The number of jobs offered by the UK’s largest private sector employer – retail – has dropped again, as companies shift to outsourcing and automation in an effort to deal with higher costs.
This trend has been ongoing for some time, and is responsible for both job loss and a lack of job creation as companies replace staff with overseas employers or automation rather than hiring domestically.
There were 2.81m jobs in retail in September 2024, according to the ONS – 40,000 fewer jobs than last year, and 225,000 fewer than five years ago.
But the fall is only “partially explained” by ongoing transformation in the industry, Helen Dickinson, chief executive at the British Retail Consortium (BRC), said. “[This includes] increased investment in automation and higher productivity [and] a shift to outsourcing of warehousing and logistics that are not all captured by the ONS retail figures.”
Retail automation includes self-service checkout systems, on-shelf inventory monitoring, and tools to analyse and predict consumer behaviour. McKinsey have suggested around a third of retail tasks will be displaced by technology by 2030.
Dickinson said that the impact of higher costs over the last few years is the other key element, with high bills exacerbating the trend to automation and outsourcing.
Costs are only set to go up. The Budget increased the National Living Wage by 6.7 per cent, adding over £2.7bn to retailer wage bills from April 2025, while changes to rate and threshold for employer national insurance contributions (NICs) will cost the industry over £2.3bn, according to the BRC.
Retail is particularly vulnerable to higher labour costs as it is a part-time reliant and low-margin sector. Part-time workers were previously exempt from NICs.
“It is inevitable the Budget will put pressure on jobs and hours in the coming year, potentially affecting communities all over the UK that rely on retail as a vital provider of entry level, local jobs,” Dickinson said.
Rakesh Dua, CEO at DUA Accountancy & Business Consultancy, said: “The question a growing number of business owners are asking following the Budget, as they seek to balance the books, is: ‘To outsource or not to outsource?’.”