Is Technology Killing Retail?
The retail industry lies at the heart of the economy and is its largest private sector employer. Local retailers provide everyday services to tens of millions of people and are a point of contact for countless customers and communities. But like many industries it is threatened by technology.
Increased competition
Many young people get their first job in retail and develop long and rewarding careers; others leave as they get stuck in low pay jobs and find it difficult to see a future.
Market growth in recent years in the retail industry has been sluggish at a time when costs are climbing and prices have reached a plateau.
Technology is intensifying competition across the sector as overheads are cut to provide value and choice for customers.
The digital revolution is having an effect too as it drives on and off-line sales and provides transparency for customers and competition for retailers.
Greater investment in technology is also swelling costs and diverting finance from the tradition of investing to upgrade stores.
As a result, the profitability of the industry is falling as sales sag, prices plummet and margins are sorely squeezed.
Changing times
Within the industry a number of significant changes are taking place: the introduction of a living wage, the introduction of an apprenticeship levy, a review of business rates and a surge in online shopping.
Retailers expect the operating costs of doing business to increase once the effect of these and other changes flood into the economy.
They also expect to absorb any increase in costs, as it is not possible to pass them on to customers given the ferocity of competition in the market.
One response to higher costs is to increase levels of technology and automation, which leads to lower overheads but also a loss of jobs.
Another is to concentrate investment on profitable stores in areas of growth and focus closures on marginal and loss making stores in areas of poor performance.
The consequences will, however, damage local communities and promote societal inequality through the redistribution and accumulation of wealth in affluent areas.
Once higher levels of automation are introduced the skills required of staff will have to evolve as different types of jobs are fashioned, particularly in large retailers.
Small retailers are likely to be hardest hit as they have fewer opportunities to absorb soaring salaries, offset overheads or pass on price hikes.
The fall out will be different in different areas and for different people but will have a greater negative effect on places of low or no growth.
It will also have a damaging effect on low paid staff, the majority of whom are women given their need to work flexible hours near home.
The speed of change in the economy is quickening and nowhere more than in the retail industry as technology spreads at a rapid rate.
SO, retailers work in every corner of every community and have done so for centuries but the industry is entering a new era where technology threatens like never before.
