Design in the retail, wholesale and leisure services sector

The headline

Retail, wholesale and leisure businesses are relatively lukewarm advocates of design’s role, though they use it as much as businesses overall.

Half of businesses in this sector apply design to externally facing functions, such as communications and branding, and marketing. Yet a third don’t commission any of the types of design we surveyed.

The details

How do businesses in this sector see design’s role?

Three out of four (72%) businesses in the retail, wholesale and leisure sector feel design has some role to play in their operations. These attitudes broadly reflect the UK average.
UK average 75%

In this sector, businesses are slightly less likely than average to see design as integral. The difference between this (11%) and the most positive sector is significant – 27% of manufacturers see design as integral.

One in seven (14%) businesses in this sector think design is crucial to their success. More traditional factors are more important. For example, 74% rate financial management as crucial.

Retail, wholesale and leisure businesses are also less positive than others about the value of design in a wider economic context. 45% agree that it’s integral to future economic performance, and 43% agree there’s a link between design and profitability. But these numbers are low compared to other sectors.

Do businesses in this sector believe it’s worth investing in design?

One in four (24%) businesses in retail, wholesale and leisure have invested more in design over the past three years.
UK average 31%

Paradoxically, more agree that in their sector it’s worth investing in design. 41% think this is the case. But as many don’t know whether this is the case, suggesting that there may be some confusion as to the benefits of using design.

A startling 50% of the sector’s businesses don’t invest in design at all. This is below the UK average, and more than twice the proportion of manufacturers which don't invest.

Just 9% of those investing in design have an accounting procedure to measure return on that investment (RODI). Our research shows that doing so can help a business compete.

Perhaps in time, the level of investment in design will increase. An encouraging 43% of businesses in this sector believe that, over the past decade, design has become more important in helping them compete. The UK average is 46%.

How do businesses in this sector use design?

Despite relatively lukewarm attitudes to the value of design, businesses in the retail, wholesale and leisure sector use it as much as others do. Communications design is the most popular service. Over half (53%) use it.
UK average 52%

Interior and exhibition design is used slightly more than average. In contrast, digital and multimedia design, and product and industrial design, are slightly less popular.

A third of the sector’s businesses don’t use any design services at all.

Businesses in this sector mostly apply design to marketing and externally facing functions. That’s similar to other sectors.

However they’re more likely than businesses in other sectors to apply design to internally facing functions, such as workplace design and internal communications.

Do businesses in this sector employ designers?

Businesses in retail, wholesale and leisure are most likely to hire their own internal designers. One in three (35%) businesses do so.
UK average 34%

How many businesses in this sector have developed new products or services?

One third (34%) of businesses in the retail, wholesale and leisure sector have developed a new product or service in the last three years.
UK average 40%

How do businesses in this sector compete?

One in ten (10%) businesses in retail, wholesale and leisure compete on innovation.
UK average 16%

Like businesses in other sectors, they’re most likely to compete on the added value of their products or services (82%). 71% compete on the basis of the price or cost of their offer, compared to two in three businesses overall.

How do businesses in this sector think their customers make buying decisions?

Businesses in retail, wholesale and leisure think 84% of their private sector clients and 81% of their public sector clients decide to buy on the added value of their product or service.
UK averages 81% and 74%

They think that only 9% and 13% of these clients buy because of innovation.

Sector portrait

In 2004, the turnover of the retail, wholesale and leisure sector was £673billion – up 7% on 2003. There were 637,594 businesses, employing approximately 8,411,000 people.

The sector covers a number of different business areas. For example:

• Hotels and restaurants – turnover £62billion; 126,746 businesses employing 1,924,000 people (2004).
• Community, social and personal service activities – turnover £119billion; 165,096 businesses employing 1,354,000 people (2004).
• Distribution industries – turnover £865billion; 381,752 businesses employing 5,133,000 people (2004).

Other businesses in this sector include trade and repair of motor vehicles, personal and household goods, and the film industry.

According to our National Survey of Firms, 88% of this sector’s businesses saw their turnover grow in 2004-05. And 22% said they intended to grow rapidly in 2005-06 – the most growth-hungry sector we surveyed.

More sector information is available from the Office for National Statistics.

How can I use this information?

If you’re a business intermediary

This report could help you persuade more businesses in this sector to consider competing through design.

On this issue, their opinions mostly echo the general view across the UK. So arguably there’s an opportunity to move forward. For example, 43% are convinced that design is becoming more important to competitiveness. The manufacturing sector comes out on top here, with over half agreeing that design’s role in competition has increased over time.

Specific topics you could discuss include:

• Investing in design. Exactly half this sector’s businesses don’t invest at all, compared to just 22% of businesses in manufacturing. Other parts of our survey demonstrate the link between investing and bottom line gains. In particular, What design can do for your figures and The link between design and better business performance. These could help you make that case.
• Using design more widely. Half of businesses in this sector currently use communications design, but less than a quarter use any of the other types of design we surveyed.

If you're a design business

This sector is fertile ground for designers. But would-be clients may take some persuading.

Businesses could use a wider range of design services. For example, take-up of both digital and multimedia design, and product and industrial design, could be increased.

You could use the findings of this report to help you persuade clients and potential clients of design’s importance.

For example, you could demonstrate the link between design and competition. Our reports What design can do for your figures and The link between design and better business performance could help. They might help you convince some of the 50% of businesses currently not investing in design that they need to do so.

If you’re a design educator or student

This sector uses design as much as most other sectors. Employing designers internally is a particularly popular solution. Yet the sector’s attitudes towards design’s value to business are often slightly less positive than the UK average. Understanding why this sector hasn’t made as big a connection as others between design and competitiveness could be a useful area of study.

For students interested in a career in design, it’s worth focusing on the retail, wholesale and leisure sector. One third of its businesses employ designers internally, suggesting plenty of opportunities.

They’re also keener than most to apply design to internally facing functions, such as workplace design and internal communications, and to use communications design services.