IT USED to be the American shopper that exemplified the state of the world economy. The focus now should be on the person on the other side of the till. America’s retail industry is huge: it employs 15.9m workers, who represent one in nine American jobs. It is also undergoing wrenching change, as e-commerce eats into sales. There is no more pressing test of society’s ability to cope with technology’s impact on work.
That impact is already visible. For all the benefits that online retailing brings to consumers, it is causing immense pain to offline rivals. Last year 4,000 American stores closed; this year more than twice that number may shutter. Standard & Poor’s, a rating agency, expects retail defaults this year to outnumber those in 2009, at the height of the global recession. Some formats—discount stores, groceries, high-end malls—will continue to thrive. But many will shrink. The industry has shed 50,000 net jobs since January. Department stores may need to close more than 800 stores to reach the productivity levels of 2006. Many outlets are looking for ways to cut labour costs by embracing automation.
The problems faced by America’s retailers are particularly acute because there are so many of them: shopping centres eat up five times more space per person than in Britain. But the threat posed by technology is familiar to workers elsewhere. In Japan, online sales menace small, specialty shops that account for roughly half of sales. The Eurasia Group, a consultancy, reckons that 192m retail jobs around the world are vulnerable to automation.
Such an outcome is not pre-ordained. And the march of technology creates new jobs at the same time as it renders others obsolete. But there is a particular reason to worry about the ability of retail workers to navigate labour-market upheaval. For decades the industry has been a reliable way to employ those with low skills; the numeracy requirements for retail assistants in Britain went down between 1997 and 2012. The cheerful assumption that shop workers can move smoothly into e-commerce and logistics jobs is deeply flawed. For one thing, the robots are making their way into warehouses. For another, four out of five e-commerce job postings in America ask applicants for at least a university degree, compared with only 12% of conventional retail jobs.
Tills and skills
The question of how to equip the typical shop worker for change does not have a single answer. More generous tax credits are one way to nudge retailers to offer their workers additional training. Unions could be encouraged to provide training courses, even for non-unionised workforces.
A 21st-century approach to careers advice would see employers across industries identify transferable skills: rather than thinking of e-commerce as a natural move for shop assistants, their ability to handle customers might make them more suitable for roles in health care, for example. Armed with such advice, people in at-risk industries such as retailing could be given learning accounts, topped up by government, that can be used to pay for new skills. Benefits could be made more portable, making it easier for workers to switch between full-time employment and the gig economy as circumstances change.
Given the number of workers involved—retail jobs in America are 30% more numerous than those in manufacturing—some of those who lose their positions will still need to be caught by the safety net of the welfare state. But much more can be done to smooth the transitions that millions of retail workers face. Policymakers have shown a woeful lack of ambition in facing up to the impact of technological change on jobs. The carnage in retail will require a far bolder response.