How Automation will Affect the Retail Industry
Between 6 million to 7.5 million existing jobs are at risk of being replaced over the course of the next 10 years by some form of automation, according to a study by financial services firm Cornerstone Capital Group.
As of 2002, retail employment exceeded total manufacturing employment, and now sits at about 16 million workers. Total manufacturing employment, which peaked in 1979 at approximately 19 million workers, has fallen to 12 million workers. The repercussions of manufacturing’s decline, the study said, which was driven by automation and globalization, have been felt at the local and national levels. For example, certain areas of the US that were once manufacturing hubs have experienced rising poverty, declining populations, and erosion of political trust.
The impact of significant reductions in retail workers may mirror the impact of manufacturing job losses, the study said. Retail sales at brick-and-mortar stores, as well as margins on those sales, are increasingly constrained as consumers shift to online shopping. “At the same time, many parts of the country are experiencing upward structural wage pressure as concerns about income inequality are gaining political traction. Major retailers, including Macy’s, J.C. Penney, Kohl’s and Wal-Mart, have collectively closed hundreds of stores over the last few years in attempts to stem losses from unprofitable stores. These headwinds are pushing retailers to rethink the traditional retail business model,” according to the study.
Retailers are investing in technology to build out their omnichannel platforms, the study noted, and in some cases, technology is complementing labor by providing a better customer experience. Indeed, the report argues that companies that use technology to support their workers are likely to benefit from long-term productivity gains. However, technology also has the potential to automate part of the sales process and render a range of jobs redundant. Taken together, store closures and automation technology have the potential to accelerate job losses in retail, an industry that employs approximately 10% of the total US labor force.