Artificial intelligence (AI) is opening opportunities for retail giants to cut costs and boost efficiency, with many worried about the prospects of job cuts and mass layoffs.
The latest research by the Centre for Retail Research (CRR) highlighted astonishing job cuts in the retail sector, with nearly 15,000 jobs lost so far in 2023. The majority of these losses (11,689) were attributed to two retail giants – Tesco and Asda.
Amid the staggering number of job cuts, Amazon is actively rolling out its “Just Walk Out” technology, effectively eliminating check-out assistants. In 2016, DHL started using collaborative robots that can perform packing, kitting and other manual tasks.
Meanwhile, IKEA has expanded its autonomous fleet to 100 drones to optimise the manual process of checking barcodes of over 10,000 IKEA’s stocking spots which could take up to three months.
There is nothing new about the way retail companies navigate financial pressures. But it seems like artificial intelligence and automation might offer them a novel – and cheap – solution to tasks.
Robots Vs Workers: Who are companies choosing?
Mark Shirley, head of logistics at Primark, says 60-65% of the retail industry might be automated by 2025.
As businesses face the rising costs of wages, energy and gas, automation becomes a compelling option.
According to IT leaders surveyed by KPMG and Harvey Nash, automation and AI are expected to replace one in five UK retail jobs by 2024.
AI is already being adopted in retail with businesses benefitting from a variety of perks such as the ability to analyse and predict customers’ shopping behaviour and recommend products based on previous purchases. This is only going to grow as automation is adopted across the retail supply chain.
That is why Max Thake, a Berlin-based co-founder of a blockchain network Peaq, believes that AI already has its foot in the door.
“We can expect generative AIs to start cutting into the job market, especially when it comes to the startup space and smaller businesses. Companies that used to outsource things like design and content to third-party agencies or gig workers will begin to leverage AI for that as a cheaper option,” he says.
“This will only accelerate as AI adoption picks up pace, and medium- and enterprise-level businesses will follow suit, slashing jobs wherever AI can enable a smaller team to do just as well. Creative, legal, coders, even service, potentially, through robots with integrated artificial intelligence, the great AI squeeze is coming.”
Assuming the inevitable
Automation is now used by many shoppers with self-service checkout machines and automated returns are integrated in almost all of big retailers’ operations.
Businesses are expanding it into the supply chain, where introducing something as simple as automated packing technology may lead to over 10,000 job cuts at companies like Amazon.
For example, the Very Group, which owns Very.co.uk and Littlewoods, announced the closure of three of its sites in Greater Manchester in 2018 as it moved to a new automated warehouse in the East Midlands, putting 2,000 jobs at risk.
With the machines reportedly packing items in seconds – around five times faster than a human counterpart – the implications for workers are profound.
There is already a backlash against the machines. In France, workers of large supermarkets staged a mass protest against automated checkout stations which allowed the Géant Casino de la Roseraie hypermarket to remain open past the working time permitted under French labour law.
Trade unionists argued that this put the staff at a serious risk of being laid off.
In addition, women seem to suffer the most from automation. Since 2011, the UK retail sector has lost over 100,000 jobs to ecommerce and automated customer services. 75,000 of these positions were occupied by women.
While 40,000 new jobs were created over the same period, the majority of them (31,000) were taken by men. However, if AI-driven job losses extend into the male dominated warehouse environment, this gender difference may subside.
“As we brace for the impact, it’s time to start considering how we make sure that the abundance that AI-powered economies can generate does not only land in the hands of the few, while the many are pushed out into irrelevance,” Thake concludes.
Robots help humans create value
Automation does not simply mean job losses. Rather, it can lead to the reorganisation of roles, with companies now focused on attracting the right talent to shine in the digital world.
However, retail giants have flagged a skills shortage in the industry, and further automation will likely amplify the existing staffing crisis, especially in data analytics.
“People look at this completely the wrong way,” says Michael Koch, who has been developing AI and ML applications since 2012 for brands like McDonald’s, PepsiCo and Visa. “It’s not about a loss of jobs with the development of AI. Instead all AI does is give businesses the ability to take mass quantities of data and make faster, better decisions,”
“It’s more of a shift for more data-driven insights to really impact and accelerate the retail space.”
Matt Pavich, senior director of retail innovation at Revionics, a pricing optimization solutions provider that works with retailers including Carrefour and Ahold Delhaize, points out that when it comes to job losses associated with technology it has been more of a “transitioning” than a “layoffs pandemic”.
“Historically there has always been bold claims when new technologies appear and they often prove to be inaccurate. The internet never did lead to shorter work weeks,” he says.
“Did some typists lose their jobs when the personal computer was invented? Sure, but the reality is that most office workers just transitioned away from a time-wasting technology to a more efficient one.
“For the foreseeable future, retail will need to have stores and those stores will need staff. Tasks might transition and become more specialised in the future, but there probably isn’t a scenario where those stores will only have 8% of the staff they have today.
“In fact, many of the retailers that are at risk of cutting jobs today are the ones who are lagging in AI adoption as they will continue to lose share and profits which put their employees at greater risk for termination.”
Additionally, Pavich believes that AI and automation can allow workers to focus on valuable tasks instead of time-wasting labour.
“One of the fundamental shifts that occur when a retailer adopts a sophisticated AI pricing platform is the transformation away from menial, execution focused tasks to more strategic value-adding tasks,” he says.
“An example of this is somebody at HQ who used to manually enter new pricing into an Excel sheet all day a couple years ago who is now running simulations to proactively improve their company’s pricing strategy.
“At the store level, the introduction of electronic shelf labels and AI pricing is a great example of how technology can better enable staff to focus on more important things like helping customers, versus spending significant time putting up new pricing signs.”
Manufacturing and maintaining robots will also create more roles. In October 2021 Amazon opened its first robotics manufacturing facility in Westborough, Massachusetts, which created over 200 new jobs in the area.
Meanwhile, according to RocketReach, Amazon Robotics currently has 4,000 employees.
At the time of opening, Amazon Robotics vice president Joe Quinlivan said the facility would bring “great jobs from hourly manufacturing roles to engineers and developers working on advancements in robotics, to help our facilities run safely and meet our customers’ needs.”
And while some positions may be overtaken, others will find their place in the market, according to Tony Mather, UK general manager at a global provider of business applications CGS BlueCherry.
“Overall, I believe there will be a few types of jobs that may be eliminated or changed, but broadly the difference will be in organisations that know how to leverage AI and those that don’t learn or adapt to it quickly enough,” he says.
“New approaches like this not only create new jobs in the fashion industry for example, but also within its ecosystem such as ad agencies who support fashion. Again, thoughtful approaches to AI would plan on using the money saved from the efficiencies to go back into the bottom line and re-invested in new job creation.”
Automation requires careful implementation strategies but it’s not a boogie man that should be approached with suspicion. Rather, it should be integrated with care and consideration for existing employees, who will find themselves doing more valuable and safer work – and Pavich highlights its benefits.
“The benefits of AI and technology are endless because at the end of the day, people make mistakes and the best technologies can help put guardrails on those mistakes to ensure better, more ethical and fairer outcomes.
“One simple example of this is using a pricing solution which ensures that you don’t raise prices on women’s shaving gel more than on the men’s equivalent.
“As retailers unlock the true potential of AI in the future, consumers will ultimately be the winners as the best platforms are designed to solve their needs. The future of retail is bright.”
