The tertiary sector encourages a higher profit margin than the rest of the two sectors. A company must achieve productive and allocative efficiency in the case of the primary sector; because profit margins are slightly low in this area. Similarly, the transformation of raw materials into goods has been the task of secondary sectors. For example, the manufacturing and assembly of steel for automobiles. “The slower growth of labor productivity in Europe than in the United States since 1995 reverses a long-term pattern of convergence. This has a negative impact on turnover as it leads to a reduction in the contribution to growth of investments in information and communication technologies. (Bark, O'Mahony and Timmer, 2008) On the other hand, the retail sector is at the heart of the UK economy: it employs around 2.9 million people – 11% of the workforce - of the UK's total business – and in 2010, UK retail sales were worth over £293 billion. Yet it is clear that it currently faces serious challenges. (Barry Knight). The retail market has seen a decline over the past two years. The most important factor is the inflation rate, especially in relation to commodity prices. The increase in value added tax (VAT) and national insurance has significantly affected consumer spending. This reduces consumers' disposable income and retailers suffer. As Knight said according to the latest figures from the British Retail Consortium, the value of UK retail sales for May 2011 was down 2.1% on a like-for-like basis compared to the same month the previous year . Furthermore, it seems unlikely that conditions will improve quickly, as persistently low interest rates and relative support from the banking sector still mask...... middle of article...... ks City Bart 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, 03/18/2012DAVID FELDMAN, (11/ 2008) reversemergerblog, http://www.reversemergerblog.com/2008/11/17/how-will-the-economy-affect-retail-sales-this-holiday-season/, 03/18/2012Skillsmart Retail Limited, ( 2009) skillsmartretail, http://www.skillsmartretail.com/Brokerage/CurrentRetailEnvironment/default.aspx, 03/18/2012Latchezar Hristov and Dr Jonathan Reynolds. (2007). The nature and contribution of retail. Innovation in UK retail [online]. 1, 9. Available at: http://www.nesta.org.uk/library/documents/inno-in-services-retail-report.pdf.