The pandemic has hastened the evolution from analog to digital across all types of businesses, and retail is no different. Approximately 1.1 million of the 1.9 million unemployed retail workers in June were classified as temporarily laid off or furloughed, according to the U.S. Bureau of Labor Statistics, but July has brought news of additional bankruptcies (e.g., Ascena, Brooks Brothers, Lucky Brand), store closures and the shedding of executive-level positions.
As the near-term impact of the pandemic on retail employment crystalizes, participants in a recent RetailWire discussion debated how long it will take for retail employment to return to pre-pandemic levels — if it ever does — and what that means to recruitment and career paths in retail in the years ahead. Several themes emerged, including:
- Retail in the U.S. was already overstored, a condition that was accelerated by COVID-19;
- Separate from the pandemic, automation, AI, robotics and other technologies will decrease the number of human workers that will be needed in the future;
- Retailers will recruit for different skills, using people for higher-level tasks such as face-to-face selling, and for duties related to fulfillment and e-Commerce; and
- The effects of the pandemic, and retail’s ability to recover completely, will take years.
Following are excerpts from the discussion.
Jason Goldberg, Chief Commerce Strategy Officer, Publicis
Economic pressures of COVID are accelerating the right-sizing of our retail footprint. We’ll probably see 25% of all retail stores in the U.S. close over the next two years.
On top of that, the trend in stores is to have fewer, higher-skilled employees. The lowest-value jobs (inventory, floor cleaning and even checkout) are being replaced by automation. Retail wages are going up, but they expect those more expensive employees to be more customer facing.
So we have a perfect storm of fewer stores every year, and fewer employees per store. Given that retail is the largest private employer in the U.S., this will result in a significant economic shock.
Rachelle King, Retail Industry Strategist and Thought Leader
It’s becoming increasingly clear that retailers will need to fundamentally change the way they go to market. The surge in online shopping and finding alternative means to get goods to consumers (e.g. curbside pickup, turning entire stores into fulfillment centers) has left many retailers unprepared for this now new-normal, and has exposed their slow speed towards digital transformation. Yes, some technologies (e.g. digital shelf, AI/ML) may require new skill sets currently not well developed in frontline employees, which may lead to downsizing for some but opportunities for others.
Ultimately, this is not about downsizing but about transformation. The time for functional thinking about retail is over. A transformative mindset is needed to ensure the industry is not only prepared to withstand the next life-altering event, but also to ensure the industry is prepared to meet evolved consumer demands that are being shaped, and likely will remain, once this pandemic is over.
Retailers with scale should start now in evaluating where they have been hit hardest and why. Then work strategically toward technology-enabled, sustainable solutions and necessary employee training/staffing to close those gaps if they want to be around in five to 10 years.
Mark Ryski, Founder, CEO and Author, HeadCount Corp.
The lingering effects of the pandemic will be felt for years as the industry recalibrates. Not only will there be fewer employment opportunities in general (notwithstanding pockets of growth), but working in retail — especially frontline — has become less desirable.
Neil Saunders, Managing Director, GlobalData
Before the pandemic hit, the U.S. had too much bad retail space. The distress caused by the lockdown has accelerated the drop out of that space, the vast majority of which will not return. Sadly, that will cause job losses in frontline retail, and we will likely see that part of the workforce shrink permanently.
However, there are two more positive caveats to this. First, new jobs will be created in different areas. Logistics, warehousing, fulfillment and so forth are all expanding; new innovative industries such as robotics will also create opportunities over the years ahead. Secondly, once we are through this period of disruption, there will be some retail expansion. New brands will grow and open stores, and we will still see new shopping centers being built and expanded. The present disruption is causing shifts. It does not spell the end of all development and progression in retail.
Jeff Sward, Founding Partner, Merchandising Metrics
This all feels a lot more like “shrink and shift” than “bounce and return.” Fewer physical stores, fewer malls, less square footage, more e-Comm, more fulfillment, more last mile, more automation and efficiency = fewer overall retail jobs.
Ray Riley, CEO, Progress Retail
Considering the positive news regarding vaccine trials in the past two weeks alone, it is realistic that by the end of Q1 2021 things will begin to return to some form of “normal.” While the level of retail employment will fluctuate considerably, and likely will trend down for the remainder of the year, the composition of employment is where the focus should be. The re-skilling and retooling needed for roles that will be distributed from front-of-house in order to support the realities of modern retailing include fulfillment, BOPIS, reverse logistics, etc. This will also vary considerably category to category.
Georganne Bender, Principal, Kizer & Bender Speaking
Retail employees at all levels have been hit hard. People seek corporate stability when job hunting, so future recruiting will be tough, especially for mid- to higher-level positions. That being said, the entire job market isn’t looking good right now.
Carlos Arambula, VP Marketing & Business Development, Estrella Brands
Smart retailers like Nordstrom are shifting sales associates to fulfillment roles for curbside or online orders. The issue will be that, unlike sales positions, fulfillment roles don’t allow for commissions and the wages are not living wages, so the incentive to work in retail will diminish. The quality of personnel and employee longevity will decline.