Think Tank: How Retail — and Its Workers — Will Survive Automation

Amit Sharma

Fri, October 20, 2017 at 4:30 AM UTC

Amazon’s purchase of Whole Foods drew the attention of the United Food and Commercial Workers International Union on an issue that affects every industry touched by technology: What will happen to the millions of workers whose jobs are at risk of automation — and who is responsible? The question feels particularly urgent in retail, which employs just under 16 million Americans. A study by Cornerstone Capital Group estimates that nearly half of retail jobs could be eliminated in 10 years. This is underscored by store closures and layoffs from stalwarts including Sears, J. Crew and Hudson’s Bay.

Retail is rapidly changing, but technology isn’t the enemy and workers aren’t doomed. Sales are actually growing, driven by e-commerce. And while traditional retail jobs are declining, new opportunities are emerging. Meeting customers’ expectations — for personalized recommendations, in-store pickup, free and fast shipping — requires both machines and humans.

As new jobs replace traditional ones, workers will need support and training from their employers. Retail executives are responsible for identifying the jobs their business will need in the coming years, being transparent about those that will likely be eliminated, and training their workforce accordingly. To fulfill that responsibility to its workers, retailers must first understand types of skills and roles will be in demand in the age of automation. Here are five jobs with the most promise:

1. Data science

Retailers are starting to apply machine learning to solve problems at the scale of thousands, and even millions, of customers. The children’s apparel company Kidbox, for example, uses predictive modeling based on returns data to curate the right mix of products and sizes for growing children. Every box is meant to “outperform” the last.

Data scientists are already in high demand, and the gap between skilled workers and available jobs is expected to increase. McKinsey projects a 50 to 60 percent shortage of qualified applicants for these positions by 2018. Retailers will need to invest not just in buying data analytics technologies, but in developing the talent that will use these tools to benefit the business. To ensure they have the talent they need despite the pending shortage, it makes business sense to nurture current employees with an interest and aptitude for data science.

2. Experience design

As products become more commoditized, retailers differentiate themselves by the intangibles — the all-important but somewhat nebulous concept of customer experience. Today, many of these experiences cross the digital divide. You might see an ad for sneakers on Facebook then buy them at a Nike store, or you might search for reviews on your phone while trying them on in person. Forrester predicts that by 2020, 42 percent of in-store sales will be influenced by online interactions.

Top retailers are picking up on this trend by experimenting with experiences that blend digital content and physical spaces. Nordstrom is building a $500 million flagship store that will be “technology-infused”; Sephora is bringing personalized video tutorials and other digital content into its stores, and the online-only makeup brand Glossier opened a pop-up showroom where shoppers can try products and snap photos in an Instagram-worthy setting.

Retailers need people to build the experiences that will connect customers to their brand — before and after the purchase. New experience teams will demand a number of non-traditional retail skills, including software engineering, UX design, product management and omnichannel marketing.

3. Operations and logistics

While algorithms can optimize many parts of supply chain management, retailers need people to do the rest of the work — namely, the decision-making, planning and interpersonal skills that are difficult to automate.

These skills will become more important as retailers experiment with different ways of optimizing their logistics. Wal-Mart, for instance, is trying to lure online shoppers into stores with new incentives, like the option to skip the checkout line. While scenarios like this may lack a cashier, they demand people behind the scenes to make sure inventory data is accurate, handle in-store operations and broker relationships with partners and vendors. Workers who stand behind a cashier today may find that their skills to these areas, namely their knowledge of the store and inventory, and interpersonal skills that are as effective managing teams as they are pleasing shoppers.

4. Personalized service

Retailers are using technology to provide curated, personalized service for every customer, not just VIPs. An algorithm may be able to keep track of trends and tastes, but as of today, only a human can connect with a customer’s emotional needs. Stitch Fix, a personal styling and subscription service, knows curators are critical to their customers’ long-term satisfaction. They empower their curators with data and technology in order to more quickly learn preferences and grow their subscribers’ wardrobes.

Traditional sales associates or cashiers may transition to brand ambassador or other specialized service positions. This path will become more viable for workers as retailers focus on services that complement the products they sell. Best Buy, for example, is doubling down on the company’s Geek Squad repair service and consulting consumers on smart home technologies.

5. Retail’s responsibility and opportunity

Change is inevitable, but automation doesn’t have to be a zero-sum game. By increasing productivity, technology can create new jobs and even reduce inequality. Transitioning smoothly will require cooperation between businesses, nonprofit organizations, government agencies and education leaders.

Some retailers are driving this change from within by giving workers the training and advancement opportunities for future employment. The RISE Up initiative, a partnership between 30 retailers and the National Retail Federation, helps workers keep up with advancing technology. Amazon takes employee development a step further by reimbursing fulfillment center workers for 95 percent of tuition for courses related to in-demand fields.

“When retailers view labor not as a cost to be minimized but as a driver of sales and profits, they create a virtuous cycle,” writes Zeynep Ton, author of “The Good Jobs Strategy,” who researched labor practices at successful low-cost retail chains including QuikTrip, Trader Joe’s and Costco. “Investment in employees allows for excellent operational execution, which boosts sales and profits, which allows for a larger labor budget, which results in even more investment in store employees.”

Preparing current employees for future jobs is the right thing to do and the only way to sustain a business. This is an economic responsibility as well as a social one. Ton’s research shows that retailers that invest in employees have better financial results, lower turnover and higher customer satisfaction rates than their competitors. As Wal-Mart chief executive officer Doug McMillon said at a recent annual shareholder meeting, “We will compete with technology, but win with people.”

Amit Sharma is founder and chief executive officer of Narvar.

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