How will automation affect jobs in retailing?

February 22, 2018


By John Hawksworth

The retail and wholesale sector is one of the largest employers in the UK, accounting for around 15% of all jobs. It is also closely linked to other sectors that are significant employers such as consumer goods manufacturing and transport and logistics.

In the future, however, the world could look very different.

First, almost a fifth of retail sales are already made online according to the latest official ONS data and this percentage continues to rise steadily over time. This tends to shift jobs from shops to warehouses, but companies like Amazon are already seeking to automate some warehouse activities (e.g. using Kiva robots to shift shelves of goods to workers who pick out items for dispatch) and this is likely to increase in future as technology advances to improve the dexterity of robots and so allow more manual tasks to be automated. Boston Dynamics, for example, has recently introduced a robot dog that can not only navigate around a room on its own, but also use one of its paws to open a door.

Second, even where people still go to shops, the experience may be very different from what we are used to, as illustrated by the recent Amazon Go launch. In these shops you can scan your phone at the entrance, scan items you want to buy as you pick them up from the shelves and be automatically charged for them as you leave the store. No need for check-outs or cashiers, though some human workers will still be needed to stack shelves and deal with customer queries or technical glitches.

In future, even the need to refill shelves may be reduced as the stores may just have samples of products that people can scan on their phones but which can then be delivered from warehouses to their homes later. If these warehouses are by then heavily automated, and deliveries are by driverless cars or drones, then employment in the sector could be further reduced.

So how fast might these employment effects emerge and on what scale? In a recent report, our conclusion was that the short term impacts would be relatively small as it will take time to perfect the relevant technologies, make them economic, deal with legal and regulatory issues and roll them out at scale. By the late 2020s, however, our estimates – based on a detailed analysis of the tasks involved in over 5,500 UK jobs – suggested that around 20% of all UK jobs could be impacted by automation and up to 30% by the mid-2030s. For retail and wholesale, the impacts could be even higher in the long run with up to 44% of jobs in the sector being impacted by automation by the mid-2030s. As the chart shows, this could range from just 16% of managerial jobs to over 50% of clerical jobs in the sector.


Benefits of automation

But there is also a positive side to this story. First, some of these technological innovations will themselves create new jobs, ranging from online website designers and AI specialists to those involved in designing, supervising, repairing and maintaining robots.

Second, the efficiency improvements from automation will allow consumer prices to be kept lower than would otherwise be the case, leaving more money to be spent on other goods and services. Even if some of these goods and services are also automated to a degree, some additional human jobs will be created, although it is hard to pin down exactly where they will be. This is the same as in every other agricultural and industrial revolution in human history, but since human wants are essentially limitless, we can be fairly sure that this process will continue to operate.

Third, profits may also be raised for the companies at the forefront of applying the new technologies, but we can expect these to be spent or reinvested in the economy through a variety of channels. This will also eventually create new demands for goods and services and so jobs for the people involved in providing them.

Overall, our macroeconomic analysis suggests that, for the economy as a whole, job gains are likely to broadly offset job losses in the long run. Retail and wholesale, and associated sectors like transport and consumer goods manufacturing, seem likely to be among those seeing net job reductions in the long run. But other less automatable sectors, such as health and education and other consumer services requiring social skills and the human touch, should see offsetting net job gains.

John Hawksworth:
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