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£20 billion reasons to shop on Sunday

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When Sunday trading was introduced in England and Wales in 1994, trade unions and religious groups objected strongly. But 21 years down the track, what evidence is there to show how detrimental or positive it has been?

In the not too distant past, Sundays were reserved for church, roast dinners and family - a ‘day of rest’ as proclaimed by religious leaders. That all changed in 1994 when the Sunday Trading Act was passed, freeing up restrictive hours for shops in England and Wales.

Two decades down the track, the nation has developed an obsession with shopping, collectively spending an estimated £20 billion on Sundays in the past 20 years. Much of Europe has followed suit, with the exception of Austria, Greece and large tracts of France, but there is still large variability across the continent.

While the rules governing Sunday shopping hours vary across Europe, the economic benefits of deregulation are indisputable, according to a discussion paper released this month by the London School of Economics looking at the different experiences of 30 European countries between 1999 and 2013.

By comparing various economic outcomes (such as prices, employment, expenditure and market structure) between countries that have deregulated Sunday trading and countries that have not, researchers from LSE’s Centre for Economic Performance (CEP) found robust evidence that deregulation has boosted employment and increased consumer spending for many products, particularly food.

Lead researcher Dr Christos Genakos says the change in Sunday trading legislation has resulted in a 7-9% net increase in employment for the reforming European countries. This implies that a further deregulation of Sunday trading in the UK would most likely also cause a spike in new jobs.

Groups opposing the deregulation have included trade unions, religious organisations and smaller businesses concerned about their ability to compete with larger stores, arguing that Sunday trading would increase their costs and hence consumer prices.

Supporters, however, point out that relaxing the trading restrictions on Sunday allows businesses to achieve economies of scale, spreading their fixed costs over seven days.

From a consumer perspective, the benefits are obvious: shoppers have more flexibility, more time to compare products and can avoid peak shopping hours. Extra competition also keeps prices in check.

Dr Genakos says despite resistance from some countries, the trend across Europe is “clearly towards liberalising Sunday opening hours”.

“Our study shows that, overall, Sunday trading deregulation has had no positive or negative effect on prices but people now spend more on non-durable retail products, such as food – up to 12.5% .

“The lack of impact on prices should reassure governments contemplating Sunday trade deregulation. While employer overheads do increase with higher labour costs, this seems to be offset by increased competition and the entry of new firms in the marketplace which keeps prices down.”

The research findings could have significant policy implications across Europe, he adds.

“Sunday trading can be a powerful tool to reduce unemployment among youth and women, in particular, and there is no doubt that it improves the bottom line of many retail businesses.”

Additional notes

“Evaluating the Impact of Sunday Trading Deregulation” by Dr Christos Genakos and Dr Svetoslav Danchev is available at http://eprints.lse.ac.uk/61156/|

Dr Christos Genakos is a research economist at LSE’s Centre for Economic Performance and Assistant Professor in the Economics Department of the Athens University of Economics and Business. His research focuses on industrial organisation and applied microeconomics, with an emphasis on quantitative techniques for competition analysis and regulation.

The CEP is an interdisciplinary research centre at the London School of Economics and Political Science. It focuses on the major links between globalisation, technology and institutions (above all the educational system and the labour market) and their impact on productivity, inequality, employment, stability and wellbeing. 

Posted March 2015

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