Retail is entering a future of fewer stores, more online shopping and innovation is the mode du jour, but experts are divided on how automated physical retail can and should get and just how many jobs are at risk.
Exactly how many jobs could be taken over by the automation of a retailer’s many facets — kiosks, shelving and inventory management and even shopping assistance, to name a few — remains to be seen. A recent report from the Investor Responsibility Research Center put the possible number at more than 7.5 million over the next decade.
That’s close to half of the 16 million people working in U.S. retail, and the prospective “hollowing out” of the industry’s workforce posed by a rise of automation was likened by IRRC to the loss of American manufacturing jobs, an economic shift caused by globalization and automation commonly linked to a rise in poverty and conservative populist politics.
However, while manufacturing jobs peaked at 19 million in 1979, those jobs still stand at approximately 12 million today, according to government data, leaving the reckoning ostensibly posed by automation in retail to be even more pronounced.
Some are skeptical of the potential loss in jobs, however, especially when it comes to apparel retail.
Greg Portell, a partner in consulting firm A.T. Kearney’s retail practice, sees the 7.5 million number as “artificially high.”
“Our research suggests that retailers who will win are those investing in increased service levels,” Portell said. “Some of the necessary service improvement will come from better merchandise selection and style curation, which can be delivered with artificial intelligence. Otherwise, we would expect an up-skilling and greater investment in salespeople in categories like apparel.”
Grocery is one retail category where Portell said automation is a “critical investment,” mainly due to the high item count per transaction. But when it comes to apparel, where a customer isn’t often lining up dozens of items to purchase at a time, he said, “this speed benefit is muted.”
The IRRC said the number of jobs ultimately handed over to automated technology depends on the retailer and whether it is seeking to provide experience or convenience.
For example, a retailer like Wal-Mart, which has its eye on a range of automated technologies, is convenience-oriented, leaving it more likely to turn to technology while also cutting employment-related costs. Specialty retailers and department stores, like Nordstrom, would fall in the category of wanting to enhance a shopper’s experience with technology, and it so could be expected to automate fewer jobs.
Paula Rosenblum, a managing director with retail research firm RSR research, said the idea that apparel retailers with physical stores will be looking to automate positions like cashiers is “bogus.”
“What it comes down to is, do you want have a store or not? If you want a store, you have to have people in them,” Rosenblum said.
She went on to admit that there’s “no doubt” apparel retailers need to up their investment in technology in the coming years, but said that money will not be aiming to replace people.
“It’s going to be about making operations more efficient,” Rosenblum said. “If I’m an apparel retailer, especially a luxury apparel retailer, I’m worried about the commoditization of luxury, I’m worrying about pressure to get faster. I would worry about getting more efficient and getting more consumer friendly.”
But Sean Maharaj, a director in AArete’s retail practice, sees retailers as already too far behind in the technology space and ignoring trends, like automation, may leave them even less able to adapt to changing consumer tastes.
“Too much is on the line for retailers, and having seen successful adoption elsewhere, they have the opportunity to benefit from transferable best practices, while not having to incur start-up risks,” Maharaj said.
He added that the advancement of automation for checkout and inventory management started in grocery started less than a decade ago, when that industry “realized that the growing cost of associated labor to run their business was unsustainable.”
“The retail apparel sector will need to implement this type of step change in order to keep pace with other technological developments, and particularly given the immense market force pressures requiring them to rethink their business model from both an e-commerce and brick-and-mortar perspective,”Maharaj said.
While retailers so far have said new technology and automation being integrated or considered for their companies are a complement to labor that will leave employees to perform higher levels of work, IRRC said a mix of experience and convenience strategies is most likely to take hold in the industry, and that millions of retail jobs will nevertheless go by the wayside.
But RSR’s Rosenblum argued: “It’s not like stores are going away. In 2005, everyone was talking about the Wal-Mart effect and the companies that readjusted then, they’re better, they’re doing well. The same is true in the apparel space. Retailers can outlast Amazon.”