Recent figures from the BRC predicting that the number of people employed in the retail sector will reduce from a present three million to nearer two million by 2025 paints a very worrying picture.
In the same way that retailers are having to completely overhaul their IT infrastructures, they are also embarking on serious reinventions in terms of their employment structures. The key driver is the continued rise in online sales that has been exerting increasing pressure on the store portfolios of traditional retailers.
The simple equation is: as online sales increase then the percentage of turnover going through physical outlets is reducing. Even if this is not in exact sync the fact is store sales will inevitably decrease. They therefore need less stores and employee numbers will inevitably need to fall.
While retailers have muddled along for some years with operating disconnected channels while online volumes have been relatively modest. Those days are now over. They are having to integrate their various channels and this is highlighting that most have simply too much square footage.
And it’s no longer about the hard selling of goods through physical stores. It is more about giving customers a strong and valuable brand experience that might ultimately involve them going home and then making the transaction online. The channel is immaterial. In this scenario retailers will likely need fewer people in stores, but those employed will be undertaking richer, more skilled, and more highly paid roles.
This reinterpretation of the shop floor employee combined with less actual stores will clearly drive down employment levels, as the BRC predicts. But it is a not all doom and gloom. As online grows, there is a whole eco-system being built that requires plenty of people.
Dotcom distribution centres are mushrooming up around the country. Next, Debenhams, Asos and Houser of Fraser are among a raft of major retailers to have added over one million sq ft to their warehouse capacities over the last few years.
Despite some automation being developed by the more progressive retailers the fact is these operations need high numbers of people to undertake tasks like unloading, checking and un-packaging in-bound goods. And then we have the really labour intensive part – handling returns. This remains very manual and with around 25% of all despatched goods finding their way back to retailers as a ‘return’ this is fertile territory for employment numbers.
The forecasted one million people to be lost from the retail industry might actually be a long way off the mark.
Glynn Davis, editor, Retail Insider
K3 Retail deliver multi-channel solutions that enable retailers to create joined up shopping experiences for their customers whether they choose to buy on-line, direct, in-store or via mobile. It has over 20 years’ experience delivering award winning solutions, to more than 175 internationally recognised retail brands.