The End of Retail: Why the Future of Shopping Doesn't Need Workers

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The retail workforce quadrupled in the second half of the 20th century. Since then, jobs here have declined as a share of the economy.

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You might say the end of retail began in 1997.

In that year, there were 14 million people working in retail, 14 million people working in the health & education super-sector, and 14 million people working in professional & business services. So, for a split second, there was virtual tie in the race within service jobs.

Fifteen years later, the tie-game has turned into a blow-out. Health care jobs grew by almost 50%. Professional/business services -- a catch-all that includes such wide-ranging jobs as law, software engineering, and waste management -- rode the roller-coaster of two recessions and wound up 4 million jobs bigger. And then there's retail. In 15 years, retail added only 400,000 new workers, or 26,000 jobs a year. In the time that health/education jobs grew by 50%, retail grew by 0.2%.

Here's our 1997-2012 story in a graph, with the Y-axis showing thousands of jobs.

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It doesn't look like such a blow-out when you pull back the lens and take stock of the last century. Between 1940 and 1990, all three sectors above tripled their work forces while manufacturing declined and agriculture plummeted. At its midcentury zenith, as Matt Yglesias (an active proponent of the end-of-retail theme) reminds us, Sears, Roebuck & Co. was "the largest retailer in the world with more than 350,000 employees." The 1950s and '60s were the heyday of retail growth.

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Today, as Brad Stone and David Welch report in Bloomberg Businessweek, the future of retail looks like a wasteland. Even with stores like Circuit City out of business, it might be too late for the survivors like Best Buy to have a sustained recovery:

The retailer's business hasn't collapsed; annual sales have been stable at around $50 billion for the past few years. But it needs to adapt in a hurry ...  No need to wait in a checkout line--or even speak to a salesperson--and if security personnel were watching, they were invisible. It's a process designed to remove any lingering barriers between shoppers and their money. You might call it frictionless.

If shoppers do more of their research at home, they don't need people to greet them and walk them around a showroom. If shoppers can read their friends' recommendations on their phones, they don't need as many people to recommend ear buds and furniture. If machines can add up purchases and scan credit cards, we don't need as many cashiers. If we buy more stuff on Amazon and other shopping sites, we'll need a declining number of people stocking a smaller and smaller number of stores.

This isn't the end of retail. It's definitely not the end of shopping. But it is the triumph of shopping technology so frictionless, it can thrive without the messy friction of interacting with people.

***

The backlash is a cherished part of every revolution, and I'll end this post by noting that there is a possible backlash against the frictionless post-employee retail economy.

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A recent Harvard Business Review study looked at four low-price retailers, including Costco and Trader Joe's, with higher labor costs (more salespeople, higher wages, more full-time workers) than their competitors. It turned out "they were more profitable than most of their competitors and have more sales per employee and per square foot," James Surowiecki reported in the New Yorker.

Perhaps, he concluded, retailers have become too frictionless for their own good. By outsourcing the work of shopping to customers, retailers might be cutting their work force to spite their profits. The success of high-labor-cost stores like Uniqlo suggests the end of retail is not nigh.

Surowiecki might be right. He might be wrong. Either way, the very fact that he's moved to defend the quaint idea that workers add value should make you stop to consider how far our attitudes toward employees have come in just half a century.

 
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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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