The tertiary sector encourages a higher profit margin than the rest of the two sectors. A company needs to achieve productive and allocative efficiency in the case of the primary sector; as the profit margins in this industry are slightly low. Likewise, the transformation of raw materials into goods was the task of secondary sectors. For example, the production and assembly of steel for automobiles. Slower labor productivity growth in Europe compared to the United States since 1995 reverses a long-term pattern of convergence. This has a negative impact on turnover as it leads to lower growth contributions from investments in information and communications technology.' (Bark, O'Mahony and Timmer, 2008) On the other hand, the retail sector is central to the UK economy: it employs around 2.9 million people - 11% of the UK's total workforce UK - and in 2010 retail sales in the UK amounted to over £293 billion. Yet it is clear that it currently faces serious challenges. (Barry Knight). The High Street retail market has suffered a decline over the last two years. The most important factor is the inflation rate, especially in relation to commodity prices. Increases in value added tax (VAT) and social security have dramatically affected consumer spending. This decreases consumers' disposable income and retailers suffer as a result. As stated by Knight according to the latest data from the British Retail Consortium, UK retail sales values ​​for May 2011 fell by 2.1% on a like-for-like basis compared to the same month last year. Furthermore, conditions appear unlikely to improve quickly as continued low interest rates and related support from the banking sector are still under wraps... middle of paper...ks CitedBart van Ark, Mary O'Mahony and Marcel P . Timmer. (2008). The productivity gap between Europe and the United States: trends and causes. Journal of Economic Outlook. 22, 25-44. Barry Knight, (2011) Grant-thornton, http:// http://www.grant-thornton.co.uk/pdf/Retail_The_finance_flow.pdf, 18/03/2012 DAVID FELDMAN, (11/ 2008) reversemergerblog, http://www.reversemergerblog.com/2008/11/17/how-will-the-economy-affect-retail-sales-this-holiday-season/, 18/03/2012Skillsmart Retail Limited, ( 2009) skillsmartretail, http://www.skillsmartretail.com/Brokerage/CurrentRetailEnvironment/default.aspx, 03/18/2012 Latchezar Hristov and Dr. Jonathan Reynolds. (2007). The nature and contribution of retail. Innovation in the UK retail sector [online]. 1, 9. Available from: http://www.nesta.org.uk/library/documents/inno-in-services-retail-report.pdf.