CHANGE AND UNCERTAINTY, NOT APOCALYPSE: Technological Change and Store-Based Retail September 2020 Françoise Carré Chris Tilly with Chris Benner and Sarah Mason A report from the UC Berkeley Center for Labor Research and Education and Working Partnerships USA 1 Acknowledgments First and foremost, we thank the numerous interviewees who gave time and shared insights. We thank the National Retail Federation for allowing us to attend the 2018 NRF Tech conference. Thanks to Patrick Dexter, Thomson Dryjanski, and Landy Joseph for able research assistance. Much gratitude to Annette Bernhardt and Jessie Hammerling for guidance and feedback, and gratitude as well to a number of helpful reviewers. This research was commissioned by the UC Berkeley Center for Labor Research and Education and Working Partnerships USA, and is part of a larger multi-industry project generously supported by the Ford Foundation, the W.K. Kellogg Foundation, and the Open Society Foundations. About the Authors Françoise Carré is the research director for the Center for Social Policy at the University of Massachusetts Boston J. W. McCormack Graduate School of Policy and Global Studies. She has published extensively on employment transformation and job quality in the United States and cross-nationally since the 1980s. Books include “Non-standard Work Arrangements and the Changing Labor Market,” “Are Bad Jobs Inevitable?” and “Where Bad Jobs Are Better: Retail Jobs across Countries and Companies,” co-authored with Chris Tilly, and “The Informal Economy Revisited, 2020,” with Martha Chen. Chris Tilly is professor of urban planning and sociology at UCLA. For more than 30 years, he has conducted research on bad jobs and how to make them better. His books include “Half a Job: Bad and Good PartTime Jobs in a Changing Labor Market,” “Stories Employers Tell: Race, Skills, and Hiring in America,” “The Gloves-Off Economy: Labor Standards at the Bottom of America’s Labor Market,” and “Are Bad Jobs Inevitable?” and, most recently, “Where Bad Jobs Are Better: Retail Jobs across Countries and Companies,” co-authored with Carré. Chris Benner is professor of environment studies and sociology at the University of California, Santa Cruz, where he also directs the Institute for Social Transformation and the Everett Program for Technology and Social Change. Sarah Mason is a doctoral student in the Sociology Department at the University of California, Santa Cruz, where she is studying technological change, automation, labor and social movements, with a focus on platform-based work. Suggested Citation Carré, Françoise and Chris Tilly, with Chris Benner and Sarah Mason. 2020. Change and Uncertainty, Not Apocalypse: Technological Change and Store-Based Retail. Berkeley: UC Berkeley Labor Center and Working Partnerships USA. The analyses, interpretations, conclusions, and views expressed in this report are those of the authors and do not necessarily represent the UC Berkeley Institute for Research on Labor and Employment, the UC Berkeley Center for Labor Research and Education, the Regents of the University of California, Working Partnerships USA, or collaborating organizations or funders. Change and Uncertainty, Not Apocalypse: Technological Change and Store-Based Retail 2 Contents Executive Summary .................................................................................................................................................5 Findings .....................................................................................................................................................................6 The State of the Retail Sector ...................................................................................................................................6 Technology Adoption in Retail .................................................................................................................................8 Impacts of Technology Adoption on Store Operations and Labor ..................................................................9 What to Expect in Future Employment Changes ...............................................................................................11 Key Areas of Strategy and Policy .............................................................................................................................14 Section One: Introduction ..................................................................................................................................16 How We Conducted Our Study ..............................................................................................................................19 Section Two: Profile of Today’s Retail Sector and Recent Employment Trends ................................20 A Quick Overview of the State of Retail .............................................................................................................20 Apocalypse…Not: Stores Will Survive ...............................................................................................................22 Store Objectives and High-Level Strategies: Reinventing Retail ..................................................................24 Current Status and Recent Changes in Retail Employment ........................................................................27 Section Three: Technology Adoption in Retail: How We Think of Potential Futures .......................36 The Retail Context for Technology Adoption ....................................................................................................37 How to Think of Technologies’ Potential Labor Impacts ...............................................................................39 Section Four: Impacts of Technology Adoption on Store Operations and Labor ...............................41 Inventory Management: Forecasting, Monitoring, and Moving Stock ......................................................42 Checkout .....................................................................................................................................................................49 E-commerce’s Impact on Stores: Stores as Fulfillment Centers ..................................................................53 Interaction with Customers: Customization, Convenience, Discounts .....................................................58 How Digital Technology is Changing the Way Retail Workers are Managed ..........................................64 Further Considerations Regarding Future Technology Adoption ................................................................71 What Technologies are Likely to be Rolled Out Sooner Than Others? ....................................................73 Section Five: What to Expect in Future Employment Changes .............................................................75 The Nature and Quality of Future Retail Jobs ..................................................................................................76 The Number of Retail Jobs .....................................................................................................................................80 Final Thoughts on Likely Job Impacts .................................................................................................................85 Change and Uncertainty, Not Apocalypse: Technological Change and Store-Based Retail 3 Contents Section Six: Key Areas of Strategy and Policy .............................................................................................86 Policies Governing Individual Worker Experience and Compensation .....................................................86 Policies Affecting the Industry as a Whole ........................................................................................................90 The Space for Negotiation .....................................................................................................................................91 Section Seven: Conclusion ...............................................................................................................................93 Glossary of Relevant Technologies Used in Retail Settings .......................................................................94 List of Interviews ..............................................................................................................................................100 Endnotes .................................................................................................................................................................103 Change and Uncertainty, Not Apocalypse: Technological Change and Store-Based Retail 4 Executive Summary The retail sector, like the rest of America’s economy and society, is being subjected to an enormous stress test by the coronavirus pandemic. Grocers, pharmacies, and such mass marketers as Walmart, Target, and Amazon are adjusting to shifting patterns in demand for goods, a dramatic increase in online ordering, and new social distancing guidelines in stores. Workers at these retailers have documented overcrowding and insufficient safety precautions at stores and online fulfillment warehouses. In contrast, department stores, apparel, and luxury retailers have had to close their (“nonessential”) stores and endure plummeting sales as consumers focus on the basic necessities. This workforce has suffered massive furloughs and layoffs estimated to be in the millions. The economic ripple effects of the lockdowns necessitated by the pandemic