LONDON, UNITED KINGDOM — The UK retail sector, the largest private employer in the country, is experiencing a significant decline in jobs as companies increasingly turn to automation and outsourcing to manage rising costs.
According to the Office for National Statistics (ONS), retail jobs fell to 2.81 million in September 2024 — 40,000 fewer than last year and 225,000 fewer compared to five years ago.
Helen Dickinson, Chief Executive of the British Retail Consortium (BRC), explained that the decline is only “partially explained” by industry transformation. “This includes increased investment in automation and higher productivity [and] a shift to outsourcing of warehousing and logistics,” she stated.
These changes reflect a broader trend reshaping the sector but are not fully captured in ONS figures.
Automation and outsourcing reshape retail operations
Retailers are adopting advanced technologies such as self-service checkouts, automated inventory monitoring systems, and predictive analytics tools to improve efficiency and reduce costs.
A McKinsey report estimates that approximately one-third of retail tasks could be displaced by automation by 2030.
Outsourcing has also become a popular strategy for cutting costs, with many companies shifting warehousing and logistics operations overseas.
Rakesh Dua, CEO of DUA Accountancy & Business Consultancy, noted the growing appeal of this approach: “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?’”
Soaring costs drive retail job cuts
The push toward automation and outsourcing has been accelerated by rising operational costs.
The recent Budget introduced a 6.7% increase in the National Living Wage effective April 2025, adding over £2.7 billion (US$3.3 billion) to retailer wage bills. Additionally, changes to employer National Insurance Contributions (NICs) will cost the sector more than £2.3 billion (US$2.8 billion) annually.
Retailers, which rely heavily on part-time workers and operate on low margins, are particularly vulnerable. Part-time workers who were previously exempt from NICs will now contribute further to these financial challenges.
Dickinson warned that these cost pressures could have far-reaching consequences: “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.”
As businesses navigate these challenges, the retail sector’s transformation highlights a pivotal shift toward cost efficiency through technology and outsourcing — leaving many workers at risk of displacement in an evolving economic landscape.