Skip to main content

Retail Automation Threatens 6M-Plus Jobs

NEW YORK — Retailers are no strangers to embracing technology; however, a new report estimates that between 6 million and 7.5 million retail jobs risk being eliminated because of automation in the industry.

Retail cashiers are at highest risk for automation technologies, and women hold 73 percent of these positions.

That's according to a new study, Retail Automation: Stranded Workers? Opportunities and Risks for Labor and Automation, conducted by Cornerstone Capital Group and commissioned by the Investor Responsibility Research Center Institute (IRRCi).

The report identifies the structural factors catalyzing change in the retail industry — which employs roughly 16 million U.S. workers — and is authored by Sebastian Vanderzeil and Michael Shavel of Cornerstone.

The retail industry represents 10 percent of the nation's working population and generates 6 percent of U.S. gross domestic product (GDP). A lack of disclosure on key labor metrics by retailers puts investors in the dark on how these companies are responding and what the fate of their workers could be, according to Cornerstone.

"This in-depth examination of retail automation gives investors insights as they consider investment risks and opportunities," said Jon Lukomnik, IRRCi executive director. "While the findings are important to investors, they should sound the alarm for economists and political leaders. 

"The shrinking of retail jobs in many ways threatens to mirror the decline in manufacturing in the U.S. Moreover, in this case, workers at risk are already disproportionately working poor, so any disruption may cause strains in the social safety net and stresses on local tax revenues," Lukomnik added.

Among the report's findings:

  • Some 36 percent of retail workers currently receive some form of public assistance and the average retail worker is age 38. Contrary to perceptions, 71 percent of retail workers are full-time employees.
  • Of the 30 companies analyzed in the report, most are considering the use of in-store technology such as mobile devices, self-checkout, digital kiosks and proximity beacons. In addition, sensor-based checkouts and smart shelves are a growing technology, as found in Amazon Go stores.
  • WalMart and other large retailers have greater market share in communities with less than 500,000 people. If employment trends correlate to market share location, retail automation by retailers could disproportionately impact these smaller communities.

"The retail landscape is changing rapidly and investors need to understand the social and governance issues impacting valuations for public companies in this sector," said Erika Karp, Cornerstone founder and CEO. "Retailers are facing a perfect storm: they need to balance demand for wage increases with the negative optics of future job losses. 

"The winners in retail will be companies that provide recruitment, retention and training for workers and innovate with forward-thinking future store strategies," Karp said.

The report details the technologies retailers are deploying, looks at the drivers of automation, and provides a framework to analyze the automation strategies of 30 large retail companies. 

In some cases, technology is complementing labor by freeing workers from mundane tasks and facilitating a more personalized customer experience. In others, technology has the potential to automate a significant part of the sales process and render a range of jobs redundant, according to Cornerstone.

Taken together, store closures and technology have the potential to dramatically alter the employment landscape in America.

To access the report, click here

Based in New York, IRRCi is a nonprofit research organization that funds academic and practitioner research enabling investors, policymakers, and other stakeholders to make data-driven decisions

New York-based Cornerstone is an SEC-registered Investment advisor focused on helping its client base of individuals, family offices, foundations and endowments to align their investments with their mission, values or interests while seeking to achieve competitive investment returns. Cornerstone works with asset owners, corporations and financial institutions to promote new research in the field of environmental, social and governance analysis.

This ad will auto-close in 10 seconds