In a recent research note, Michael Mandel, chief economic strategist at the Progressive Policy Institute in Washington, said data from the institute shows that e-commerce and fulfillment centers have added 270,000 jobs since 2014 — which compares to 53,000 in “traditional retail.” Moreover, Mandel noted that these are better-paying jobs. Why such growth? It’s because e-commerce has evolved, he wrote, noting that the emphasis on speed and faster delivery has changed the e-commerce model.
But a report from The Conference Board today said labor projections paint a different picture. While e-commerce-related jobs (which they describe as “new retail” jobs) are growing, it’s not fast enough to support the erosion of traditional retail jobs, said Brian Schaitkin, senior economist of U.S. economic outlook and labor markets at The Conference Board.
Schaitkin offered two scenarios based on trends. And while both show an overall decline in the retail labor market, the so-called “Retail Apocalypse” might just pan out.
Schaitkin said it was important to define retail employment as having “old and new” components. The combined group of old and new retailing includes: couriers and messengers, warehousing and storage, electronic shopping and mail order houses, other non-store retailing and in-store retail — which is defined as retail trade jobs that are outside of warehousing and other nonstore retailing.
Combined, this retail labor sector “has added just 100,000 of the 2.5 million private-sector jobs created during the past 15 months,” Schaitkin said, adding that it garners a 14 percent share of the total private sector employment picture.
“Sadly, the future is likely to be even worse for ‘old and new’ retail workers,” he explained. “The ‘new’ jobs in e-commerce are simply not growing fast enough to make up for the ‘old’ jobs lost at brick-and-mortar establishments. Under one possible scenario, retailing moves entirely online, in which case, retail sector employment will fall from 17.6 million jobs today to just 12.1 million by 2040.”
Schaitkin’s other model has e-commerce growing at a modest pace “as a share of total retail sales because many of the lowest-hanging e-commerce fruit have already been plucked.” In that model, the economist said the “transformation from in-store retail to e-commerce would take quite a long time.”
“The logistical challenge of shipping books to individual customers is orders of magnitude less complicated than delivering groceries,” he explained. “The ‘in-store’ experience also provides special value to some consumers, especially when the ability to touch and feel merchandise and consult with experts is part of the value proposition stores and their workers provide. Firms will learn how to adapt to the challenge of e-commerce in less easily adapted industries, but because of these challenges, growth in the e-commerce share may increase by only 6.8 percent every 13 years, as happened between 2005 and 2017.”
Schaitkin said under that scenario, the share of e-commerce in retail sales “would be 21 percent by the end of 2040, and the ‘old and new’ retail sector will employ 16.8 million workers, compared to 17.6 million today. A disappointing job trajectory to be sure, but hardly apocalyptic.”
For more business news from WWD, see: