Latest estimates place over 40% of jobs in the retail sector are at risk from automation. That would result in over 2 million lost roles in the UK, and impact 6.5% of the total working population.
Whether the precise number is accurate or not, you can understand how such a dramatic conclusion has been reached. The growing sophistication of efficient and smart machines, the transition of sales to digital and voice channels and the growing costs of labour are making the shift from human to machine an increasingly attractive proposition for an industry battling mounting cost pressures.
However, taken too far, this sets retailers on a risky path. For most consumers, shopping is not purely a rational and functional pursuit, it is an emotional one, and maintaining some form of human contact and engagement is central to their experience.
Our recent study of 50,000 global consumers, revealed service and trust (as opposed to price or range) as the single most important factors driving retailer selection. As we scratch into this further, for consumers this has a profoundly human element. Trust and service means: (1) consistency of shopping experience, (2) alignment of personal values and (3) a sense that the retailer is ‘on the consumer’s side'. For “millennial” shoppers, who will drive retail sector growth over the next decade, trust is even more acutely important.
Put simply, increasingly if consumers don’t trust you and value the service you offer, they will not shop with you, and customer-facing colleagues play a critical role in this.
With this in mind, there is a risk that, for many retailers, clumsy adoption of new technology-enabled models begins to alienate consumers, making it harder for retailers forge strong bonds. In a world where retail is left too much to the machines, retailers will operationally optimise but lose their warmth, position of trust and with it, their customer loyalty.
Even Amazon, a formidable, industry-defining, force of nature has seen that advances in its technology are not universally well-received by customers. Sophistication of its pricing engine has exposed to consumers that they could be paying much more or less depending upon when they buy. Amazon has dropped from being the 3rd highest rated retailer on price in 2015, to 28th this year.
So what does this all mean?
Firstly, automation will profoundly change the face of global retailing over the coming years. Be it personalisation algorithms, replenishment bots, voice activation or automated fulfilment, the entire retail ecosystem will be impacted.
Secondly, the retailers that will make the most of new automation will combine it with a human “layer”, and develop a 'new generation' customer service model. Focusing human effort at the key points in the customer journey where it adds to customer experience, driving stronger and more enduring relationships.
It is likely that in this world, many of the current jobs that are rendered obsolete by machines are replaced with new, value-enhancing and rewarding roles, both for retailers, their colleagues and customers.