Research Briefing

28 March 2025

By Matthew Ward
Retail sector in the UK

Summary
1 The retail sector in the UK: definition and statistics
2 Retail sales in Great Britain
3 Pressures on the retail sector

commonslibrary.parliament.uk
Number CBP 06186 Retail sector in the UK

Image Credits
Cover page image copyright Shopping mall by Stevepb / image cropped.
Licensed under Pixabay License – no copyright required.

Disclaimer
The Commons Library does not intend the information in our research
publications and briefings to address the specific circumstances of any
particular individual. We have published it to support the work of MPs. You
should not rely upon it as legal or professional advice, or as a substitute for
it. We do not accept any liability whatsoever for any errors, omissions or
misstatements contained herein. You should consult a suitably qualified
professional if you require specific advice or information. Read our briefing
‘Legal help: where to go and how to pay’ for further information about
sources of legal advice and help. This information is provided subject to the
conditions of the Open Parliament Licence.

Sources and subscriptions for MPs and staff

We try to use sources in our research that everyone can access, but
sometimes only information that exists behind a paywall or via a subscription
is available. We provide access to many online subscriptions to MPs and
parliamentary staff, please contact [email protected] or visit
commonslibrary.parliament.uk/resources for more information.

Feedback
Every effort is made to ensure that the information contained in these publicly
available briefings is correct at the time of publication. Readers should be
aware however that briefings are not necessarily updated to reflect
subsequent changes.

If you have any comments on our briefings please email

[email protected]. Please note that authors are not always able to
engage in discussions with members of the public who express opinions
about the content of our research, although we will carefully consider and
correct any factual errors.

You can read our feedback and complaints policy and our editorial policy at
commonslibrary.parliament.uk. If you have general questions about the work
of the House of Commons email [email protected].

2 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

Contents

1 The retail sector in the UK: definition and statistics 6

1.1 Definition of the retail sector 6

1.2 Economic contribution of the retail sector 6

Summary 6
Economic output 7

1.3 Employment 8

1.4 Businesses 9

2 Retail sales in Great Britain 10

Coronavirus pandemic: impact on sales 11

Non-store and online sales 12

3 Pressures on the retail sector 13

3.1 Coronavirus pandemic 13

3.2 Internet retailing 13

3.3 Shop closures 16

3.4 Empty shops 18

3.5 Changing consumer behaviour 20

3.6 Economic factors 21

3.7 Changing supermarket environment 24

3 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

Summary

The retail sector is going through a prolonged period of upheaval – the Centre
for Retail Research have described the industry as undergoing a
“permacrisis” since the 2008 financial crash.
Factors such as changing consumer behaviour, increased internet shopping
and challenging economic conditions are changing the way retailers operate
and engage with their customers. The coronavirus pandemic and increased
cost of living have added to these challenges and accelerated trends such as
increased online shopping and closures of retail premises.
This briefing paper describes the current state of the retail sector in the UK
using data and recent reports on the industry. Sometimes due to data
availability, data refers to Great Britain only. This briefing covers the retail
sector only (not the wholesale sector) and does not provide information on
government policy in the retail sector.

Key figures
• Retail sector economic output was £111.8 billion in 2023, 4.5% of the UK’s
total economic output and a 1.2% increase on 2023.

• There were 2.7 million jobs in the retail sector in 2022.

• There were 324,995 retail businesses as of 1 January 2024.

In 2024, retail sales in Great Britain were worth £517 billion, an increase of
1.4% on 2023. For every pound spent in 2024:

• 39 pence was spent in food shops – a 1% rise on 2023

• 11 pence was spent in clothing shops (including textiles and footwear) – a

fall of 0.1% on 2023

• 9 pence was spent on automotive fuel – a fall of 0.2% on 2023

• 7 pence was spent in household goods shops (including electronics and

furniture stores) – a fall of 4.7% on 2023

4 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

Impact of the pandemic on retail sales

At the onset of the Covid-19 pandemic in March 2020, retail sales fell
dramatically as lockdown restrictions closed non-essential retail stores.
Trends in retail sales were erratic for the remainder of 2020 and 2021, though
overall, broadly returned to pre-pandemic levels from March 2021. Since
August 2022, retail sales have generally fallen back below pre-pandemic
levels, with the exception of sales in household goods stores, which have
remained above pre-pandemic levels.

Internet sales
Internet sales have been rising since 2008 (when ONS data began) reaching
around 20% of all retail sales in Great Britain in 2019. Online sales rose
sharply at the onset of the pandemic as physical stores were closed, reaching
a record high of 37% in February 2021. Internet sales as a proportion of all
retail sales have generally fallen since February 2021, though remain above
pre-pandemic levels. Internet retailing is more popular in the UK than other
European countries and the USA.

Store closures
Figures from the Centre for Retail Research indicate 34 retail companies with
multiple stores ceased trading in 2024, affecting 7,537 stores and 55,914
employees. This was the highest number of stores affected in a calendar year
since the Centre for Retail Research have been collating this data in 2007.
Despite this record high, the number of employees affected was much lower
than in previous years with high levels of stores closures. This was attributed
to high levels of store closures among small and independent retailers,
typically operating between one and five stores, which generally employ
fewer staff.

5 Commons Library Research Briefing, 28 March 2025

 Retail sector in the UK

1 The retail sector in the UK: definition

and statistics

1.1 Definition of the retail sector

The retail sector includes any business or individual involved with selling
products directly to consumers. The retail sector includes shops, department
stores, supermarkets, market stalls, door-to-door salespeople and internet
retailers.

Related sectors include the wholesale sector (which supplies retailers), the
logistics sector (which connects wholesalers and producers with retailers),
and the manufacturing sector (which produces the products sold by
retailers). This briefing paper focuses on the retail sector only. 1

Retail stores are an important part of high streets and town centres.
However, it is important to note that the retail industry is broader than just
sales on the high street. The statistics in this briefing represent the whole
retail sector including in shopping centres, retail parks and online sales.

For further discussion about high streets, see the Library briefing: Town
centre regeneration.

1.2 Economic contribution of the retail sector

Summary
• The retail sector’s economic output was £111.8 billion in 2024, 4.5% of the
UK’s total economic output and a 1.2% increase on 2023. 2

• There were 2.7 million jobs in the retail sector in 2022. 3

• There were 324,995 retail businesses as of 1 January 2024. 4

1
The retail sector is defined as Standard Industrial Classification (SIC) code 47: businesses engaged in
the sale without transformation of new and used goods mainly to the general public for personal or
household consumption or utilisation.
2
In terms of Gross Value Added (GVA). ONS, GDP low level aggregates data, 13 February 2025 (Gross
value added, current prices, series KK7F, KKP5)
3
ONS and NISRA, Business register and employment survey, 2022
4
Department for Business and Trade, Business population estimates 2024 (data as of 1 January 2024).

6 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

Economic output
The economic output of the retail sector in 2024 was £111.8 billion, which was
4.5% of the UK’s total economic output. 5

The retail sector’s economic output fell by 3.0% in 2020 compared to 2019,
following the impact of the coronavirus pandemic.

The economic output of the sector returned to pre-pandemic levels by the end
of 2020. The pandemic has had very different impacts across different types
of retail stores – this is discussed further in section 2.

Retail sector economic output

% change in GVA on previous year, quarterly data, UK
40%
Whole economy
30%
Retail industry
20%

10%

0%

-10%

-20%

-30%
2007 2010 2013 2016 2019 2022

Source: ONS, GDP Output approach – low level aggregates, 13 February 2025, series KLA8 and KL74

Over the past ten years, the retail sector’s economic output has largely
followed a similar path to the whole economy.

The retail sector saw a fall in economic output and then weak growth
following the financial crisis and subsequent recession of 2008, until late
2012. In 2013, the sector began to recover and grew strongly from 2014 until
late 2016.

The retail industry, like the economy as a whole, suffered a severe downturn
as a result of the pandemic, and output in the retail sector has generally
remained below pre-pandemic levels since March 2020.

5
In terms of Gross Value Added (GVA). GVA is a measure of economic activity similar to GDP. Briefly,
GVA is the contribution of part of the economy, minus costs incurred in production. Source: ONS,
GDP low level aggregates data, 15 November 2024 (Gross value added, current prices, KK7F).

7 Commons Library Research Briefing, 28 March 2025

 Retail sector in the UK

1.3 Employment

Employment in the retail sector in the UK was around 2.7 million in 2022, 8.6%
of the UK total. This was a fall of 5% compared to 2021 (over the same period,
total employment in the UK grew by 2%). 6

Employment in the retail sector is fairly evenly distributed across most

regions and countries of the UK, shown in the chart below.

London had the lowest proportion of retail employment in 2022 (7.8% of jobs
in London were in retail) and Northern Ireland had the highest (11.0%),
followed by the North East on 9.7%.

Retail employment in the UK

% of total region/country employment, 2022

London 7.8%

West Midlands 8.1%

East Midlands 8.3%

England 8.5%

UK 8.6%

Scotland 8.6%

South East 8.6%

East 8.7%

North West 8.7%

South West 8.8%

Wales 8.9%

Yorkshire and The Humber 8.9%

North East 9.7%

Northern Ireland 11.0%

0% 2% 4% 6% 8% 10% 12%

Source: ONS and NISRA, Business register and employment survey: 2022, via NOMIS.

Note: Employment estimates includes employees and self-employed workers registered for PAYE or
VAT. Northern Ireland includes only employee jobs.

6
Data from ONS and NISRA, Business register and employment survey, 2021 and 2022, via NOMIS.

8 Commons Library Research Briefing, 28 March 2025

 Retail sector in the UK

1.4 Businesses

There were 324,995 retail businesses in UK retail sector as of 1 January 2024,

5.9% of all businesses.

In common with most other sectors in the economy, small and medium sized
enterprises (SMEs) made up over 99% of retail businesses. However, the
retail sector and the whole economy had differing proportions of businesses
in other business size categories.

• 60% of businesses in the retail sector had 0 employees (single person-

led business), compared with 74% in the economy as a whole.

• 34% of businesses in the retail sector had between 1 and 10 employees,

compared with 22% in the whole economy.

• 6% of retail businesses had between 10 and 100 employees, compared

with 4% of all businesses.

Businesses by size
% businesses in retail sector and whole economy by size, UK, 2024

73.7%
0 employees
59.7%

21.6%
1-9 employees
34.4%
Whole economy
4.4% Retail industry
10-99 employees
5.7%

<0.5%
100+ employees
<0.5%

0% 20% 40% 60% 80%

Source: Department for Business and Trade, Business Population Estimates, 2024

9 Commons Library Research Briefing, 28 March 2025

 Retail sector in the UK

2 Retail sales in Great Britain

In 2024, retail sales in Great Britain were worth £517 billion, an increase of
1.4% on 2023. For every pound spent in 2024:

• 39 pence was spent in food shops – a 1% rise on 2023

• 11 pence was spent in clothing shops (including textiles and footwear) – a

fall of 0.1% on 2023

• 9 pence was spent on automotive fuel – a fall of 0.2% on 2023

• 7 pence was spent in household goods shops (including electronics and

furniture stores) – a fall of 4.7% on 2023

The remainder was spent in other types of shops, non-specialist shops, or in

non-store retailing, such as market stores, catalogues and online only
retailers. 7

Prior to the coronavirus pandemic, the volume of retail sales had been
increasing year-on-year since 2013. This followed a period of stalled growth in
sales following the financial crisis, between 2008 and 2013. The chart below
shows how the volume of retail sales (with sales adjusted for inflation) has
changed over the last two decades.8

Retail sales, volume of sales, Jan 1997 - Feb 2025

Index 2022=100
Seasonally adjusted, Great Britain

120

100

80

60

40

20

0
1997 2002 2007 2012 2017 2022

Source: ONS series J5EK

7
ONS, Retail sales pounds data, value, seasonally adjusted
8
ONS, all retail sales including fuel, volume, seasonally adjusted, series J5EK

10 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

Only rarely have retail sales fallen in volume terms compared to the previous
year since 1997. Average growth in rolling three-month periods compared to
the previous year was 1.9% between 1997 and 2024. 9

Coronavirus pandemic: impact on sales

At the onset of the Covid-19 pandemic in March 2020, retail sales fell
dramatically as lockdown restrictions closed non-essential retail stores.

Retail sales as a whole recovered to pre-pandemic levels by June 2020 – this

was relative quick compared to other sectors such as hospitality and
entertainment. 10 Sales fell again in January and February 2021 when non-
essential retail outlets shut again, however the fall was much less significant
than early 2020, suggesting that retailers and consumers had adapted to
restrictions. Retail sales overall broadly returned to pre-pandemic levels from
March 2021, though there was a big difference between the impact on
different store types, with clothing stores the worst affected.

Clothing stores were hit hardest by the pandemic

Volume of sales, seasonally adjusted, Great Britain

140
120
120
100
100
80
80
60
60
All retail Food
40
40

20
20 Clothing Household

00
1997
2020 2002
2021 2007
2022 2012
2023 2017
2024 2022
2025

Source: ONS, Retail Sales Index, series J5EK, EAPT, EAPX, EAPY, J5DZ.

Notes: all retail includes sale of fuel.

Since August 2022, retail sales have generally fallen back below pre-
pandemic levels, with the exception of sales in household goods stores.

Retailers have indicated that the increased cost of living and rising food
prices have been detrimental to retail sales. In February 2025, food store
sales volumes were 5.5% below their February 2020, pre-pandemic levels,
while clothing store sales volumes were 7.8% lower, and all retail sales
volumes were 0.4% lower. 11

9
ONS, all retail sales including fuel, volume, seasonally adjusted, J5EH
10
See Commons Library briefing, Coronavirus: economic impact, section 3.5 (CBP 8866, 9 April 2021).
11
ONS, Retail Sales, 28 March 2024

11 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

Non-store and online sales

Non-store sales increased rapidly at the onset of the pandemic and remained
high throughout 2020 and 2021, but generally fell in 2022 and 2023, though
they remained well above pre-pandemic levels. Non-store sales were 54%
above pre-pandemic levels (February 2020) in June 2020; in December 2023,
they were 11% higher, though were at their lowest level for a year. Non-store
sales refer to retail without a physical store presence; 82% of this category is
online-only retail and the remainder market stalls, catalogue-order retail,
pop-up stores etc.

Similarly, the proportion of all retail sales happening online increased

significantly in March 2020, shown in the chart below. These figures include
all online retail sales, including for retailers with physical stores, such as
online supermarket orders. Internet sales were slightly below 20% of all retail
sales pre-pandemic, before rising sharply from March 2020, reaching a
record high of 37% in February 2021. Internet sales as a proportion of all retail
sales have generally fallen since February 2021, though remain above pre-
pandemic levels. Online retail is discussed further in section 3.2 of this
briefing.

Internet sales as a proportion of all retail sales

%, seasonally adjusted, Great Britain
40

30

20

10
<0.5%

0
2008 2013 2018 2023

Source: ONS, series MS6Y

12 Commons Library Research Briefing, 28 March 2025

 Retail sector in the UK

3 Pressures on the retail sector

The retail sector has changed radically in recent years. Factors driving these
changes include internet retailing, store closures and other changes on the
high street, and an increasing consumer preference for large multi-purpose
malls.

This section includes a discussion of challenges facing the retail sector. For a
discussion of wider challenges facing high streets and town centres, including
on business rates, see the Commons Library briefing Town centre
regeneration.

3.1 Coronavirus pandemic

The coronavirus pandemic caused challenges for the retail industry. Section 2
covers the impact of the pandemic on sales, showing the different
experiences of different retail sectors during the pandemic and section 3.3
below covers store closures.

For a summary of government support schemes for businesses affected by the

pandemic and statistics on levels of funding, see the Library briefings
Coronavirus: Support for businesses and Coronavirus business support
schemes: Statistics.

The pandemic also accelerated some pre-existing trends and challenges

facing the retail sector discussed further in this section, such as increased
online shopping. New challenges and opportunities have also emerged due to
new behaviours during the lockdown, such as from increased home working
and restrictions on travel. For example, the Local Data Company, PwC and
others suggested a trend towards local shopping emerged during the
pandemic, with local stores and smaller villages/towns seeing better footfall
performance compared to city centres (see section 1.4 of our briefing, Town
centre regeneration for further discussion).

3.2 Internet retailing

Shopping on the internet has become increasingly popular and this is

transforming the retail sector.

13 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

As shown in section 2, online retail sales have increased from around 5% of

all retail sales in 2008 (when the ONS data series began) to around 20% in
2019, increasing to 28% in 2020, 31% in 2021, before falling to 27% in 2022.

The popularity of buying goods via the internet varies by type of shop, shown
in the chart below. Department stores and clothing stores have a higher
proportion of online sales compared to food stores.

All store types saw big increases in online orders in 2020 and 2021, before
falling in 2022. Total online retail sales as percentage of all retail sales
increased very slightly in 2023 and 2024, though remained below peak levels
seen in 2021.

Online sales by retail sector, 2019-24

Online sales as percentage of all sales by sector, Great Britain
40
2019 2020 2021 2022 2023 2024

30

20

10

0
All retail Mostly food Clothing Household

Source: ONS, Retail sales index: Internet sales

A 2023 report published by the Centre for Cities argues that the growth of
online retailing is not necessarily correlated with the declining fortunes of the
high street and physical shops, stating “the strength of the high street” is
more closely correlated to other, local factors, such as “levels of disposable
income and the strength of the local labour market.” The article points to
large numbers of empty shops in cities like Newport and Stoke, despite lower
prevalence of online shopping in these cities, though points out specific types
of high street shops, such as clothing retailers, are especially vulnerable to
the rise of online shopping. 12

Data on online retailing published by the Centre for Retail Research indicates
that prominent UK fashion retailers such as Next now derive “a minority of
their sales from their retail premises.”13 The trend is expanding to value
clothing retailers, noted in developments like Primark expanding click-and-

12
Valentine Quinio, Three years on from lockdown: has the pandemic changed the way we shop? Centre
for Cities, 23 March 2023
13
Centre for Retail Research, Online Trends & Statistics for UK, Europe & N. America 2022-2023

14 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

collect services, despite the chain previously avoiding online expansion in the
belief that online sales would be “uneconomic at its lower price points.” 14

International comparisons
Internet retailing is more popular in the UK than other European countries
and the USA, shown in the chart below.

In 2022, 27% of UK retail sales were online, while online purchases accounted
for 20% of total retail sales in Germany and 19% in the USA; the European
average was 15%.

The growth of online sales in the UK in particular has partly been a result of its
relatively small size, resulting in lower transportation costs. The USA had a
relatively low proportion of its retail sales being conducted online, despite
many ecommerce groups being headquartered in the United States, with the
growth of online retail nationally in the United States inhibited by the
country’s large size and associated expense of shipping goods across large
distances. 15

Online share of total retail trade, 2022

30%

25%

20%

15%

10%

5%

0%

Source: Centre for Retail Research, Online Trends & Statistics for UK, Europe & N. America 2022-2023

* A large proportion of Dutch online retailing and e-shopping involves cross-border sales so the figures
may be less accurate than for the other countries.

Online sales as a proportion of total retail sales have increased throughout

the world since 2020, as lockdowns restricted shoppers’ ability to make in
person purchases. Lockdowns also resulted in shops improving online
shopping facilities, as well as increasing the number of online purchases

14
Laura Onita, How online shoppers fell back in love with the high street, Financial Times, 10 January
2024
15
Centre for Retail Research, Online Trends & Statistics for UK, Europe & N. America 2022-2023

15 Commons Library Research Briefing, 28 March 2025

 Retail sector in the UK

made by shoppers, and forcing shoppers who had no prior engagement with
online shopping, such as older people, to begin purchasing goods online. 16

3.3 Shop closures

In 2020, 54 retail companies with multiple stores ceased trading, affecting

5,214 stores and 109,407 jobs according to the Centre for Retail Research. 17

This was a roughly similar number of store closures seen in 2008 and 2009,
following the financial crisis. An equivalent number of retail companies with
multiple stores ceased trading in 2012, owing to a significant decline in chain
retailer numbers in town centres, though the number of stores affected was
much lower than in 2020, 2009 and 2008.

The Centre for Retail Research described 2020 as “probably the worst year for
retailers for 25 years.” 18 The number of store closures slowed significantly in
2021, before increasing again in 2022, with the number of store closures
increasing by 31% between 2021 and 2022, partly a result of the sharp
increase in consumer prices. 19

The number of store closures in 2023 was 971, the lowest number of store
closures since 2015, though this was a result of 62 businesses failing, the
highest number since the Centre for Retail Research began collating this data
in 2007. The number of employees affected by these closures has been
relatively low compared to recent trends – 20,642 employees were affected
by retail store closures in 2023, compared to 109,407 in 2020 and 46,506 in
2019.

The sharp rise in businesses failing was attributed to some high-profile

chains, such as Wilko, going into administration, which the Centre describes
as “the largest retail failure since Woolworths in 2008” in terms of the
“numbers of staff and stores” affected, though the downturn in 2023 also
affected retail sectors “which looked to have high demand and plenty of well-
heeled customers” such as prestige fashion and sports cycling. 20

34 retail companies with multiple stores ceased trading in 2024, affecting

7,537 stores and 55,914 employees. This was the highest number of stores
affected in a calendar year since the Centre for Retail Research have been
collating this data. Despite this record high, the number of employees
affected was much lower than in previous years with high levels of stores
closures – 109,407 employees were affected by store closures in 2020, based
on 5,214 store closures.

16
Centre for Retail Research, Online Trends & Statistics for UK, Europe & N. America 2022-2023
17
Centre for Retail Research, Who’s Gone Bust in UK Retailing in 2007-2024?
18
Centre for Retail Research, The Crisis in Retailing: Closures and Job Losses
19
Centre for Retail Research, Who’s Gone Bust in UK Retailing in 2007-2024?
20
Centre for Retail Research, Who’s Gone Bust in UK Retailing in 2007-2024?

16 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

This was attributed to high levels of store closures among small and
independent retailers, typically operating between one and five stores, which
generally employ fewer staff. These accounted for 84.1% of all store closures
during 2024. 21

Number of stores affected by retail company failure

2007-2025*
8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025*

* Data for 2025 is covers February 2025

Source: Centre for Retail Research, Who’s Gone Bust in UK Retailing in 2007-2024?

Prior to the pandemic and cost of living crisis, the retail sector was already
experiencing challenges from store closures - the Centre for Retail Research
has described the retail industry as facing a “permacrisis” since the 2008
financial crisis. From 2008 to the end of 2019, the retail sector with the most
stores affected by company failures was the clothing sector, accounting for
27% of all stores affected, while off licences accounted for 15% and footwear
stores and DVD music and video game rental stores each accounted for 12%
of stores affected. 22

The Centre summarised the challenges in the retail sector leading to store
closures as follows:

• “Rapid debt-fuelled expansion” of shops in the 2000s, which pushed city

centre rents to “astronomical levels.”

• Low profitability caused by high costs, slow growth in sales and

squeezed profit margins.

• The growth of online retailing, with much of online growth achieved at

the expense of bricks-and-mortar retailers.

21
Simon Godley, UK lost 37 shops a day in 2024, data suggests, Guardian, 2 January 2025
22
Centre for Retail Research, List of Major Retail Failures 2008 to end-2019

17 Commons Library Research Briefing, 28 March 2025

 Retail sector in the UK

• Lack of preparation: low investment in stores and weak forward planning

to meet the challenges of the new retailing.

These longer-term trends have been exacerbated by the pandemic and cost
of living crisis. The Centre for Retail Research have stated that post
pandemic, consumers have “got out of the habit of high-street shopping or
even visiting a store”, such that in early 2023, “customer footfall was 10%
lower than in 2019, and in major cities even less.” The cost-of-living crisis has
also led consumers to led consumers to “seek out cheaper retailers”,
increasing competition in an already competitive industry.

Retailers have also been losing their share of consumer spending to spending
on leisure and tourism, such as meals out, city breaks, gym membership,
subscriptions to TV Channels, foreign holidays and spa, health and
wellbeing treatments. 23

3.4 Empty shops

The Local Data Company (LDC, a retail and leisure data company) collects
information on retail and leisure businesses in town centres in Great Britain.

Data from the LDC indicates that the rate of vacant retail units increased
steadily in 2020 and 2021, as the effects of the pandemic became manifest,
from 12.2% in Q1 2020 to a high of 14.5% in Q2 and Q3 2021. While vacancy
rates fell in five successive quarters following Q3 2021, they remain above pre-
pandemic levels.

Retail vacancy rates increased in 2020 and 2021

Percentage of total retail and leisure units vacant, GB, Q1 2018 - Q4 2023
15

12

0
Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023

Source: Local Data Company

23
Centre for Retail Research, The Crisis in Retailing: Closures and Job Losses

18 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

Vacancy rates vary considerably depending on the type of retail location -

vacancy rates on high streets are generally close to the national average,
while vacancies in shopping centres are generally much higher and vacancies
in retail parks are much lower.

Vaccancy rates by location

Percentage of total retail and leisure units vacant, GB, Q1 2018 - Q4 2023
20

15

10

5
Shopping centres High streets Retail parks
0
Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023

Source: Local Data Company

Shopping centres were most impacted by the pandemic in terms of store

closures, due in part to indoor environments and low proportions of essential
retail compared to retail parks and high streets. Ongoing high vacancy rates
in shopping centres have been attributed to factors such as high rents and
services charges, and a general decline in footfall. 24

Retail parks were most resilient to store closures during the pandemic, with
vacancy rates now below pre-pandemic levels. The ongoing resilience of
retail parks has been attributed to accessibility by car, hosting a high
proportion of retailers classed as essential during the pandemic, and playing
a “fundamental role in many retailers’ click and collect supply chains.” 25

The continued move to provision of services online by banks, betting shops

and estate agents has had a particular impact on high street vacancy rates.
Online provision has meant these businesses have reduced their number of
physical locations, which has a knock-on effect for other types of business, as
consumers have fewer reasons to visit high streets. 26

24
Deloitte, What next for the high street? Part one: The way things are now, January 2021, pg. 13
25
Deloitte, What next for the high street? Part one: The way things are now, January 2021, pg. 4
26
PwC, Plenty of positives but a need for caution: Store openings and closures H1 2023

19 Commons Library Research Briefing, 28 March 2025

 Retail sector in the UK

3.5 Changing consumer behaviour

Physical shops, high streets and shopping centres have adapted to the rise of
internet retailing by changing the experiences and services that they offer to
customers. This can be seen in several broad trends.
Click and collect and omnichannel retailing has grown. Online retailing has
not resulted in a simple substitution of physical shopping for online shopping,
although this has happened to some extent. Instead, successful physical
stores have developed online services that are complimentary to their
physical presence. Modifications include offering customers the option to
browse goods in the store and then order them online or pick up goods they
have bought online in physical stores. 27
A report by Barclays estimated that click and collect accounted for 8.4% of
total UK retail spending in 2022, stating that integrating digital and in-store
shopping “is fast becoming a standard industry expectation.” The report
found that having “both an online and physical presence can be
advantageous for a retailer’s appeal”, reporting that just under a quarter of
consumers can be “hesitant when buying from online-only brands”, though
this figure drops to 13% when businesses “also have physical stores.” 28
The British Retail Consortium have argued that post-pandemic, retailers have
to “react to a fundamental shift in attitudes towards consumerism.” 29
Retailers are increasingly moving towards shops that provide experiences and
services that cannot be sourced online (such as stylists, repairs, cafes) rather
than simply browsing space. 30 The increasing popularity of beauty or personal
service shops further highlights this trend, signalling the type of service that
customers value that is not found online. The Local Data Company reports
that in the first half of 2023, the UK saw net gains in the number of barber
shops, nail salons and beauty salons, compared to an overall net loss of
4,000 retail units. 31
There has also been a notable increase in the number of convenience stores,
which have benefited from the “localisation” of shopping habits, a trend
borne of necessity during lockdown, that has continued, allied to wider trends
seeing shoppers move from a large weekly shop to multiple shopping trips
(see section 3.7 for more). 32

27
Wrigley N., and Lambiri D. (University of Southampton), British High Street: from crisis to recovery: a
comprehensive review of the evidence, 2015, p65
28
Barclays, Click-and-collect economy worth over £42bn as ‘hybrid’ shopping grows, 6 October 2023
29
Faye McConnell, The High street is not dead, it just needs a new purpose, British Retail Consortium, 20
October 2022
30
Centre for Retail Research, Store of the Future
31
Andrew Ellson, Barber shops boom as vanity drives rise in male grooming, The Times, 24 October 2023
32
Local Data Company, Key trends in FMCG and convenience: a Local Data Company review, 23 October
2023

20 Commons Library Research Briefing, 28 March 2025

 Retail sector in the UK

There has been growth in mixed use malls which include shops, cinemas and
food and drink outlets. It has been argued that consumers should no longer
be analysed in terms of discreet purchases, but rather by the trip they make
to the shopping area. 33
The Centre for Cities have predicted successful high streets of the future, in
addition to shopping, will also offer “what we cannot find at home or online,
by moving away from over reliance on retail towards the ‘experience’ leisure
economy.” 34 Adrian Palmer, an academic at the University of Reading has
argued that experience in terms of retail may derive from traditional retail
experiences such as “being able to go into a neighbourhood convenience
store and come out quickly having found everything that is needed at that
moment”, but also through other experiences, such as “being entertained by
interaction with others, and with other leisure activities which coincide with
shopping trips.”35

3.6 Economic factors

In the decade following the financial crisis of 2008/09, average earnings have
been subdued and disposable income has barely grown. These factors have
affected confidence in the retail sector and contributed to some of the recent
trends in retailing mentioned above.

For much of the past decade since the financial crisis, earnings growth has
been below inflation, leading to a long period of stagnating wages in real
terms. 36 In conjunction, household disposable income has also grown far
more slowly than in previous decades, shown in the chart below. Household
disposable income means income after tax; it includes wages as well as other
sources of household income such as pensions and investment.

Between 1955 and 2007, the average annual growth in real disposable
household income per head was 2.6% a year. Between 2008 and 2011
disposable income on average fell by 0.8%. Between 2012 and 2023 growth in
income recovered, but at a slower rate (1.1% average annual growth).
Disposable incomes increased by 1.3% between 2022 and 2023, after a fall of
2.8% between 2021 and 2022. 37

33
Elizabeth Howard, New shopping centres: is leisure the answer? International Journal of Retail &
Distribution Management, 2013
34
Centre for Cities, High streets recovery tracker, 1 May 2022
35
Professor Adrian Palmer, Have we reached peak online retail sales? Henley Business School, University
of Reading, 25 July 2022
36
See House of Commons Library, Average Earnings
37
ONS, Households: Real disposable Income, per head, series CRWX

21 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

Household disposable income per head, 1960-2023

£, real terms
25,000

20,000

15,000

10,000

5,000

0
1960 1970 1980 1990 2000 2010 2020

Source: ONS, series CRXW. Reference year: 2022

These factors have fed into weak consumer confidence, particularly in the five
years following the financial crisis. 38

Consumer confidence fell at the onset of the pandemic in March 2020, though
began to recover in early 2021, with the vaccine programme accelerating and
lockdown restrictions easing, reaching pre-pandemic levels in May 2021.

Despite this growth, consumer confidence levels nose-dived in 2022.

In September 2022, consumer confidence levels fell to their lowest level since
equivalent records began in 1974, as consumers felt “the pressure of the UK’s
growing cost-of-living crisis” driven by “rapidly rising food prices, domestic
fuel bills and mortgage payments.” 39 Consumer confidence levels remained
markedly low for the remainder of 2022, as consumers adjusted to “the new
abnormal” of high prices, and rising interest rates. 40

Consumer confidence has generally grown since late 2022, though remains
well below pre-pandemic levels.

38
GfK NOP, Consumer Confidence Index. This index measures a range of consumer attitudes, including
forward expectations of the general economic situation and households’ financial positions, and
views on making major household purchases.
39
GfK NOP, UK consumer confidence tumbles to new low of -49 in September, 23 September 2022
40
GfK NOP, UK consumer confidence claws back meagre two points at -47 in October, 21 October 2023

22 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

Consumer confidence index, Jan 1988 - Feb 2025

% balance expecting improvement/deterioration

20
10
0
-10
-20
-30
-40
-50
-60
1988 1993 1998 2003 2008 2013 2018 2023

Source: GfK NOP consumer confidence survey, monthly data.

The pandemic also led to high levels of accumulated household savings

(concentrated in higher income households) as consumption fell while
household incomes remained stable.

UK household deposits
£ billions, monthly change, January 2020 - January 2025

30
25
20
15
10
5
0
-5
-10
2020 2021 2022 2023 2024 2025

Source: Bank of England, LPMVVHS

Rebounding consumer confidence in 2021 had led to speculation that

consumer spending would recover strongly in 2021 and 2022, with some
predicting a “consumption blowout” resulting from “a degree of euphoria” as
pandemic related restrictions ceased, and the fact that additional household
savings made during the pandemic were “held primarily in liquid form,
allowing them to be run down more easily.” 41

41
Katie Martin and Chris Giles, Britons prepare to spend their savings as lockdown eases, Financial
Times, 12 April 2021 and OBR, Economic and fiscal outlook - March 2021, pg. 57

23 Commons Library Research Briefing, 28 March 2025

 Retail sector in the UK

This anticipated increase in consumer confidence and spending was instead

curbed by the “rapid acceleration” in inflation in 2022, generating “new
challenges to UK households faced with a sharp increase in the cost of living
and falling real incomes.” 42

3.7 Changing supermarket environment

Supermarkets are a fundamental component of the retail landscape in the

UK. They are where many people buy their food and other essential items,
they are innovative businesses that have transformed the retail environment
and, in some cases, they are also significant global brands. But their role and
position in the retail landscape has changed in recent years.

The decade to 2012 was a period of rapid expansion for the ‘big four’
supermarkets - Tesco, Sainsbury, Asda and Morrison – traditionally the four
supermarket chains with the largest market share.

These stores’ market share in groceries grew from around two thirds in 2000
to over three quarters in 2013. This growth was accompanied by a number of
other features, including broadening product ranges, more and larger stores
which were often located out of town, and increased multi-channel retailing
(including home delivery and click-and-collect). 43

The major supermarkets have also altered the profile of their estates, with a
concerted move away from out-of-town stores towards town centre
convenience stores and ‘small supermarkets’. In 2014, Sainsbury’s announced
that it had more convenience stores than supermarkets; Tesco, the UK’s
largest retailer, announced that its convenience stores outnumber its
supermarkets in 2013. 44

Morrisons and Asda have also begun to expand into convenience stores. The
first Morrisons Daily was opened in 2017, with the chain has expanding this
portion of its operations following the acquisition of McColls in 2022. 45 Asda
opened its first convenience store in late 2022, with plans to expand after
acquiring a number of sites from the Co-Op. 46

Challenges to the ‘big four’

Since 2013, the market share of the ‘big four’ has generally fallen, from 77% in
2011 to 65% in 2023. 47 This decline in the market share of the big four was

42
ONS, Economic modelling of forced saving during the coronavirus (COVID-19) pandemic, 6 June 2022
43
Bank of England, David vs Goliath: the supermarket’s battle for the consumer (via the Bank
Underground blog), 8 September 2017
44
BBC, The rise, fall and rise of the mini-supermarket, January 2014
45
Ronan Hegarty, Morrisons plans to convert most McColl’s stores to Daily format as takeover
completes, The Grocer, 1 November 2022
46
Eloise Hill, Asda to open over 80 Express stores in December, Retail Gazette, 19 December 2023
47
Kantar World Panel, Great Britain grocery market share, accessed 14 November 2023

24 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

accompanied by the rapid rise of the lower costs, “no frill” competitors - Lidl
and Aldi. In 2011, the combined market share of Lidl and Aldi in the Great
Britain groceries market was 5%; in 2024 it reached 18%.

The rise of Aldi and Lidl

% share of GB grocery market 2014-25, monthly data

20
18 Combined

16 Aldi
14 Lidl
12
10
8
6
4
2
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Source: Kantar World Panel, Grocery Market Share, Great Britain

Aldi has a larger market share of the two, with an almost 10% share of the GB
grocery share market in 2024, compared to around 8% for Lidl. Data from
Kantar indicates Aldi overtook Morrisons in its share of the GB grocery market
in September 2022 and has generally maintained a larger market share than
Morrisons ever since.

Aldi enters the big four

% share of GB grocery market, 12 weeks ending 23 February 2025

Tesco 28.3%

Sainsbury's 15.7%

Asda 12.6%

Aldi 10.3%

Morrisons 8.6%

Lidl 7.3%

0% 5% 10% 15% 20% 25% 30%

Source: Kantar World Panel, Grocery Market Share, Great Britain

These stores are characterised by a smaller range of goods (Aldi and Lidl are
said to have around 2,000 product ranges, compared with Tesco’s “tens of

25 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

thousands” 48), fewer staff, and generally lower prices, compared to the big
four supermarkets. They also generally spend less on advertising and do not
offer services such as click and collect and home delivery. 49

Changing consumer behaviour has also affected the big four supermarkets. In
recent years, consumers have begun to make more frequent, smaller value
shopping trips. Consumer preference has shifted in favour of single item
purchases, rather than “big weekly shops” while the trend towards increased
online purchasing means that a large stock selection in store is no longer as
important. 50

The rise of Aldi and Lidl at the expense of the traditional ‘big four’
supermarkets, particularly since 2022, has also been seen as a result of the
cost of living crisis and particularly high levels of food price inflation.

Inflation, as measured by the Consumer Prices Index (CPI) rose steadily in

2021 and 2022, reaching 11.1% in October 2022, its highest level since 1981
according to Office for National Statistics (ONS) estimates.51 Food price
inflation has also been especially high, rising sharply in 2022 and 2023,
reaching a high of 19.2% in March 2023, its highest annual rate for over 45
years. 52

More recently, inflation has generally fallen, and was 2.8% in February 2025,
down from 3.0% in January, while food price inflation was 3.3% in February
2025, unchanged from January, though up from 2.0% in December 2024.

ONS data on household expenditure indicates 59% of adults in Great Britain

reported an increase in their cost of living in February 2025 compared to a
month earlier, with 93% of those who reported an increase citing an
increased price of food shopping as the reason for this. 42% of those who
reported an increase in their cost of living said they were shopping around
more as a result, while 40% were spending less on food shopping and
essentials. 53

Increased cost of living has also had a detrimental effect on retail spending at
Christmas, traditionally the busiest time of year for the retail industry.
Consumers reported plans to spend less on Christmas in both 2022 and 2023
compared to the previous year, through both buying less and buying less
expensive things. 54 Figures from 2024 also indicate consumers shopping
further in advance of Christmas, taking advantage of Black Friday, with

48
Laura Onita, Day of the discounter: when will the UK reach peak Aldi and Lidl?, Financial Times, 10
September 2023
49
Isabella Fish, Cheap, fresh and local: how Aldi shook up the grocery market, The Times, 20 May 2024
50
PwC, Frictionless retail – the future of shopping, November 2022, pg. 5 and Bank of England, David vs
Goliath: the supermarket’s battle for the consumer (via the Bank Underground blog), 8 September
2017
51
ONS, Consumer price inflation, UK: September 2023, 18 October 2023
52
ONS, Consumer price inflation, UK: September 2023, 18 October 2023
53
ONS, Public opinions and social trends, Great Britain: household finances, 26 March 2025
54
See ONS, Retail sales, Great Britain: December 2022, 20 January 2023 and Retail sales, Great Britain:
December 2023, 19 January 2024

26 Commons Library Research Briefing, 28 March 2025

Retail sector in the UK

retailers reporting in 2024 that Black Friday sales “started well in advance of
the official day”, leading to Christmas shopping being less concentrated in
December than previous years. 55

Food price inflation increased sharply in 2022

% annual change in CPI and food and drink component of CPI, monthly data

20
Food & drink CPI
15

10

-5
2020 2021 2022 2023 2024 2025

Source: ONS, Consumer price inflation, UK: February 2025, series D7G7 and D7G8

A Financial Times article argues that discount supermarkets “usually win

market share” under such conditions, as consumers look to reduce
expenditure, though also that the rise of Lidl and Aldi is not solely a result of
the cost-of-living crisis but also a result of “strategic miscalculations by the
top four” in choosing to “prioritise profitability over preserving sales volumes
at a time when household incomes were under acute pressure.” 56

An article by the Centre for Retail Research speculates that the rise of these
discount supermarkets is not a temporary phenomenon caused by the cost-
of-living crisis, arguing that Aldi and Lidl will retain their level of market share
“even if there is a sustained boost in household incomes over the next two-
three years” as consumer behaviour has been fundamentally altered by the
pandemic and cost-of-living crisis. 57

By contrast, a Financial Times article argues that the new customers discount
supermarkets have acquired will return to previous shopping habits when the
cost-of-living crisis eases, stating “more affluent shoppers” are “generally
expected to trade up again as soon as consumer confidence improves, a
trend observed during previous downturns.” 58

55
ONS, Retail sales, Great Britain: December 2024, 17 January 2025
56
Jonathan Eley and Patrick Mathurin, How Aldi burst into supermarket big league, 23 September 2023
57
Centre for Retail Research, The Crisis in Retailing: Closures and Job Losses
58
Laure Onita, Day of the discounter: when will the UK reach peak Aldi and Lidl? Financial Times, 10
September 2023

27 Commons Library Research Briefing, 28 March 2025

The House of Commons Library is a research and
information service based in the UK Parliament.
Our impartial analysis, statistical research and
resources help MPs and their staff scrutinise
legislation, develop policy, and support constituents.

Our published material is available to everyone

on commonslibrary.parliament.uk.

Get our latest research delivered straight to your inbox.

Subscribe at commonslibrary.parliament.uk/subscribe
or scan the code below:

commonslibrary.parliament.uk

@commonslibrary