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Up to 7.5 mn retail jobs in US at risk due to automation
May '17
Courtesy: IRRC Institute
Courtesy: IRRC Institute
About 6-7.5 million retail jobs in the US are likely to be automated out of existence in the coming years, leaving a large portion of the retail workforce, mostly women and working poor, at risk of becoming 'stranded workers', says a recent report. Retail cashiers are at highest risk for automation technologies, and women hold 73 per cent of these positions.

Some 16 million Americans are employed in retail, which represents 10 per cent of the nation’s working population and generates 6 per cent of US gross domestic product (GDP). A lack of disclosure on key labour metrics by retailers put investors in the dark on how these companies are responding and what the fate of their workers could be.

The findings are contained in a new study, Retail Automation: Stranded Workers? Opportunities and Risks for Labor and Automation, conducted by Cornerstone Capital Group and commissioned by the Investor Responsibility Research Center Institute (IRRCi). The report identifies the structural factors catalysing change in the retail industry and is authored by Sebastian Vanderzeil and Michael Shavel of Cornerstone.

The report examines current and potential automation initiatives across 30 retail companies, chosen based on market capitalisation and comparability and provides analysis of the characteristics of current retail workers, including gender and location, and assesses stakeholder groups that may be impacted by changes to retail labour. It also uncovers how large, publicly-listed retail companies are positioned to manage automation and labour through the industry’s transition.

Some 36 per cent of retail workers currently receive some form of public assistance and the average retail worker age is 38. Contrary to perceptions, 71 per cent of retail workers are full-time employees, says the report. Of the 30 companies analysed in this report, most are considering the use of in-store technology such as mobile devices, self-checkout, digital kiosks and proximity beacons. In addition, sensor-based checkouts and smart shelves are a growing technology, as found in Amazon Go stores.

The report also indicates that Walmart and other large retailers have greater market share in communities with less than 500,000 people. If employment trends correlate to market share location, retail automation by retailers could disproportionately impact these smaller communities.

"This in-depth examination of retail automation gives investors insights as they consider investment risks and opportunities. While the findings are important to investors, they should sound the alarm for economists and political leaders. The shrinking of retail jobs in many ways threatens to mirror the decline in manufacturing in the US. Moreover, in this case, workers at risk are already disproportionately working poor, so any disruption may cause strains in the social safety net and stresses on local tax revenues," said Jon Lukomnik, IRRCi executive director.

"The retail landscape is changing rapidly and investors need to understand the social and governance issues impacting valuations for public companies in this sector. Retailers are facing a perfect storm: they need to balance demand for wage increases with the negative optics of future job losses. The winners in retail will be companies that provide recruitment, retention and training for workers and innovate with forward-thinking future store strategies," said Erika Karp, Cornerstone founder and chief executive officer. (KD)

Fibre2Fashion News Desk – India

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