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WESTERN CULTURE AND SOCIETY: THE UNITED KINGDOM (UK) -

British Retailing

What is Retail?

Shops

Shopping

Buying things

Selling things

Trade

Distribution etc.

British Retail: Manufacturers need to sell their goods to the consumers. There are many different ways of distributing goods. The manufacturer may sell goods directly to the consumer, or may sell to a wholesaler (see next section). The wholesaler can then sell the goods directly to the consumer or to a retailer. If the goods are sold to a retailer they can be bought by the consumer in the shops.

Wholesalers: It is easier for manufacturers to sell to a few wholesalers rather than have to sell directly to the consumers or to retailers. There are many advantages to using wholesalers, these include:

Bulk Buying - Large amounts of products purchased at the same time, reduces cost

Storage - The wholesaler will store the goods, so the manufacturers own warehousing costs are reduced

Risk - The manufacturer reduces their risks, as the goods are purchased and stored by the wholesaler before being sold to the consumer, so if demand is reduced, the manufacturer has still sold the products, it is the responsibility of the wholesaler to sell the goods.

Retailers - The retailers can deal directly with local wholesalers, reducing costs etc.

Credit - Wholesalers may offer credit to the retailer to finance the purchase of stock. Some wholesalers offer "Cash and Carry" outlets, where discounts can be offered for large purchases paid for in cash.

Delivery - Many wholesalers will deliver directly to the retailer

Some businesses now miss out the wholesaler, because retailers may be large and have adequate storage facilities they may act as a wholesaler and retailer.

Delivery and Transport of Goods:Most goods are transported by truck in the UK. Many retailers own their own lorries or vans or they may rent them. The lorries normally have advertising on the outside to display a product or retailers details. Some goods are transported by rail, such as coal etc. but most retail goods are by truck.

Many retailers will deliver goods direct to your home in the UK. Especially heavy or large goods. When purchases are made using the internet, retailers will deliver the goods direct to your home, using their own delivery service or alternatively a delivery company.

British Retail Outlets

Independent Retailers: There are many small shops or independent retailers in the UK, they often specialise in one product or service, such as a local hairdresser. However their importance in retailing has declined because many of them can not compete with the larger retailers. (Many independent retailers are run as Sole Trader organisations).

Department Stores: A department store may exist as a single shop or may have a chain of stores. These stores contain many different departments, selling many different products, such as food, toys, furniture, clothing etc. all in one shop. They normally provide high quality products supported by a high level of service.

Superstores: Large shops with many branches are known as superstores, they are normally Public Limited Companies (PLC's) and sell a wide range of goods, which may be specialist such as just clothes or just food etc. or may sell a variety of goods. Food supermarkets are a type of specialist store.

Shopping Centres: There are many shopping centres in the UK - large areas which have many shops, usually undercover, there are normally many hundreds of shops in a large shopping centre. There are also many retail estates with a mix of shops for the public as well as trade centres. 

Location: Traditionally there were many small local shops selling food, newspapers etc. These shops were on the corner of many streets in the UK. People would shop for other goods at the local "High Street" a place where many retailers would sell goods.

In the last 20 years many retailers have grown in size and require very large shops. Due to the high cost of High Street shops the retailers started to build "out-of-town" shopping centres or shopping estates. because many people in Britain drive a car, or have access to a car the out of town locations became very popular. Retailers could have much larger shops and were able to store much more in their own warehouses, so reducing costs to the customers.

The supermarket chains all now have very large out of town superstores where people usually do one big shopping trip each week.

Because the out of town shopping locations have become very popular there is now concern about the amount of traffic to these locations. The government are currently reviewing the policy of building out of town shopping centres.

Key facts about British Retailing: 

• There are 2.9 million people employed in retailing

• 11% of Britain's workforce is employed in retailing

• British households spend £3.85 billion pounds a week on shopping

• By the end of 1999 there were 2,462,500 retail employees in Britain

• Retailing accounts for 1 in 9 of the UK workforce

• During 1999 retail employment provided 58,400 new jobs (22% of the total)

• Retailers operate more than 321,000 outlets in the UK

• Retail sales accounted for 23% of GDP in 1999

• Retail in the UK represented £200bn in turnover in 1999

• Each household in the UK spends an average of £144 per week in retail outlets 

• Food and non-alcoholic drinks make up the biggest proportion of average weekly household spending in retail outlets, at 31% of the total

• The UK has a population of 59 million people, representing over 24 million households

• 61% of the population is of working age. From this group, 79% is economically active

There is a wide use of self service in British retailing, customers select their own products and take them to the payment desk. Some shops might have sales assistants to advise on products, but most shops are self service.

Most purchases are made using Credit Cards or Debit Cards. Cash is normally used for smaller purchases, such as a can of soft drink or a magazine.

The British Retailing Consortium (BRC): As the ‘Voice of British Retailing’, the British Retail Consortium (BRC) expresses the views of its members and keeps the press, parliamentarians, consumers and many other opinion formers informed about issues in the retail sector. The BRC has had an office in Brussels since the early 1990's. Its role is not just one of gathering early intelligence but it also ensures the voice of British retailers is heard in the EU institutions. It also plays a key role in ensuring there is better recognition of the retail sector.

BRC Brussels has identified a number of priority areas. These are:

• Electronic commerce

• European Food Safety Agency

• Beef labelling

• Product liability/Product safety

• Waste of electrical and electronic equipment

• Revision of packaging and packaging waste directive

• Credit card fees complaint

• Anti-discrimination

Food Standards Agency (FSA): Retailers source food globally and want global risk assessment of food safety issues. The BRC is keen that the UK Food Standards Agency should give authoritative opinion on scientific issues. It should also be outward looking, working in particular more openly and closely with key regional and global agencies on food safety assessment and management issues. The BRC is fully supportive of the Agency role in giving an expert and independent view on matters relating to food safety, food standards and nutrition. The FSA should use its new powers to monitor new food legislation and ensure it is consistently enforced throughout the UK. 

Information on nutrition and the safe handling of food: Retailers offer a wide range of foods at various price levels to reflect product quality, so a wholesome, nutritious diet is available to all, whatever their income level. Retailers have long since developed labelling systems for their own brands which give customers far more information than the legal minimum on nutritional content of pre-packed foods. Larger retailers also make available information via customer leaflets or the company magazine on such issues as healthy eating and the safe handling of foods. More concise information is given for those with particular nutritional needs, such as those intolerant of or allergic to certain foods. Now retailers are experimenting with new technology to explore whether websites, call centres, hand-held scanners and touch screens can improve customer information. The prime responsibility for educating the consumer about healthy eating and the safe handling of food remains that of the Government, although retailers will usually be pleased to support government in their work, e.g. by making government leaflets available in their shops, time and logistics permitting. 

Genetically Modified Food: British retailers will consider the sale of GM foods or foods containing GM ingredients, provided they have approval from the regulatory authorities and where they have confirmed a clear customer demand. Such demand could arise from the offering of food that is allergen-free, or has an enhanced nutritional content, or perhaps an improved taste or keeping quality or a lower price. 

Labelling: In January 1998, British retailers started to label as genetically modified all Soya and maize derivatives in processed foods from supply streams believed to contain GM product. EU legislation was only introduced for labelling of pre-packaged foods with effect from September 1998 and for food sold in catering establishments from 19 September 1999.

e-commerce: BRC aims to ensure the UK legal and institutional framework develops in a way that encourages, facilitates and stimulates the growth of electronic commerce as an extension of existing trading activities such as mail order, telephone ordering, direct marketing and other televisual and interactive media opportunities. Self-regulation will play an important role, since a retailer's good reputation is vital to his business and his brand. This technology will facilitate global trading probably more in business-to-business transactions initially than in business-to-consumer. Nevertheless, the consumer protection measures that will be taken in the name of crime prevention and security should not be burdensome on business. 

SHOPPING PRICES: British retailers have a good reputation for delivering lower prices to their customers. Yet in recent years, they have been accused of charging more for basic grocery and household goods than their counterparts in continental Europe and the United States. The accusations have been driven by a series of shopping basket comparisons which have appeared in the national media.

The accusations are based on superficial comparisons, disregarding the factors that contribute to prices. They ignore the fact that UK shop price inflation has been consistently below the Retail Price Index. Similarly, the accusations have disregarded the host of methodological problems which affect international shopping baskets. 

Food Prices: Supermarkets' prices have come in for particular criticism in recent years. However, the domestic data again demonstrates conclusively that food prices have fallen significantly relative to overall prices during the last decade. Food prices have risen by less than overall prices in seven of the last 10 years, and each of the last three years. Overall, the 28% rise in food prices compares with 38% rise in the 'all items' Retail Price Index. 

Differences in sales taxes: There are significant differences in VAT and other sales taxes (notably duty on tobacco and alcohol and electrical components) across Europe. In the UK, shop price labels include sales taxes whereas in the US they generally do not. 

In many product areas, British retailers face higher supplier prices than their overseas counterparts. For example, the recent McKinsey food retailing study found the UK food processing sector to be some 25% less productive than that in the US. UK food retailers face higher input prices as a result.

British retail property is notoriously expensive, with its cost compounded by often onerous and restrictive lease arrangements. According to Morgan Stanley, "space generally is around twice as expensive in the UK (compared with mainland Europe), partly reflecting the tight planning regime and the lack of available good quality retail space".

Turning to transport costs, UK vehicle excise duty is more than three and a half times the average for the rest of the EU, and more than twice as high as in the US. UK fuel duty is more than twice the average for the rest of the EU, and more than seven times as high as the US.

The over-riding point is that even if significant price differences can be demonstrated between Britain and elsewhere, the significant cost differences between countries do not lie with retailers and indeed are largely outside retailers' control.

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