Retail’s New Industrial Revolution

By Doug Stephens

Earlier this year while at the National Retail Federation Conference in New York, I listened to Walmart U.S. President Bill Simon talk at length about how retail was still a great career for young people to embark on.  He reflected on his own career path, and that he put himself through college on the $2.00 an hour he earned as a young man, implying that today’s young retail worker should be able to do the same. Mr. Simon shared his firm belief that one could still start on the ground floor at companies like Walmart and work their way up.  In fact, he said, it was still entirely possible to start as a cashier and ascend to the executive ranks.

It all sounded so nostalgic and inspiring.

A little more than a month after Mr. Simon’s talk, however, Walmart announced that it was adding 10,000 self-checkout lanes in its stores in 2013.  Why? Well according to Walmart’s own figures, every second of delay in the checkout aisle amounts to nearly 12 million dollars in cashier payroll.  So, time being money and money being everything, self-checkout, they decided, was the clear path forward.  And if that weren’t a sharp enough juxtaposition to Mr. Simon’s keynote from a mere month earlier, the retail giant has even more recently announced expansion of the smartphone based self-scan and pay technology that they began testing in 2012, allowing customers to scan items while shopping and pay for everything at self-checkout kiosks by scanning one single barcode.

The naked truth is that cashiers won’t become executives.

Because soon there won’t be any cashiers – and not just cashiers – greeters, merchandisers, inventory counters and store cleaners too. Technology is poised to replace all of them for two reasons.  First, because it can.  And second because it must. Digital, mobile, virtual and robotic technologies are quickly progressing to the point where they now pose a legitimate threat to anyone whose work is largely repetitive and non-dynamic in nature. And because retailers are increasingly challenged in growing top-line revenue, there’s little alternative but to substantially slash operating costs – and people are the easy place to start.

This is hardly a phenomenon exclusive to Walmart. Walmart only tends to be the most visible of battlegrounds.  It applies to any retailer in the developed world that currently employs people who don’t add significant and tangible value.  Any employee who doesn’t either deliver cost savings, generate revenue or optimize profit will be a moving target for any number of technologies – robots, apps, kiosks, virtual assistants and more – and much sooner than we might think.  The Hointer denim store in Seattle provides a glimpse of what this people-less retail future might look like and to be honest, it doesn’t look bad.

But there’s a bright side.

It’s that for the first time in about forty years, there’s also a reviving market in retail for truly talented, creative and remarkable people.  People whose work adds significant texture, vibrancy and human connection to the retail experience.   People who are believers in the brand values, super-users of their products and co-creators who love to help their customers imagine and personalize solutions.  True Brand Ambassadors.

Some retailers already seem to understand this.  REI, The Container Store, Sephora, Bloomingdales and a handful of others seem to get it.  They realize that their people aren’t just a cost item on the P&L but rather the spiritual glue that can make their brands truly sticky and loved.  They understand that in a world of commodities, human emotional connection is the intangible value that can and must differentiate them.  Above all they understand the concepts of highly talented staff and minimum wage are oxymoronic.

But spinning yarns about cashiers taking the corner office isn’t going to get us anywhere.  This is no longer a debate about the opportunities that do or don’t exist for hard working, underpaid retail workers. Let’s call it what it really is. It’s the end of the era in which retail workers are paid to punch buttons, enter numbers and count widgets and no amount of nostalgia will reverse that.

It’s a new industrial revolution and the era of the clerk is over.  The age of the Brand Ambassador has just begun.

Update: On April 24th, 2013 hundreds of employees of McDonald’s, Macy’s and Victoria’s Secret (among others) walked off the job in Chicago to protest what they cite as impossibly low wages.  This follows on the heels of a similar protest among fast-food workers in New York City.  Also, in early May Walmart launched an externally focussed media campaign aimed at portraying the company as a company that promotes from within.  You can see it HERE.