers use physical space and technology.[77]

    It highlighted the two major impacts on skills:

    ·  Retailers need to upskill their customer facing workforces to be able to deal with customers who are increasingly willing to shop across a variety of channels. In many cases the customer is ahead of retailers' ability to respond.

    ·  Many small businesses have not yet embraced the technology due to their lacking the technical skills to get their businesses online. A major initiative to upskill the owners and managers of small businesses is needed if we are to retain the diverse range of retailers we currently have.[78]

53. TalkTalk Group's written evidence stated that half a million SMEs lacked the digital skills required to make the most of online opportunities and that only 14% of SMEs sold products and services online.[79] TalkTalk went on to argue that improving the digital skills of UK businesses, especially retailers, should be a priority of Government:

    The Government are making a considerable investment into building infrastructure but an insignificant small amount on making sure people are able to use it. Northern Ireland has around 95% superfast broadband coverage already today yet around 24% of the population have never been online; the highest level of exclusion in the UK. The Government is about to spend £150 million on broadband via its Super Connected Cities programme and currently it looks like a significant portion of that will go to fund broadband connection fees for SMEs. TalkTalk believes this funding would be much better invested in skills programmes and initiatives like funding UK online centres.


    Talk more about the importance of digital skills. We believe the more Government talk about it, the more motivated the private and third sector will become to take steps to change behaviour. The internet connects, educates and informs and TalkTalk strongly believe that working to close the digital skills gap is essential for the UK's economic growth.[80]

54. The only reference to skills in the first BIS retail strategy document of October 2012 was the lack of people with adequate science, technology, engineering and mathematics (STEM) skills throughout the retail sector, with an undertaking to carry out a retail STEM skills gap analysis in February 2013. It stated:

    The Government will help to identify the extent of the problem by undertaking a retail STEM skills gap analysis, likely to focus on higher mathematics, technical capability, data mining and analysis, e-commerce functionality and cyber security, good science and technology (February 2013).[81]

When asked what the Government had learnt from this analysis, Michael Fallon, Minister at BIS, replied:

    We learned that there are still skills gaps inside the sector. The Minister for skills in my Department continues to meet the Retail Consortium and each of the individual retail employers, alongside the National Skills Academy, to make sure they are getting the best out of the apprenticeship scheme, that they put forward good bids for the employer ownership pilot schemes and to see what we can do to help stakeholders, particularly in this sector, map the range of retail roles that will require digital skills in the future, not least the ones that will demand a higher level of maths and knowledge of code than we have seen up till now.[82]

    The Department's Strategy for Future Retail, published in October 2013, restated the Government's ambition for skills and the progress made thus far:

    To make the most of these opportunities, BIS will:

    In partnership with retailers, retail sector bodies and skills providers, develop a framework that identifies the range of retail roles that require skills in high level mathematics and data analysis. The project will then map the skills and qualifications required in these roles. Key partners: BIS, Retail sector bodies, retailers, retail Sector Skills Council, research councils (Spring 2014);

    In partnership with stakeholders, develop a framework that captures current and planned initiatives and activities to drive up digital skills and qualifications across Government, retailers and retail organisations and sector skills bodies, and promote effective collaboration and co-ordination where possible. Areas captured would include the retail National Occupational Standards for Multichannel, the Government's Information Economy strategy, and the 'Stimulating Innovation' action of this strategy. Key partners: BIS, Retail sector bodies, retailers, retail Sector Skills Council, research councils. (Spring 2014).[83]

When asked about the similarities between the action points on skills from the original BIS Retail Strategy document to those in the document published the week before the oral evidence session, Michael Fallon told us:

    The retail strategy itself is new. What we published last week is a refresh, one year on. There are other policies across government, the launch of the digital capability programme and so on, that have come on stream this year, which need to be tailored to what we are going to do on digital. We are not dragging our feet on this at all. We want to work with the industry and make sure that we can really focus our effort on where they think the priorities are and on where they think the gaps are.[84]

55. The changing nature of how people shop needs to be mirrored in the way in which staff are trained, to enable them to provide a more tailored service. The BIS Retail Strategy document published in 2012 made passing reference to skills needed for the retail sector, referring only to the need for a science, technology, engineering and mathematics (STEM) skills gap analysis. In its follow-up document a year later, A Strategy for Future Retail stated that an analysis of skills needed for high level mathematics, data analysis, and general digital skills to be completed by the Spring of 2014. In its response to this Report, the Government must outline the results of BIS's latest STEM skills analysis, and the timeline for the action that it will take.

62   Q104 Back

63   Ev 115 Back

64   Ev w25 Back

65   Ev 174 Back

66   Q104 Back

67   Ev 164 Back

68   Q126 Back

69   Ev 187 Back

70   Ev 132 Back

71   Q300 Back

72   Q126 Back

73   Ev w63 Back

74   Ev w14  Back

75   Q301 Back

76   For example, Ev 183 [National Skills Academy for Retail]; Ev w23 [British Independent Retailers Association]; Ev 172 [British Retail Consortium] Back

77   Ev 186 Back

78   Ev 186 Back

79   Ev 192 Back

80   Ev 193 Back

81   BIS Retail Strategy, page 6 Back

82   Q422 Back

83   The Department for Business, Innovation and Skills, A Strategy for Future Retail: Industry and Government delivering in partnership, October 2013, para 2.7.2. Back

84   Q424 Back

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Prepared 4 March 2014