eCommerce

How eCommerce is Transforming the Retail Employment Landscape

Traditional in-store retail jobs still make up the bulk of retail employment in the U.S., but that is changing as in the wake of the pandemic and as eCommerce grows.

Craig Rowley, a Senior Client Partner at human resources advisory Korn Ferry Hay Group, says that 60% of remaining retail jobs over the next decade may be completely new or traditional roles with revised job descriptions. That figure is currently 10%, he adds. The speed at which it changes will depend on the growth of online shopping, the development of robotics and changes to the minimum wage. 

Retail’s labor landscape is already changing. Here’s how the labor model is evolving to keep pace.

New Roles for White Collars and Blue

Retail jobs are no longer limited to the store. As consumers spend more time online and less in shopping malls, dozens of new roles need to be fulfilled. 

Software jobs, in particular, have become much more commonplace in the last few years. A 2017 Glassdoor study found retail had the biggest share of all industries’ software jobs, with software job postings up by 7.5% since 2012, writes the recruiting site’s Director of Research and Chief Economist, Andrew Chamberlain, Ph.D.

New roles aren’t limited to college educated, Silicon Valley developers, however. Blue-collar jobs are also being created in warehouses and logistics companies.

Warehouses and delivery networks have grown alongside eCommerce sales, writes Christopher Rugaber, Economics Reporter at the Associated Press. While many of these warehouses do use robots, they often improve the jobs of human workers — not replace them. 

Technology may threaten some of these roles in the future, says Rugaber, but eCommerce companies will need to build more warehouses as demand grows. “So even if each warehouse employs fewer workers, the proliferation of new warehouses is projected to generate hiring across the industry.”

Overall, more warehouse jobs is good news for retail workers, says Business Insider Editor, Dennis Green. “Data from the National Bureau of Labor Statistics says that warehouse worker jobs are on the higher end of low-paying jobs, and they even come with benefits like health insurance and 401(k) match, which traditional retail jobs often do not.”

informally dressed worker at desk with three monitors and one laptop; retail employment concept

Training and Recruitment is Changing to Meet Demand

Many of these new roles aren’t a natural fit for traditional retail employees. That’s why employee training programs have proliferated as consumer preferences have changed. Ellen Davis, EVP of Industry Engagement at Consumer Brands Association, says there are plenty of opportunities for people to work in retail, but new skills are essential.

In response, the NRF Foundation launched RISE Up in 2017 to help retail workers prepare for the future. Supported by retail brands like Target, Brooks Brothers and Disney Store, the 15-module training program and exam provides retail workers with credentials they can use in their careers going forward. 

Leading retail brands are also upskilling employees. Amazon has committed to retraining one-third of its 275,000-strong U.S. workforce by 2025, reports Rachel Siegel at The Washington Post. 

Walmart has gone even further, says Greg Petro, Founder and CEO of the merchandising platform First Insight. “Dating back to 2015, through its program Live Better U, Walmart employees have been able to get degrees in fields ranging from computer science to cybersecurity for the tuition tab of $1 a day, and earn free college credits and other educational perks.”

Retail recruitment is also changing. Niche eCommerce recruitment agencies are popping up to meet the short-term labor demands of the industry. Hourly staffing platform Wonolo is one of these brands designed to help eCommerce companies, including stores, brands and logistics firms, find the short-term labor they desperately need when sales spike. 

Demographics Are Shifting With Jobs

Many former retail workers may not find it easy to stay in the industry even if they learn new skills. That’s because the new roles being created by eCommerce don’t necessarily marry up demographically with the jobs they are replacing. 

Take the geographical distribution of retail jobs, for instance. New roles are often not in the same locations as traditional retail roles, says the Federal Reserve Bank of New York’s Jason Bram and Nicole Gorton

While physical retail stores hire in every county across the nation, eCommerce brands aren’t limited by geography. They can serve customers anywhere, with workers at one or two central hubs. If you don’t live near these hubs, you can’t get hired. Even though the number of combined retail jobs hasn’t changed much since 2012, the distribution of those jobs has, Bram and Gorton write.

Mike Maciag, an Officer at The Pew Trusts, reviewed county-level job estimates for eCommerce-related jobs. In the decade ending in the third quarter of 2017, a total of 528,000 jobs were created. Yet much of the job growth was contained in small areas, with only 31 of the country’s 3,200-plus counties accounting for over half of the job growth. These aren’t huge metro areas, either. Only 14% of the population resides within these counties. 

The demographics of retail workers are changing, too. Senior Economics Correspondent at Time Magazine Alana Semuels reports that the number of retail jobs for women is shrinking, while opportunities for men increase. The reason? Women held most of the cashier jobs being replaced by automation. Much of the new growth occurs in warehouses, which have typically been dominated by men.

Sign on cash register reads "for hire"; retail employment concept

Are More Jobs Being Created Than Eliminated?

Debate rages over whether the jobs created by eCommerce outnumber those it replaces. Michael Mandel, Chief Economic Strategist at the Progressive Policy Institute, is one person who says eCommerce has created more jobs than it has killed. 

“Since 2007, the eCommerce sector, including fulfillment centers, has created 355,000 new jobs,” he writes. “That growth far exceeds the 51,000 jobs lost since 2007 in the ‘general retail’ sector, which includes the brick and mortar retailers competing most directly with eCommerce: electronics stores; clothing, shoes and jewelry stores; sporting goods, hobby, musical instrument and book stores; and general merchandise stores, including department stores and super centers.”

Others aren’t so sure. The problem is that eCommerce stores are less labor intensive than traditional retail stores, Robert Gebeloff and Karl Russell write in The New York Times. It takes fewer workers to sell more products, and almost three-quarters of eCommerce stores have four employees or fewer. So even though online stores pay more per employee and contribute heavily to sales figures, their impact on employment is far less than traditional stores.

Economist Andrew Flowers also notes that eCommerce jobs don’t scale in line with retail jobs. So much is automated and virtual that online brands simply don’t need to add employees at the same rate when sales rise. The non-store retail sector has actually seen a 1.4% drop in  employment in the 12 month period between 2018 and 2019 despite increasing sales, he writes.

The availability of data doesn’t help any analysis. One problem is that the Bureau of Labor Statistics doesn’t classify retail jobs accurately, says Mark Mathews, VP of Research Development and Industry Analysis at the National Retail Federation. If you work for a retail brand in a corporate HQ, you don’t count as a retail employee. Executives, HR, marketing and finance teams aren’t counted as retail workers either. Nor are warehouse workers or logistics providers or call center operators.

“Retailers across the country are investing significant capital to build out their eCommerce platforms and fulfillment capabilities,” Mathews explains. “They’re building warehouses and hiring a broad array of employees who aren’t store-based. As a result, some of the fastest growing job categories in retail are mis-classified into other industries such as IT, management, transportation and warehousing.”

Even temporary staffing figures aren’t calculated accurately, writes Jennifer Smith, Logistics and Supply Chain Reporter at The Wall Street Journal. If staffing agencies provide the employees that logistics providers and fulfillment companies rely on, they are counted as “temporary-help services,” rather than retail employees. 

Is COVID-19 Accelerating Change?

Brick and mortar brands and resellers are fighting challenges on multiple fronts right now, says Jason Goldberg, Chief Commerce Strategy Officer at Publicis Communications. “Yet successfully navigating these issues alone will not assure a bright future, or any future at all,” he says. “That’s because once we get through this pandemic — and we will get through it — we will emerge in a very different world from the one we left prior to the outbreak.”

Online shopping has become the norm for millions, and it could stick, writes Michelle Evans, Senior Head of Global Digital Consumer Research at Euromonitor International. After all, that’s exactly what happened in South Korea after the 2015 MERS outbreak, with the first foray being online groceries.

Matt Kaness, Executive Board Director and Interim CEO at Lucky Brand, says that many people who worked in retail may not have jobs or even a company to come back to. 

At the same time, it could mean more eCommerce jobs. To fulfill the surging demand for deliveries, brands will either need an increase in autonomous vehicles and drones or more delivery workers, writes The Atlantic’s Derek Thompson. He says he is betting on the latter in the short run, citing Instacart’s plans to hire 300,000 contract workers. 

The coronavirus pandemic has also caused an acceleration toward automation, says Karen Fichuk, CEO of Randstad North America. “What we’re seeing is this significant need for massive up-skilling and retraining, especially for workers who have been laid off.”

Whether you believe more jobs are being created or more are being culled, there’s no hiding from the fact that eCommerce is having a lasting transformational change on the industry. A great eCommerce team looks very different from a brick-and-mortar workforce, which makes upskilling your staff essential if you want to keep them in your company as you move your brand online.

Images by: BBH Singapore, [email protected], Clem Onojeghuo