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UK Retail Industry: PESTLE analysis Featured

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The UK retail industry remains one of the most important parts of the economy. The sector is worth 300 billion pounds and contributes 20% to the UK GDP.  Retail industry is a major private employer in the UK providing approximately 4.2 million jobs in 2011 (Rhodes, 2012).  There are approximately 428,000 business units operating in the retail sector.  The industry can be classified into specialized and non-specialized retail stores. Non-specialized stores include shops that sell a variety of products such as supermarkets, convenience shops and department stores. The sector faces numerous economic, social and environmental challenges, the changing technology, and political factors.  


The activities of retails and shoppers are affected by political structure and policies in numerous ways. Retailing trends are dependent of numerous national debates and initiatives. The main direct effect that the political environment has on the retail industry is through the exercise of power over sites through the land-use planning system. This legislation influences the location of retail stores. In addition, politicians have over the past been involved in campaigns such as “rip-off-Britain” which investigated supermarket prices and profits. Other instruments of the government have a great influence on the operation of businesses. Shoppers are affected by a number of public policies which attempts to regulate competition, safeguard the interests of consumers and employment practices.  Public health concerns have led to tighter regulations on food stores while multinational retail companies are affected by pan-European standards.  The European Union has political implications on the retail industry. Political acts have economic implications. However the government has a push of general legislation and activities that affect retailing activities.  For example, issues such as VAT rates, business rates and other forms of national taxation influence the retail industry. In 2012, the government initiated the Retail Sector strategy (Rhodes, 2012), which elaborates a number of issues aimed at promoting growth in the sector. The strategy focuses at instituting better regulations, promoting knowledge transfer, and promoting the Gloucestershire Local Economic Partnership.


The economic structure of the country has a direct impact on the retail landscape  The retailing sector  is dominated by large Multinational stores, majority of which are head-quartered out the country (Burt & Sparks, 2003; 13). Although there is an increased need to promote local investors, foreign-based stores such as Wal-mart continue to dominate the market. Therefore, the industry is likely to continue to be dominated by such multinational stores and other global players.  The interaction between the political environment and the economic situation in UK will continue to influence attractiveness of investment locations. Since 2007, the US economy has been on a rollercoaster. The global financial crisis (2007-2009) was characterized with negative GDP. This slow growth rate continued in 2010 and 2011 (World Bank, 2013).  Although national statistics indicates a slight improvement in the economy, the retail industry continues to be affected by slowed economy growth.  The disposable income in UK and the level of employment continue to be a major concern in the sector (Tutt, 2012).


The UK population is witnessing numerous social and lifestyle changes, which have considerable impacts on shopping and retailing.  Attitudes, beliefs, wants and needs of citizens have been transformed.  The expectations and experiences of consumers have increased due to the exposure to international markets.  The preference of branded products with conspicuous logos is changing as consumer demand convenient products (Department for Business Innovation & Skills, 2013). According to Kurt (2013), consumer trends are likely to be affected by depressed consumer moods. In addition, the nation has become increasingly diverse. This increase in cultural, ethnicity, nationality and race makes the need to be culturally-sensitive for all retailers. In addition, shopping trends are going to be affected by changing demographics.  As a large portion of the nation being senior citizens, mobility and the need to provide convenient services becomes fundamental.


The retail industry has been transformed by recent technological development (Saroja, 2012). As retails stores continue to strive to improve their efficiency and increase productivity, market research has become a major investment. The availability of cloud computing has facilitated market research such as consumer trends and preferences (KPMG, 2013).  In addition, the retail sector has witnessed a massive shift to online shopping. All the major stores have established online stores. Effective communication technologies have facilitated the online migration.  Retail stores are also using social media platforms such Twitter, YouTube, and Facebook to promote their products (David, 2014).   


The retail sector is under national and EU laws, which require stores to conform to numerous standards and regulations. For example, the minimum wage legislation influences operation expenses.  In addition, legislations such as equal opportunity legislations and other Acts designed to promote equality influence the staffing process (Pibeam & Corbridge, 2010).


Burt S & Sparks L (2003). Competitive analysis of the retail sector in the UK. Institute for retail studies. Accessed from on 3/26/2014.

Department for Business Innovation & Skills (2013). A strategy for future retail. Accessed from on 3/26/2014.

Pilbeam, S. & Corbridge, M. (2010). People resourcing and talent planning. Harlow: FT Prentice Hall.

Retail economics. Accessed from on 3/26/2014.

Rhodes C (2013).  The retail industry. Accessed from file:///C:/Users/Guest/Downloads/SN06186.pdf on 3/26/2014.

Tutt, L. (2012). Market report 2012.

World Bank (2012). Annual GDP. Accessed from on 3/26/2014

Saroja S (2012). Information technology-Key success factor in retail. Gian, Jyote-journal. Vol.1, 2.

David P (2014). The impact of digital technologies on innovations in retail business model. Accessed from on 3/25/2014

KPMG (2013). s2013 retail industry outlook survey. Accessed from on 3/25/2014.

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