The digital transformation of the retail industry, with investment in technologies such as robotics, tracking technologies and Artificial Intelligence (AI) has been rapidly accelerated by the global pandemic.
With estimates from McKinsey suggesting around a third of retail tasks will be displaced by technology by 2030, how will these rapid changes affect employment in the sector?
Retail work in the US accounts for around just under 10% of all employment, a comparable proportion to the 3 million retail employees in the UK. Recent data from the US Bureau of Labor Statistics shows that while there has been a growth of jobs in food and beverage stores and in building material and garden supply stores, other parts of the sector have seen a fall in employment in the US, with 176,000 people less in November 2021 than in February 2020. Similar swings have been evident in the UK.
To understand how retail companies are managing these challenges during the pandemic we conducted interviews in 2020 and 2021 with 11 senior supply chain leaders at Walmart US and one tech partner organisation. In 2020 alone, ecommerce sales at Walmart grew by a staggering 79% and they recruited over 550,000 new employees during the pandemic. We wanted to find out how they were managing these challenges with digital and human solutions.
The innovation of ‘dark’ stores, highly automated mini warehouses that are closed to customers, have become much more important in delivering ecommerce. Fully integrated automatic storage and retrieval (ASR) systems are increasingly being used in warehouses. Radio Frequency identification (RFID) technology, to improve inventory accuracy, is now widely being used across distribution on apparel products. And, AI based software in fulfilment helps associates pack orders by optimising pick walks and automating product substitution decisions.
Developing partnerships with well-established suppliers and start-ups, such as Plug and Play, a venture fund and technology accelerator has allowed Walmart to quickly move into particular technologies, but what are the emerging and longer-term effects of these for retail workforces?
Labour retention and managing transitions
Staff attrition in retail services is known to be high – in 2019 it stood at 58% in the US, comparable with the UK. For all retailers, then, retention is a major challenge, particularly for roles that are labour intensive or physically demanding. But will the technologies Walmart is deploying augment jobs and reduce tedious tasks associated with high turn over?
Productivity and gamification
Walmart estimates that the introduction of automation technologies will increase staff productivity by automating simple tasks, by enhancing the efficiency of others or by motivating performance through gamification.
Its AI-based ‘Global Integrated Fulfilment’ software reduced 15% of the time it took associates to do their pick walks for online orders by zoning their product picking. A second iteration of the tool took a further 10% off the time by more efficiently routing associates through the store.
The company is also adding gamification functionality to its software to increase staff productivity through peer to peer competition over performance. This will show the top associate for picking that day or who gets the most likes from customers. The extent to which technological gamification initiatives like these will change and motivate employee behaviours and promote employee engagement is yet to be seen. Much is likely to depend on how much these technologies are perceived to enhance job roles, rather than threaten them; and whether or not employees engage with them or perceive them to be a tool of surveillance.
From physically demanding roles to customer service?
Walmart has given considerable priority to replacing many of the manual tasks across the company’s supply chain with automation technologies to increase capacity and deliver operational efficiency. Their supply chain executives stressed that technological innovation is not about replacing humans but about creating job opportunities that are better quality or that attract different skill sets.
It aims for a steady, evolutionary approach with support for education, retraining and upskilling. This is evidenced by its involvement in the industry wide RISE UP (Retail Industry Skills & Education) programme. More recently it has sought to invest more in its workers, through an emphasis on wage increases, job promotions and staff training. Through its ‘Live Better U’ programme it aims to support employees to get a High School diploma, College degree or develop other skills that can help them as the nature of jobs of Walmart evolve.
More emphasis is being given to how job roles will require skills to consume and understand data or to fix electrical systems, as well as improve the customer experience. Walmart’s investment in software engineering skills was also highlighted in these interviews. For fully automated distribution centres, although reducing operating costs by 50% of traditional warehouses, the more technical jobs (e.g., maintenance and technicians) went from being less than 10% of the cost to being close to 30% because these are better paid jobs. Replacing labour intensive and physically demanding roles with more rewarding customer service roles aims to improve job quality and increase job retention.
These research findings illustrate the complex and iterative processes of meeting changing customer expectations through a mixture of technology and human solutions. Labour enhancing and labour replacing technologies will have a significant impact on the shape of employment in retail over the next decade. While this is likely to result in the replacement of some lower skilled jobs there clearly is a need to simultaneously upskill staff to adapt to these rapid changes.