PRINTABLE VERSION HERE

As retail is undergoing major evolutionary changes, so retail jobs are evolving. The possibilities of automation and the application of AI as well as social and political changes force a radical reassessment of retail functions and organisation structures to improve service and performance. At all levels, retail jobs are shifting, reskilling, being automated, or being deconstructed and redesigned for new retail models.

*What: Two trends are developing in the world of retail work: a shift away from store-based work (which is becoming increasingly skilled), towards technology mediated fulfilment work. At the same time, jobs are being reassessed and deconstructed as part of a search for a new retail productivity deal.

Why it is important: Both of these affect retail, and specifically omnichannel department stores,*

• as its store-based business shrinks relative to the online business
• as it struggles to find a new profitability model

The IADS has already written about “working from home”, “remote work” and “hybrid work” as it applies to retail during and after the covid pandemic. What is covered here is a longer-term adjustment in a broader economic cycle.

The future of labour

The world of work is changing. According to The Economist (see Labour Markets, The Economist), after four decades during which the rich world’s workers endured competition, technological change, unequal wages and unconvincing recoveries from recessions, while investors and companies benefited from expanding global markets, liberalised finance and low taxes, the balance is now shifting. The coming of a post-pandemic economy with lower unemployment will be characterised by a rise of the labour market thanks to two factors: a more favourable political environment; and a technology shift.

On the political front, the US is leading the way with infrastructure spending, the promotion of unionisation and higher wages. Thus, classically low-paid jobs such as those in fast-food and retail are under the spotlight. Unionisation is back in the headlines (see Amazon in Alabama FT article), McDonald’s is upping wages (see FT article), and Walmart is considering how to offer careers to its workers instead of the precarity of hourly pay (see article in IADS news).

This “paradigm shift” has been accelerated by the covid pandemic. Two elements for omni-channel retailing (including department stores) stand out:

The first is overall job losses. As traditional brick-and-mortar stores closed, so traditional sales associate jobs were lost. A study from the Centre for Retail Research showed that 177 000 jobs were lost in UK retail in 2020, and it is predicting another 200 000 to be lost in 2021. The job losses concern mostly entry-level positions such as sales assistants and check-out roles, while some jobs are being created in online warehouses and delivery.

The second is a shift in jobs. As retailers struggled to compensate for store losses through online sales, the relative number of order fulfilment-related jobs has increased.

![Retail Jobs table 1

Ben Evans, The Great Unbundling, January 2021

This is not a new process: The number of people identifying as retail associates on their LinkedIn profiles has declined 41.4% from 2013 to 2017 (see Retail Dive). Software developer is the fastest growing job in retail, with engineering and information technology jobs growing from 7% to 9%.

During covid, store staff have been taking on order and fulfilment roles either working in DCs or fulfilling from stores, providing click & collect service, kerbside pickup… Others have been providing one-to-one sales service over mobiles in “live streaming” shopping for customers.

Retail in the future will be in need of “upskilled” customer facing staff more akin to a concierge role on the one hand, and staff working with automation and AI on the growing fulfilment side of the business on the other.

Is it enough to “redesign work ecosystems”?

Unsurprisingly, consultants have caught on to this movement and have offered various perspectives.

• Thus, Oliver Wyman talks of “job redesign”. They have found that it has been possible to eliminate obsolete operating processes, some of which have resulted in productivity savings by up to 50 percent. They see the exercise as a periodic necessity in order to better align with the organisation’s future strategy; to ensure that work is easy to perform and productive; and that the work should be as engaging as possible for the individual.
• Deloitte on its side, describes managers caught between two realities: “One reality is that their workforce increasingly depends on external workers. The other reality is that their management practices, systems, and processes are designed for internal employees” (MIT Deloitte, 2021). This perspective challenges the linear career paths which have traditionally created value for companies and offers the idea of a “workforce ecosystem” including a broad community of workers and organisations.
• McKinsey addresses specifically the question of automation in retail and how we should be prepared for skilling and reskilling at scale, in particular as an alternative to replacing talent. They foresee that the remaining retail jobs will probably be better paid, with higher skills and lower turnover. “As retailers introduce additional automation into their retail models, they will end up with fewer but more highly skilled jobs. To get the right talent, retailers must invest in higher wages and benefits” (McKinsey, 2020).

Unbundling or deconstructing jobs

Against these approaches, however, it is argued that in times of uncertainty, another more radical argument is needed. This is connected to the tech concept of “unbundling” as described by Ben Evans (January 2021) and others. It describes originally a business process where a series of blocks or products inside a value chain are broken down to provide better value. What has happened to TV is an oft-quoted example with unbundling separating news, sports, storytelling, entertainment etc. into separate entities, in each one of which another company has grown such as Google, YouTube, ESPN, History Channel, Netflix.

That argument is taken further and applied to jobs and indeed the very notion of a job itself by John Boudreau and others (MIT Sloan, January 2021).  (See also Li’s Newsletter, Unbundling Work from Employment.) This approach argues that a “new operating system for work” is needed that will support a high degree of organisational agility amid increasingly rapid change and disruption. This new operating system allows leaders and workers to deconstruct jobs into more granular units such as tasks in order to deploy staff based on their skills and capabilities, rather than on their job descriptions.

The traditional work operating system was built for the Second Industrial Revolution, with work defined as “jobs” and workers defined as “job-holding employees”. The agile methodology is insufficient on its own to overcome resistance to collectively work on, and actively engage with challenges that span job titles or departments. In one example, staff could not understand how projects fit with their day jobs, how to find space to contribute, and how to respond to direct supervisors who felt that projects were unrelated to the employees’ functional areas.

This is not an argument for the deskilling and degradation of work as discussed by some analysts in the 1970s. It is rather a process of decomposing and eventual recomposing of skills due to economic and technological changes in order to make them better suited to the conditions of the time.

The process of deconstructing jobs into tasks also shines a light on the degree to which particular jobs can be automated depending on their nature. Thus, merchandise planning may be significantly automated, while supplier management only moderately so, and space planning might rest somewhere between the two. Most jobs can be placed somewhere along the three lines below:

![Retail jobs table 2

At the IADS, it has been clear that a number of department store functions have been “redesigned” or “redefined” or indeed simply been broken up. Thus, Globus divided its selling staff between sales associates and replenishment associates in order to allow the former to concentrate on customers and the latter to ensure merchandise availability. The same company followed a trend (which was adopted by others) consisting of separating the roles of buyers and planners, which it has since reversed. The marketing function over the last few years has become importantly divided into a brand role and a customer data role (exemplified by many including Galeries Lafayette).

As for automation, the HR department of Magasin du Nord has been investigating how jobs can be classified into more or less automatable parts. Falabella HR department on its side has already put in place some bots which effectively automate some of the more routine functions of the HR department itself and give a quicker and better service to employees.

The end of the retail job as we know it

What happens when the nature of retail changes?  The first thing to happen is that retail jobs change. If retail is changing today as profoundly as it changed with industrialisation, then the jobs designed to power that retail model need to be revisited. The current retail job model belongs to another age (see for example the Oxford University iLabour project).

Although many areas of retailing work can certainly still be managed within the traditional system, work is likely to evolve as retailing itself changes and as always it would be preferable to anticipate and control that change rather than bear it. The two trends outlined above will probably have dramatic effects on retail employment. Costs will shift, employment practices will change, and companies will need to adapt. However, it has often been argued that the increased productivity of businesses expected as a result of the application of new technologies has not happened. It is arguably unlikely to happen if the structure of employment does not shift to accommodate a new model and in so doing liberate the productive potential of new working models.

In addition, the shift in operating system described here will certainly necessitate different leadership skills to overcome problems of coordination, responsibility and consent. “This new agile, serial leadership will require leaders and managers to excel at human leadership as they perpetually reinvent work; construct more transient, deconstructed, and highly efficient teams; and blend humans with technology. (See Boudreau and Donner, MIT Sloan, 2021).

Unbundling is part of a process. After a period of turbulence, over time, it is often followed by “rebundling” in order to achieve the economic benefits which unbundled businesses cannot reach. Thus, the deconstruction of jobs into tasks may well be followed by a reconstruction of jobs on a very different basis. Unbundling in the music industry, for example, saw traditional giants suffer at the hands of Apple or Amazon which offered songs by the unit rather than control the whole value chain. However, while the customer gained in terms of price and choice, she lost out in terms of curation and direction. Then Spotify came along and in effect “rebundled” the music offer using customer data to personalise the offer. Some argue that the same process is happening in finance.

The question is whether the companies that get unbundled can ever be the ones that rebundle? Or is it always new entrants?

Credits: IADS (Dr. Christopher Knee)