Service industries are defined as activities which do not produce or modify goods. Many types of service industry exist.
Classification of Service Industries:
Divided in to types as below:
(i)         Producer Services - high order activities e.g. market research, management consultancy. Usually provided in highly developed metropolitan centres for other organisations.
(ii)        Consumer services are more localised and are usually on a personal basis, e.g. healthcare, education, retailing.
(iii)      Non basic Services are provided for local area users and have limited multiplier effects.
(iv)      Basic service are those provided for a large market, e.g. domestic/international.
(v)       Private/market services are organised by independent companies for other firms.
(vi)      State services (Non Market) are those provided by the government, e.g. the NHS or state education.
Causes of Tertiary Industry Growth (Tertiarisation)
Explained in a number of ways, the key factors are:
(i)         Manufacturing efficiency - increased efficiency and production leads to a larger disposable income. This is then spent on services. Decline in manufacturing is due to increased mechanisation, foreign competition, demand changes etc.
(ii)       Subcontracting (Reclassification) - Companies now no longer directly employ everyone, e.g. cleaning staff, but subcontract. The same job is reclassified as service instead of secondary industry.
(iii)      Demographic Change - change in demand for service, e.g. older population will require more healthcare.
(iv)     Deregulation/New Technology - services not capable of full scale automation, therefore employment remains high. Government encouragement of private pension schemes has led to an increase in associated service industries.
Other important factors include globalisation, deregulation of markets, increasing specialisation of outputs, increasing flexibility of production and telecommunication advances.
Factors Affecting Intra Urban Location:
Include, but not limited to:
(i)              Accessibility to;   Customers   Transport Networks   Personnel/Employees   Competition/similar businesses to share information
(ii)            Cost of office space and property
(iii)           Image and prestige of site.
(iv)          Quality of environment (v)            Car parking space and accessibility (vi)          Room for expansion
Changing factors; geographical distribution of customers, levels of affluence and demand, and internal developments within service industry.
Service Employment in the UK
   Employs 17m people, producing of the UK’s GDP.
   Concentrated in the SE, especially London.    Lowest service employment is in the Midlands.
   Decentralisation from the ‘City’ to the regions.    Tourism in the SW
   Local administration in devolved regions.
London is a major financial centre, between the two global trading centres of the world (New York and Tokyo) allowing for 24 hr trading. Excellent support and back room trade services. Support from accountants, lawyers etc. Sympathetic regime, skilled and flexible labour force and good infrastructure
Constrained location theory and producer services.
Decentralisation is largely confined to intra-urban or intra-regional locational decisions. Usually routine work, especially clerical. Because of rising costs of centrality (high rents, high salaries etc.) Dispersal to suburban clusters, or to accessible location, e.g. Aztec West or low density suburban office parks like Oxford Science Park.
Retail Developments
Changes in the retailing industry include:
(i)    Change from family business to corporate dominance
(ii) Loss of strict hierarchy as suburbs reach thresholds previously only reached by CBDs
(iii) Rapid growth in superstores and retail parks.
(iv) High streets losing significance.
(v) Government policy biased towards central shopping areas and neighbourhood schemes over out of town shopping centres.
Retailing is a major part of EU economies, accounting for 13-14% of GDP in most countries. Number of shops has fallen from 3.5m in 1955 to 2.5 in the mid 1990s, but average floor space has increased - thus there are fewer but bigger shops. Standardised retail techniques are common. Large scale, specialist, mass merchandise shops are widespread. Closure of small shops dependent upon frequent trade. Current trend towards inner city regeneration.
Reasons for the change in retailing:
   Demographic change - falling population growth, smaller households.
   Suburbanisation/Counterurbanisation of more affluent households.    Technological changes.   Economic change and higher standards of living, especially car ownership.   Congestion/inflated land prices in the CBD.
   Changing accessibility of suburban sites.    Social changes, e.g. more working women.
Retailing Case Study; Merry Hill
   UK’s second largest retailing centre - 167,000 sq m and 19m shoppers p.a.
   Access by car/coach is crucial.
   Revitalisation of the retail core of the CBD to coincide with the redevelopment of the inner city.
   Inner city malls, e.g. The Pavilions, The Pallasades.
New Retailing Strategies:
   Must seem advantageous to customers.
   Retailing focus - matching outlet location to consumer target.
   Increasing Sunday trading 95+% in OTSCs, 5% in CBDs.
   60% of population shop on Sun. Number of shops open increase from 14.6 to 24%
   Diversification of corporation (power of corporate identity) e.g. Sainsbury’s Bank, Virgin Empire.
   Factory outlet stores; seconds, end of line, clearance for 25-50% below RRP.
   Consumer led locational demands on retailers.