A new headline drew attention today: “Automation could destroy as many as 73 million U.S. jobs by 2030, but economic growth, rising productivity and other forces could more than offset the losses according to a new McKinsey Global Institute report”. No doubt Intelligent Process Automation (IPA) and Robotic Process Automation (RPA) combined with Artificial Intelligence (AI) will cause retailers to cut staffing over the next few years, but who will be targeted?
The Gartner retail team recently published two predictions that focus on the future of the retail store associate:
Through 2022, multichannel retailer efforts to replace sales associates through AI will prove unsuccessful, although cashier and operational jobs will be disrupted.
Multichannel retailing has a complex cost structure that has two major drivers: cost of goods sold and labor. Competitive challenges and the resulting investments required to facilitate a unified retail commerce experience for customers will drive significant efforts to automate tasks and processes that have survived relatively unchanged for decades.
Leveraging technologies such as AI and robotics, retailers will use intelligent process automation to identify, optimize and automate labor-intensive and repetitive activities that are currently performed by humans. The intent will be to reduce the labor costs through efficiency. This automation effort will cross all levels of operations, from headquarters to distribution centers and stores.
Currently, retailers are expanding their use of technologies to improve the in-store check-out process, such as self-check-out, which is reaching beyond grocery and big-box retailers into areas like convenience. Some retail companies such as Ahold are providing scanning devices to consumers for use as they load their shopping cart, further enabling a seamless transaction for the consumer exiting the store. Walmart is currently testing a scan-and-go process enabled by the customer’s mobile device. Some retailers are experimenting with robotic solutions for customer service, and there are active experiments with virtual customer service assistants.
While all of these efforts will continue, research suggests that consumers of all ages still prefer to interact with a knowledgeable sales associate when visiting a store. This need is elevated in specialized areas such as home improvement, drugstores and cosmetics, where informed associates can make a significant impact on customer satisfaction. As a result, though they will reduce labor used for check-out and other operational activities, retailers will find it difficult to eliminate traditional sales associate functions.
Through 2022, at least two large multichannel retailers will replace 10% of store associates with nonhuman resources.
The role of associates in physical retail stores remains in the spotlight as retailers look to differentiate themselves through superior in-store customer experiences. At the same time, technology is becoming increasingly intelligent, driving experimentation to augment associates’ work in stores. In some cases, replacing human labor can lead to improved profitability through lower costs. In other cases, human labor can be redeployed to aid customers and provide a strong, differentiated customer experience.
As a result, Gartner predicts that through 2022, at least two large multichannel retailers will replace 10% of store associates with nonhuman resources. This could combine robots, AI, mobile, sensors and other technologies in roles involving check-out and inventory management. The convergence of AI, robotics and the IoT, together with mobile, social and big data, will transform current retail business models and organizational structures. This will revolutionize retail during the next few years.
Retailers that leverage intelligent technology for repetitive tasks will be leaner and more efficient, and they will likely gain competitive advantage. Store associate engagement also stands to increase as repetitive, unengaging tasks are handled increasingly by machines. In addition, Generation Z — the first post-digital generation (1995-2010) — account for nearly one-third of the world’s population. Gen Z is expected to leverage technology as a means to collaborate, gain knowledge and get things done. Retailers increasingly realize that long-term growth and stability in a digital world requires a workplace that is an effective economic entity, while empowering and engaging employees.
Retail CIOs must act now, along with the business, to investigate which customer processes and value propositions are specifically linked to human touch. Retailers must decide which work is best suited to people, which is best suited to machines, and which tasks are a combination of the two. It’s vital to redistribute work between people and machines to enable people to focus on growth and revenue creation. In the world of digital business, growth will depend on human ingenuity, human interactivity and human engagement.
Gartner clients can learn more about these and other predictions in these two recently published reports:
Predicts 2018: Retail Unified Commerce Will Require Even Greater Collaboration and Alternative Models for Success