Digital disruption is hitting every sector, but perhaps none more so than retail and consumer. We have become used to reports of store closures and the restructurings of well-established brand names as the online march takes its toll. Jamie Oliver, for example, spoke of how the High Street is becoming ‘Uber-fied’ with new digital platform operators eating into existing market shares.
Alongside this sector-wide business model disruption we must also factor in another huge transformational trend: automation. Businesses across sectors are increasingly investing in automation, machine learning and AI to drive greater efficiencies, responsiveness and agility. An obvious application of this in the retail sector is in warehousing, where picking and packing are ripe to be performed by machines. At a store level, we have also all become accustomed to digital check-outs replacing people – for all the frustrations that ‘unexpected items in the bagging area’ sometimes cause!
In fact, Harvey Nash research conducted jointly with KPMG amongst CIOs around the world finds that up to half a million jobs could go in UK retail as a result of automation. Separately, the Office of National Statistics recently forecast that two thirds (135,000) cashier jobs in the UK are at high risk of being automated.
So, should the retail sector be preparing to become run by machines with only skeleton staffs occasionally pressing the reset button? I don’t think so.
Reorganisation not decimation
The good news in our research was that two thirds of IT leaders believe new jobs will compensate for those lost to automation. In other words, what we will see is reorganisation, not decimation.
In retail, it does seem likely that digital channels will continue to undermine the need for large bricks and mortar networks. However, there’s no doubt that many of us enjoy going to pleasant retail environments and physically browsing goods and products on offer. That’s unlikely to change. We may see fewer stores, but there will continue to be physical outlets providing customers with a personalised retail brand experience, and these will need staff even if transactions inside them become more automated.
What we’re likely to see in stores is that human roles become more focused on service on the one hand, and advice on the other.
For service, think of a (non-retail) environment like Heathrow Airport. A couple of decades ago there were large numbers of staff at passport desks, checking and stamping travellers’ documents. Now, these have been largely replaced by automated stations. But what we see alongside this is a big increase in staff available in seconds to help people having difficulties with the machines. Mechanical roles have shifted to service roles which collectively (with the machines) deliver a more effective experience. The same will be true of retail.
Human staff will also continue to have a significant advisory role. Think of visiting an Apple store. They are quite minimalist – no reception areas – and all the gadgets are on display for anyone to look at (and play with) by themselves. But there are banks of knowledgeable staff on hand to discuss, advise and make suggestions. In many ways, it’s that knowledge that people go to Apple stores for – rather than simply buying online from home.
Humans also have another significant advantage over machines: technology is not good at closing a sale. Automation can send us recommendations and put products in front of us – but it is virtually powerless to actually tip the balance and make us buy. This key, simple human skill – the art of selling – will remain a powerful revenue generator in retail networks and is something that will continue to be invested in.
On the operations side, as I have alluded to already, automation is likely to have a major impact, removing many warehousing and picking jobs. At the same time, new technology is changing distribution and delivery in the last mile – with the likes of Co-op trialling e-bike deliveries in London, and using autonomous delivery robots in Milton Keynes.
Human tech brainpower
If the above feel like ‘debits’, there is another area where we can surely rack up some significant ‘credits’: the middle office. The collection, analysis and leveraging of customer data is already a major area of focus for retailers. Sophisticated algorithms and AI applications are already in play, tracking and predicting customer behaviour, in some cases instantly putting tailored offers in front of an individual consumer on their device. This is an area that will grow exponentially and continue to evolve as new technology emerges, fuelling a huge need for talented software programmers, data analysts, Big Data specialists and computer scientists. Marketers and business development professionals will be in high demand too.
Obtaining the tech talent needed will be a challenge, for retailers and indeed businesses in every sector, as skills shortages remain a prominent feature of the market. Quite simply, there aren’t enough of these highly skilled individuals to go around. As an example, we estimate there are fewer than 1,000 Drupal developers (the content management software language) in the whole of the UK.
The outlook for many retailers may be challenging, given the amount of disruption that they are having to deal with. But automation has the potential to help them re-engineer their businesses at the same time as creating new kinds of human jobs.
Beverley White is chief executive of the Harvey Nash Group