The Digital Revolution continues to erode Retail … is your industry next?
Every year over the past decade, we’ve witnessed tsunamis hit the shores of Retail industries all over the world. If you’re a shopper or traveled to the US, you’d know that these brands have one thing in common:
In case you’ve been living in a cave the past 5 years, these companies filed for bankruptcy. Sears deserves several medals for its ability to flourish beyond a century, yet its vast experience wasn’t enough to cope with the changing landscape. The eCommerce tsunami continue to hit the shores of retail with almost 6,000 store closures so far in the US this year (versus 2,600 opened) and its negative impact has been reported by the Bureau of Labor Statistics (see graph) showing the monthly employment drop in US retail trade.
Store closures and bankruptcies are nothing new and and are actually part of our modern economic and capitalist system which describes these milestones as gales of creative destruction. However, over the past 2 decades, these “gales” have intensified into tsunamis thanks to the internet and internet-driven innovations. So far, we’ve been talking about the retail industry, but the earthquakes or landslides that trigger these tsunamis, also referred to as “Digital Disruptions”, have impacted other industries.
When was the last time you listened to a CD, purchased film for your camera…
When was the last time you listened to a CD, purchased film for your camera or a book from a bookstore.… booked a flight or hotel through a travel agency? what “channel” did you tune into to watch a movie? when was the last time you paid for an overseas call or SMS, flagged a taxi, or read a newspaper?
Unless you foresee a post-apocalyptic world like Matrix (the movie), we will continue to live in our physical and digital worlds. We continue to have farmers and factory workers as automation continues in these job domains. However, the share of employment from these blue-collar workers have been reduced significantly over the previous century (see chart above of share of agriculture and manufacturing employment). There’s a good chance that this digital rebalancing has already affected someone we know in other industries — or even one of us. How then do modern-day over-stressed workers who have previously transitioned to the age of computing and internet… prepare for a world of more frequent tsunamis?
How do the rest of us morph and when will the tsunami hit our shores?
If you grew up in the era of mobile data and smartphones, you are lucky to be labeled “digital natives” who have the requisite DNA to cope with the future. How do the rest of us morph and when will the tsunami hit our shores? The first part or “how to morph” is what this multi-episode article is about versus latter half where you’ll find many forecasters with varying timelines. Also, I hope I don’t need to convince you that highly repetitive jobs are being automated or already in less demand (e.g. toll-collector, retail sales clerk, factory workers, or car/truck drivers with the advent of eCommerce, robotics, or autonomous vehicles. While full warehouse automation is still a decade away according to Amazon, you only need to visit their warehouses to see how much automation has been deployed today.
Unless you’d rather bury your head in the sand like our favorite ostrich and or about to retire into financial independence — then I’d like to simply thank you for reading this far. For the curious others, let’s journey together to the world of disruption and learn more about the context of more specialized jobs (that may also require physical dexterity such as surgeons) and the tasks that can be affected by automation.
Which is your current state? Denial, Avoidance, Curiosity
If you’ve read this far, then your answer to the question above is unlikely to be “in denial.” You may have run across the seminal paper written in 2013 by authors Frey and Osborne entitled “The Future of Employment: How Susceptible Are Jobs to Computerisation?” which estimated that 47% of 702 US occupations they studied are automatable from a technological capabilities point of view which includes Artificial Intelligence (AI) and Robotics. High-risk jobs are ones where much of the tasks performed by a worker, may be transitioned to a machine.
If you have trouble believing the degree of automation capability, the Organisation for Economic Co-operation and Development (OECD) built upon Frey and Osborne’s 2013 report on US jobs and applied job variants from 32 OECD member countries. They came up with a more conservative estimate of 14% jobs affected which translates to 66 million European workers. Whichever way you look at it, jobs will be affected and large government institutions like European Union who funded the OECD study, want to take proactive steps such that their constituents are prepared for the changing landscape. The OECD report went as far as identifying jobs such as food preparation assistants, cleaners and helpers as the highest most likely to automate at 64% and 59% at risk. At the lowest end are Teaching Professionals with 28% probability.
On the other extreme, some books forecast an employment apocalypse with a happy ending if radical steps are taken. I have a moderated view as Frey and Osborne who point to several periods in our history where we’ve been here before and survived. In their opinion article published a year ago at University of Oxford, they pointed out that the potential for automation is as vast as what our workers experienced during the “Second Industrial Revolution, before electricity and the internal combustion engine rendered many of the jobs that existed in 1900 redundant.” Almost 3 centuries elapsed between the first Industrial Revolution through the Third Industrial Revolution when todays workers were born or lived through since the middle of the last century. The World Economic Forum (WEF), began driving awareness of the Fourth Industrial Revolution which is among their global agendas. They describe the transformation…
will be unlike anything humankind has experienced before.
I’m hopeful that we continue to thrive and live through our current Digital Revolution, but I cautiously await the next series of tsunamis. If we were to believe WEF, these will be bigger and more transformative and record breaking. I‘ve never experienced a real tsunami before, although I’m quite aware of the havoc it can bring. No doubt most of us are thinking, when will the first of the tsunamis arrive, will it directly affect our industry, and what sort of lifestyle changes would be needed as we prepare for the Fourth Industrial Revolution.
On a more local note, if I were one of the Amazon warehouse workers today and I was told that I have 10 years to prepare for the next tsunami, I’ll be making some life-changing decisions today. In the next episode, I’ll be sharing how some people in various jobs have taken proactive steps to a more eudaemonic future.
