E-commerce Is Changing the Definition of Retail Employment
The retail landscape is in the midst of a mind-boggling – and fast-moving – evolution. In a short amount of time, Americans have radically changed how they shop for things, utilizing multiple channels of shopping to meet their needs. 80% of Americans are now shopping online, and they utilize e-commerce for a wide range of purposes – from researching costs and reviews before making a buying decision (sometimes at home, sometime while they are in a physical store location), to ordering non-perishable household goods and clothing.
As a result of these on-going changes to the retail landscape, 2017 has seen an unprecedented number of retail bankruptcies and store closings, with department and clothing stores in particular taking big hits. Just this year, The Limited, Wet Seal, Payless Shoes, and Gymboree have all filed for bankruptcy. As reported by Bloomberg, the CEO of Urban Outfitters described the current retail clothing picture as a bubble, “and like housing, that bubble has now burst . . . We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.”
What has this larger sea change in retail meant for employment? Retail jobs are a mainstay in this country, offering entry level positions and reliable work for tens of millions of Americans. It is clear that along with shuttered stores, we are losing traditional retail jobs – reportedly 30,000 in March alone. However, the report is not so bleak across the board. It seems that jobs are shifting to new areas of demand, rather than simply disappearing. While the rise of e-commerce has led to fewer traditional retail jobs, it is also driving a huge demand for warehouse, distribution and customer service jobs. Amazon alone is planning to hire approximately 100,000 people by mid-2018. That hiring boom, along with Amazon’s acquisition of Whole Foods, signals plenty of job opportunities in “new” retail. Additionally, e-commerce jobs may be better quality work than traditional retail. E-commerce pays significantly better than traditional retail jobs – approximately 26% percent more, as increased demand has led to increased competition for workers and higher wages, and the 100,000 jobs Amazon has announced are full-time positions with benefits.
Another area for retail job growth is customers’ increasing interest in so-called experiential retail. Consumers don’t want to shop simply for goods (hence, the reduced demand for broad-based department and clothing stores), they are looking for brick and mortar stores to provide experiences and services. The brands that provide such experiences are thriving, from fast casual restaurants like Shake Shack, to beauty providers like Sephora and Ulta, to specialty fitness like SoulCycle. Experiential retail is also one way to address a major concern with new e-commerce jobs – specifically, how unevenly they are distributed. New jobs in e-commerce are located near distribution centers, which are disproportionately located near large metropolitan areas. That has left smaller metropolitan and rural areas with two waves of job losses – first from manufacturing, and now from retail shifts. Therefore the demand for experience may pave the way for a renaissance of local businesses, even in rural and small metro areas, that provide services rather than goods. So while mom-and-pop shops have been pushed out by Walmart and similar retailers, there is room for local stores as well as chains to spring up in lots of markets, if they offer services, such as spa and nail services, restaurants, local breweries, and fitness.
In short, while the consequences of e-commerce are still shaking out, and there are likely to be many more store closings and bankruptcies in the future, there is reason to be optimistic about “new” retail and the opportunities it can create for individuals. That is, until the robots come.
Sneak peak at next month's blog post topic -"The Robots Are Coming: How Will the Rise of Automation Alter Retail Jobs?”