A third of UK retail jobs will be lost within the next decade with the closure of thousands of shops warns a new report. So what will the future of retail look like?
A British Retail Consortium (BRC) report
, released on Monday, blames the rising costs facing retail businesses on the upcoming increase to the National Living Wage and the imminent apprenticeship levy. These, it says, will be responsible for speeding up job cuts. But these measures alone wouldn’t be enough to bring about so many job losses without the impact of rapidly developing new technologies that the UK retail sector simply can’t afford to ignore.
The sector has already been hit by changes to the way millions of consumers shop. In June last year, online sales increased by 11.4%
compared with figures for the previous year and there's no sign of a slow down. The imapct on the high street is that net store closures rose to 987 in 2014
, nearly three times the 371 posted in 2013. The BRC report warns that the additional effects of the National Living Wage on employment, which comes into effect in April, "have been under-estimated”.
“It's in many ways a very good thing - but it will also probably accelerate some of the changes within the workforce and the responses that retailers make in order to mitigate some of the rising cost pressure that they're seeing,” Sir Charlie Mayfield, chairman of the BRC told the BBC
It's probably true to say that there's never been a harder time to be a bricks and mortar type retailer. Aside from the internet, there are financial disincentives: stores such as John Lewis pay far higher levels of tax in the UK than companies like Amazon. The pressure to keep up with the competition is great too, with retailers needing to collaborate, even with rivals, to keep afloat. Witness the stock market’s snap judgment on Monday’s strategic shuffles in the online grocery market
, which saw Morrisons sign a deal with Amazon, who will now distribute the grocery chain's goods online.
But the internet is not the only new technology retailers are being forced to employ. The most forward thinking are turning to the
Internet of Things, automation and even humanoid robots.
Internet of things
While e-commerce has been a disruptive influence to the sector over the last fifteen years, it’s clear that the Internet of things (IoT) has the potential to completely change the way the industry operates in terms of the supply chain, customer experience, and new revenue streams.
The UK’s first IoT enabled shop
opened last year. The Dandy Lab, uses NFC-tagged products and sensor terminals to engage customers and analyse their behaviour. But mainstream retailers such as Target are also getting in on the act.
Target recently installed beacons in 50 stores, using the technology to make content product recommendations available to customers via a push notifications on on their phone.
The IoT is also changing the way retailers monitor stock and restock items. Amazon Dash
, for instance, has seen the online retailer partner with a number of brands on its Dash button – a WiFi connected device which can reorder items, such as washing powder, at the press of a button.
Product advertising is also getting an overhaul with the increasing popularity of location based advertising. Rapidly improving positioning tech is finally enabling brands not only to optimally advertise their products, but also to track customer behaviour via tagging and footfall
Robots for retailers
Of the British retailers, perhaps the most forward thinking is Ocado. The online grocery store is investing heavily not only in IoT but also in robotics. The aim of its huge IoT project is to transform the retail industry and create the largest automated packaging service of its kind.
Developed with the help of Cambridge Consultants, the Ocado Smart Platform
uses over 1,000 robots and is designed to maximise warehouse efficiency and the plan is to take the system to market so that other retailers can purchase and deploy the power of a robotic bagging team.
Based on 4G telecoms technology deployed in the 5GHz WiFi band, the system aims to effortlessly coordinate countless fast-moving machines to within a fraction of a second.
Tim Ensor, head of connected devices at Cambridge Consultants, told technology website V3
: “We think it’s the most densely packed mobile network in the world with this number of devices in such a small space, all moving around at high speed, and connecting to the backbone so often.”
Thinking very differently from the average grocer is what got Ocado interested in robotics. The company is also involved in major robotics projects in collaboration with European research institutes: Secondhands and SoMa
are both funded via Horizon 2020 grants. SoMa is about using compliant robotic mechanisms to handle deformable products without conventional geometry, and Secondhands is seeking to develop a humanoid robot to assist maintenance technicians in routine and preventative maintenance. It’s a hugely ambitious exercise in collaborative robotics to develop a safe robot that can work shoulder to shoulder with a human and, If successful, it’s unlikely that the robots will stay behind the scenes.
Next generation retail
Next generation retail, Retail 2.0, is not only about efficiency of operation it's about enhancing consumer engagement within brick and mortar, moving beyond simply blending in the online and the mobile experience. It’s driven at the heart by sophisticated big data tools that truly enable contextual, personalised and real-time conversations between brands, retailers and consumers.
In the future, even now, the retailer that ignores the industry's information driven nature is unlikely to stay in business for very long. From online stores to point-of-sale systems, supply-chain management and big-data customer analytics—it’s all dependent on computing. And as we look five to 10 years into the future, we know this trend will continue as personalisation is now key. Through data, retailers must personalise experiences for their shoppers both in-store and online.
Robots at the door, limitless stock inventory, seamless customer experience - this is the future of the UK's retail sector, but what about human jobs? Change has seldom been quicker and more vertiginous than today. The good news for those concerned about
unemployment is that we’ll need human intelligence to get to this and to make it a better future.