Automation could put as much as 50 percent of the U.S. retail workforce at risk in upcoming years.
That’s at least according to a report by The Investor Responsibility Research Center Institute (IRRCi) and Cornerstone Capital Group, which said automation could lead to the loss of 6 million retail jobs and as many as 7.5 million jobs are at risk of being computerized.
There are roughly 16 million retail workers in the U.S.—which represents 10 percent of the country’s working population—and if retailers don’t provide key labor metrics it proves challenging for investors to know what the fate of those workers will be.
“The retail landscape is changing rapidly and investors need to understand the social and governance issues impacting valuations for public companies in this sector. Retailers are facing a perfect storm: they need to balance demand for wage increases with the negative optics of future job losses,” Cornerstone founder and CEO Erika Karp said. “The winners in retail will be companies that provide recruitment, retention and training for workers and innovate with forward-thinking future store strategies.”
Automation is gaining momentum in the retail sector. The push for this technology, including robots, stems from two key factors—the growth of e-commerce and increasing wage pressure. Both things considered, it could increase retailers’ inclination to automate to help cut costs and remain competitive.
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In Cornerstone’s report, the technology initiatives of 30 retail companies, including Gap and Walmart, were assessed to determine automation’s present and potential impact on retail labor. Most retailers are considering the use of in-store technology, including mobile devices, digital kiosks and self-checkout to ramp up their efficiency and success in the market.
Retailers are likely to pursue automation through two consumers strategies–convenience and experience. Convenience enables retailers to create a seamless purchasing journey and axe labor costs with machines, while experience focuses on improving in-store experiences for consumers. Although companies may pursue both strategies, indicating the primary strategy would allow investors to better understand how labor and technology could integrate and if that will change up a company’s labor profile.
Broader stakeholder implications will still remain with labor, however. Assessing the gender composition of retail workers showed that retail salespeople, the largest group of the retail workforce, are equally proportioned with men and women. However, the report found that cashiers, the second largest retail group where workers are predominately women (73 percent) could lose their jobs to automation. What’s more, Walmart and other big-box retailers have more market share in communities with less than 500,000 people. If market share location and employment are correlated, retailers’ automation efforts could negatively impact these communities too.
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Although most retailers are making strides with automation, 65 percent don’t have a clear strategy in place for their workers. Thirty-five percent of retailers are focused on improving the customer experience with automation, but aren’t remedying labor issues that could arise from implementing technology.
On the other hand, some retailers, including Amazon, Target and Walmart, are investing in labor through tech-oriented programs and continue to prioritize their employees while still pursuing automation. The Dallas Morning News reported recently that these companies are contributing to the growth of e-commerce, which provides workers with higher pay and more career opportunities.
According to research from the Progressive Policy Institute in Washington, e-commerce has added 397,000 jobs in the U.S. since 2007. Instead of working entirely at brick-and-mortar outlets, sales associates could be taking positions at fulfillment centers nationwide in a few years. These new digital retail jobs will require employees to use software, lift boxes and manage millions of online orders on a daily basis. Amazon has plans to hire 2,500 more employees at its upcoming fulfillment center in Houston, which will have inventory-fetching robots and humans working side-by-side to handle the increasing volume of product deliveries.
If retailers pursue a balance between automation and sales associates in their strategies, they might be able to curb the negative impact of automation and continue to support retail employment down the line.