The rise of the robots: what's in it for retail?

The Bank of England's chief economist recently addressed the Trade Union Congress in London, implying 15 million UK jobs could be at risk due to the rise in technological advancement and robotics.

In his speech, in mid-November, Andy Haldane indicated that most evidence shows that over the course of history technological progress has not damaged jobs but rather boosted wages, although times could be changing. He argued that each phase of advancement has typically resulted in a "growing tree of rising skills, wages and productivity" but over time they have also been associated with the "hollowing out of this tree", resulting in a widening income gap between high- and low-skilled workers.

The latest technological cycle has many observers suggesting that the pace of change in business – including within retail – is now quicker than it has ever been. With machines becoming smarter, the point Haldane made was that "the greater the likelihood that the space remaining for uniquely-human skills could shrink further".

He commented: "If the option of skilling-up is no longer available, this increases the risk of large scale un- or under-employment. The wage premium for those occupying skilled positions could explode, further widening wage differentials.

"And labour's share of the pie could fall even more dramatically than in the past. On this view, the tree would be so thoroughly hollowed-out that it may no longer be able to support itself."

Barry Matthews, retail specialist at management consultancy Alsbridge UK, told Essential Retail that he agrees with Haldane's general trends summary.

"Increasing numbers of jobs are being, and will continue to be, replaced by automation in all of its many forms," he explained.

"'Technological unemployment' was being written about by JM Keynes in the 30s and continues to risk the employment status quo; the question is whether the incredibly rapid development of technology and businesses that design, implement and support that technology will provide employment at a similar rate to the jobs that are being replaced by it?"

Matthews says today's prevalent technology companies are Google, Facebook, Amazon and Apple - all of which employ relatively few people. Businesses with the largest market caps like Uber and AirBnB also have "very few direct employees and have no real inventory or assets other than the technology that links their supply chain", he adds, meaning never before have the most successful companies been such small employers.

But what are the implications for the retail industry, which is increasingly looking to introduce robotics in the supply chain and automated in-store systems that can provide digitally-led customer experiences?

"Automation in general, and robotic automation specifically, offers huge opportunities for retailers," Matthews commented.

"The ability to predict and then match a consumer's needs to real-time availability, location, price and delivery can all be enabled by machine-to-machine interfaces without the need for human intervention. The customer experience can be personalised, more intimate and improved, while the retailer can improve responsiveness while reducing costs and inefficiency."

He added: "Automation is already being used throughout the supply chain, ensuring the right product at the right time, at the right price, and enabling retailers to meet peak demand. Robotic process automation (RPA) is already being used by retailers to help manage both retail-specific and standard business processes."

The robotics expert says that traditional retailer concerns such as customer service, complaints, returns, refunds, planning and  merchandising can be made more efficient through RPA, which can link multiple standalone systems without the need for duplicate data input or analysis. 

Finance and HR are being transformed by RPA too, he argues, with month-end close, reconciliation, accounts receivable, HR compliance, new starter and leaver processes, which often rely on the same employee data being entered into multiple systems, having the capacity to be automated and processed by a single robot accessing a single data source.

More use of robotics will be seen in retail over the coming 12 months, according to Matthews, who advises those operating in the industry to work on automation strategies and build "as much automation as possible into their models".

"They are already investing heavily in new technology platforms  to provide better supply chain and fulfilment performance and at sufficient scale to meet peak demand;  their investment should include automating the processing of the huge volumes of data required to be able to effectively plan and deliver across their entire supply chain at all times," said the Alsbridge director.

"IT and digital teams should be working together to combine the digital power of robotics, automation, data analytics and social media. Robotics, analytics and cloud – often referred to as RAC – has the potential to transform the way retailers prepare for and engage with their customers and their supply chain and how to benefit from it should be a core part of their 2016 strategies."

The Bank of England economist Haldane's analysis of the current labour market and tech advancement is cited by him as one reason why he is not yet voting for a rise in interest rates in the UK.

What do you think? What impact do you think a "third machine age" in the UK will have on retail and the wider business workforce? Feel free to comment below or contact Essential Retail editor on Twitter @bsillitoe.

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