Despite the bright florescent lights, a growing cloud of uncertainty hangs over the retail industry and dims the bright prospects of this sector. Workers in the retail and wholesale trades face increasing pressure as such jobs are lost to automation. In February and March 2017, the U.S. retail industry experienced the largest two-month decline in jobs since 2009. Brick-and-mortar stores continue to face pressure from online retailers, and employers are shedding jobs to try and remain profitable in the face of this competition. Whether they can succeed remains to be seen.

Already more than 2,880 retail stores have closed in 2017, up sharply from 1,153 stores that closed during the same period in 2016. If this rate of store closures continues, the retail sector could ultimately see a loss of 8,600 stores this year, far exceeding the peak closure rate of 6,163 stores that occurred during the financial crisis in 2008.

Analysts fear that these large structural shifts in the retail sector are likely to continue too, and retail workers will be the hardest hit by the changes that result. A new report from PwC indicates that 44 percent of U.K. workers are a risk of losing their jobs to automation by the early 2030s. Jobs that rely heavily on social skills are generally less at risk of such losses, but many lower skilled retail jobs, such as cashiers and warehouse employees, face an astounding 97 percent probability of being replaced. Store owners, especially of small businesses, are much more insulated from the risk of automation, with only a 16 percent probability of being replaced.

Faced with such dire predictions, some governments are already attempting to tackle this potential issue by implementing legal and regulatory hurdles to help slow job automation. However, higher employee wages and other market pressures continue to make it profitable for retailers to invest in new automation technology. For now, robotics and artificial intelligence seem to be winning the war in the retail space.

In addition, even as some analysts are raising the alarm, others predict the future may not be quite so dire. Overall employment rates in the United States are currently at some of the highest levels ever. Although retail jobs are being lost at a high rate, the displaced employees are currently able to find work elsewhere. The productivity boost provided by automation also might drive these workers into more highly skilled positions that cannot be automated, which generally pay better and add extra wealth to the economy.

For now, consumers can expect to see and interact with more automated features at their favorite restaurant or retail establishment. Whether this trend toward automation ultimately will be a positive or negative step forward for the economy remains to be seen. At the very least, perhaps your drive-through order will finally be right.

Discussion Questions: 

1. How will automation change retail jobs in the future?
2. What are the advantages and disadvantages of retail automation from the retailer’s and the retail employees’ perspective?

Source: Tom Ryan, Retail Wire, March 28, 2017; see also Chris Dieterich, “Jobs in Retail Are Vanishing Quickly,” April 7, 2017