The retail sector is undergoing its biggest organisational shake-up in years, according to management consultancy Q5.
New research from Q5, which works with many of the UK’s biggest and most well-known companies, reveals that rising employment costs, weak consumer confidence and rapid advances in AI are forcing retailers to rethink how they arrange and run their businesses.
The report analysed more than 160 retail and consumer businesses across the UK. It found that retail companies are overall employing fewer people due to cost pressures, with many of the biggest declines in central and support functions.
Demand for retail roles has fallen 12% since 2023, with the hardest hit areas including centralised customer and digital roles (which have declined by 25%), people roles (down 23%), support roles (21%) and finance roles (20%). This has come alongside a reshaping of the corporate function around higher-value strategic, advisory and AI-enabled work and the automation of many routine tasks.
At the same time, retailers are prioritising investment in areas that directly support growth and frontline customer experience. Technology roles fell just 1% over the same period, while comms and marketing roles were down by only 4% – showing the importance of brand distinction even as cost pressures bite.
Matt Phelan, head of retail at Q5, said: “We’re seeing a seismic shift in how retailers organise their businesses, adapting to the pressures of the 2020s. Businesses are currently in the midst of trying to automate routine processes – with new systems and tooling the big ticket items – but at the same time are increasingly recruiting for human skills like commercial judgement, analytical insight and a strong understanding of the customer to drive growth.
“The sweeping changes we are seeing go far beyond cutting costs and lowering headcount – although that is undoubtedly happening – to get to the core of how a business is run. Many retailers are considering how to completely reshape their companies for today’s new operating environment.”
The report also highlights how lean many retailers already are. Grocery retailers operate some of the leanest head-office functions in British business, with approximately 500 headquarters staff per £1 billion in revenue. While headquarters’ teams continue to shrink, store roles are largely protected as they remain central to customer experience and operational delivery.
