The distribution and trade sector, also referred to as commerce, consists of two main sub-sectors: retail and wholesale trade.
Traditionally, wholesale trade includes the selling of goods to retailers or to industrial, commercial, institutional, and professional users, whereas retail trade is about selling goods to the consumer without transformation. However, the traditional value chain has changed considerably over the past 20 years. Retail companies have increasingly taken over the wholesale function and nowadays negotiate directly with producers and have introduced retailer brands. Led by a continuous search for scale economies and efficiency, vertical integration, disintermediation (elimination of intermediaries) and reintermediation (provision of extra services by aggregators and infomediaries) have dramatically changed the sector. With the Internet, e-commerce and ICTs in general as major engines, developments could go even further, possibly changing the role of retailers altogether, with producers directly selling to consumers.
The majority of consumer goods in Europe are imported directly or indirectly from abroad, with international procurement being driven by cost advantages and local market factors (local tastes, etc.). The sector spends relatively little on R&D, but is an important purchaser of high-tech inputs developed in other sectors. The main technological change in commerce has come from ICTs, with the sector being one of the largest investors in ICT equipment. ICTs have drastically altered business operations, by providing tools to automate business processes, to analyse performance, and to manage relationships with customers and suppliers. ICTs contributed substantially to advanced supply chain management lowering inventory in warehouses (and thus lowering costs), while decreasing out-of-stock and improve pricing strategies. ICTs have also driven significant trading advantages through smarter customer data as well as the development of e-retailing and home shopping and lean retailing.
In 2006, the whole sector employed 33.3 million people or 15.3% of overall EU employment. Retail employed most people (18.5 million), while 10.4 million jobs were in wholesale. Almost 81% of the jobs in the sector was located in the EU-15.
The share of low educated workers is decreasing and the trend of up-skilling will continue in the coming years.
More than half of all employees is younger than 40 years. Ageing, however, might lead to staff problems in the near future. Across all job functions e-skills as well as soft skills like entrepreneurship, social skills and self-management skills will become increasingly important. Especially skills to adapt and learn new competences and life-long learning will become relevant.