Revolution in retail employment

Online sales continue to grow at a fair clip – from a present base of 10-15% of total sales across the whole retail industry – and with this, the landscape for employment in the sector is at the early stages of a revolution.

Until this point retailers have used rubber bands and sticky tape to create supposedly multi-channel businesses – whereby consumers can shop across channels seamlessly. In reality online and store operations have been largely run in silos – with separate stock piles and the same roles replicated for each channel.

While volumes of online sales have been relatively low, this situation has not been a problem. But as the percentage is set to grow there is recognition that radical action is now needed in terms of single roles across channels and most importantly the reduction in store numbers.

Hence we’ve this week had the forecast from the BRC that one million less people will be employed in retail by 2025. There will undoubtedly be fewer shops actually selling physical things to be taken out of the store. Forecasts from the BRC suggest this could involve the closure of 74,000 shops out of the 270,000 today, which equates to 440,000 job losses.

I think this is overstated. It is questionable whether there will be quite such a decimation of physical units on the high street. Some shops will convert to leisure and hospitality businesses – this is already happening.

And many other shop units will be less about selling and more about engaging with customers – giving them a brand experience that might well result in them buying online when they get home.

The introduction of technology in-store is certainly gathering pace – with the likes of self check-out, magic mirrors, interactive kiosks, contactless payments, NFC tags, RFID, and QR codes removing some of the need for store staff.

Because the interface on these technologies is the same as on the consumer devices that we all use personally, nobody has a problem using them – unlike in the past when they were very alien things to use.

These changes will result in a very different type of person working in retail stores. They will be armed with technology such as tablets, which give them access to product information and reviews, as well as personalised data on individual customers. To date shoppers have been much more knowledgeable than store employees. This has to change.

Boots has reduced its store employee numbers as it moves towards a ‘multi-skilled advisor model’ involving employees receiving more training on its products. And in the US – The Container Store is experimenting with fewer, but more skilled employees.

The role of these employees will be much richer, varied and fulfilling – with more emotional intelligence required, rather than just hard sales skills. Even without the National Living Wage this will likely require higher wages to be paid.

Increased wages for broader skill-sets, but spread across fewer shop floor employees looks a distinct possibility. The total salary cost to retailers after these changes might be the same as they are today but the absolute number of employees involved will be reduced.

But there are other roles being created. Online retail is not a people-free zone and as already stated, it is growing rapidly. There is a need for employees in logistics and delivery networks, call centres, and technology firms.

However, one other issue must not be forgotten – automation. This is increasingly reducing the need for many roles in the warehouse function. Amazon is making an art form out of automating its warehouses. In the US, the retailer Hointer uses robots in its back-room to organise products and automatically despatch them to the changing rooms.

On the horizon we also have Artificial Intelligence, which is being used in call centres to automate problem resolving and on websites for helping customers find the most relevant products to their needs. The retailer North Face uses such a system.

Technology is such a moving feast that it is tough to forecast its future impact. The use of computers was supposed to rid us of lots of paper – it clearly hasn’t happened. And technology was also supposed to kill off the CD – in contrast, this has almost happened.

But what we do know is that technology is a great enabler of disruption among existing retail business models. And with this it is bringing major disturbances to long-standing employment practices.

Glynn Davis, editor, Retail Insider