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By Doug Stephens<\/p>\n
In my 2013 post, Ten Trends to Watch for in 2014<\/a><\/b>, I said this would be the year we would hear much more about technologies such as artificial intelligence and robotics and their potential to replace retail service workers.\u00a0 So, it came as little surprise that U.S. home improvement chain Lowe\u2019s recently announced a test of robots in its Orchard Supply Hardware store in San Jose California.\u00a0 The robots, called OSHbots, are programmed to speak multiple languages, greet customers at the door, field product inquiries and escort shoppers to the exact in-store location of the items they’re looking for.\u00a0 In addition, the OSHbots can also provide additional product information and instruction via video screen interfaces as well as access real-time on-hand inventory information. And all without ever taking a lunch break, a sick day or even a paycheck!<\/p>\n <\/p>\n [youtube]https:\/\/www.youtube.com\/watch?v=Sp9176vm7Co[\/youtube]<\/p>\n <\/p>\n And, if you’re among those who believe that our innate understanding of human emotion is what safeguards us humans from obsolescence at the hands of technology, it\u2019s important to know that tech company IPSoft has recently announced the release of a virtual customer service platform called Amelia<\/a><\/b>.\u00a0 Amelia not only processes natural speech but also detects emotion in the voice of the customer.\u00a0 This enables Amelia to tailor not only the information delivered but also promises that it will be delivered in a contextually and emotionally sensitive manner.<\/p>\n In combination, these two things – advanced robotics and deep artificial intelligence, make an extremely powerful combination; robotics tirelessly stands at the customers\u2019 beck and call while artificial intelligence accurately retrieves the information they desire, in a manner that suits the context of the query and even the customer\u2019s mood!<\/p>\n <\/p>\n <\/p>\n It stands to reason that companies like Walmart will be watching such technologies with great interest. After all, consider that they employ more than 1.3 million associates in over 4000 U.S. stores.\u00a0 The potential cost savings from technologizing even a percentage of that sales force would be astronomical. And Walmart is not alone.\u00a0 The retail sector is North America\u2019s largest employer, accounting for over 15 million workers, and in an industry continually challenged for profitability, the potential upside of replacing workers with technology has to be tantalizing.<\/p>\n So, are people now truly an endangered species in retail? Will technology displace retail workers the way steam-powered machines displaced horses in the 18th<\/sup> century? \u00a0The answer is neither as simple nor definitive as you might think.<\/p>\n A recent study out of Oxford University examined the likelihood of different types of workers being replaced by technology and determined that there is a 92% probability of retail labor being displaced over the coming decade. There are several reasons for this.<\/p>\n The first is that most retail workers are dreadfully underpaid.\u00a0 In the U.S. for example, the median wage<\/a> for all retail workers in 2012 was $10.29 per hour or $21,410.00 per year. \u00a0 In the same year, the poverty threshold for a U.S. family of four was set at $23,492.00.\u00a0 In other words, for at least 50% of retail workers, supporting a family with a spouse and two children on a retail salary, implicitly means living in poverty.<\/p>\n <\/p>\n <\/p>\n While you might think such low wages would serve to insulate retail workers from technological disruption, it actually makes them much more vulnerable. Here\u2019s why. While the Federal minimum wage is set at $7.25 per hour and some states have minimums slightly above that, most estimates suggest that if minimum wage had kept pace with inflation, it would currently be set at or above $20.00 per hour.\u00a0 This wage chasm presents tremendous problems for both retailers and their employees. If a retailer raises wages from $7.25 per hour to $7.75 per hour, it represents a significant (6%) increase to payroll. However, even at $7.75 per hour, an employee\u2019s earnings still fall horribly short of the $20.00 per hour they would be receiving if wages were properly indexed to inflation in the first place.\u00a0 This remaining shortfall results in unmet expectations for the employee, even lower morale, reduced performance and ultimately diminished returns for increase for the employer.\u00a0 Each incremental increase in wages only perpetuates a downward spiral in performance and dissatisfaction. In the end, it’s this conundrum that makes an investment in technology to replace workers look more attractive to a retailer than making an investment in the workers themselves.\u00a0 It may not seem morally right but it\u2019s financially true.<\/p>\n Secondly, while few professions are immune to technological disruption, retail workers are particularly at risk because much of their work has been reduced to a series of manual, repetitive tasks.\u00a0 Their core work has to do with looking up prices, checking inventory levels, scanning packages and transferring bits of product information from a manual or database to a customer.\u00a0 Unfortunately, this also happens to be just the sort of work in which technology far exceeds human capability.<\/p>\n <\/p>\n <\/p>\n But all this is not to say that we will soon be living in a dystopian future, devoid of people. Robots aren’t perfect either. In fact, there have been some extremely compelling studies that clearly show that robotics and cognitive computing power alone are often not the best solutions to complex problems.<\/p>\nIs this the end of people?<\/h2>\n
Diminishing Return on Wages<\/h2>\n
The Problem With Robots<\/h2>\n
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