Technological advancement is changing how we shop, forever
The dreaded slow checkout line may soon become a thing of the past. Technological advancement as well as a push to increase the minimum wage are making it both possible and attractive for mega-corporations like Amazon to work towards an automated shopping experience that reduces or eliminates the need for traditional human labour.
Amazon currently uses robots to bring about their success as a wholesaler. Much of their warehousing operations are now carried out by small Kiva robots that deliver stacks of goods from across the warehouse to a human who picks the required item off the stack. This has reduced the order processing time from 60 to 75 minutes to 15 minutes. Every 10,000 robots replace 25,000 human workers, saving Amazon US$900 million a year. As of 2016, Amazon uses approximately 30,000 Kiva robots, reducing the need for approximately 75,000 workers, saving the company US$2.7 billion per year.
This disruption is impacting the retail industry as well. Computer processing capacity has reached a point where it may be economical to reduce labour from retail locations. Amazon is also experimenting with grocery stores with no cashiers, or even self-checkout lines. This store identifies shoppers through an app on their phone that is linked to their online Amazon accounts, which contain credit card information and shopping history. Customers shop for their groceries as usual, and in-store cameras, assisted by infrared, pressure, and load sensors, determine who picks up or returns a product to the shelf. These sensors even identify the cost of products that are sold by weight. When a customer is done shopping, they simply leave the store and their Amazon account will be automatically charged. Two thousand autonomous stores are currently planned for the US, bringing Amazon’s retail presence in line with Kroger Co., which operates about 2,800 stores.
Technological advancements targeting service jobs are not only coming from giant corporations. A small business owner in Sweden, Robert Ilijason, an IT specialist, opened a small grocery store with no human workers. This company similarly employs a phone app to enable the autonomous shopping experience. Customers must register with his app and use their phones to open the door to the store. Customers then use their phone’s camera to scan the barcode of any merchandise they would like to purchase. They are then free to leave the store with all purchases being taken care of automatically. The registration requirements, a security door, and the many cameras inside have so far deterred theft. While, Mr. Ilijason’s solution is less elegant than Amazon’s, it demonstrates the extraordinary ability even small businesses have to reduce labour costs. This example may be a glimpse into a future where many traditional jobs have been automated.
Amazon has also been working on reducing their dependency on logistical companies for expensive “last-mile” delivery. They are beta testing Amazon Flex in Cincinnati and Manhattan, which allows individuals to participate in the gig economy by delivering packages to customers. Amazon Flex operates in a similar way to Uber, in which the drivers are contractors of Amazon, capable of setting their own hours and availability, rather than fulltime employees. While this is a great opportunity for people to supplement their income or work flexible hours that fit their lifestyle, it displaces dependable fulltime jobs at existing package delivery companies such as FedEx and UPS.
While these advancements provide greater value and convenience to consumers, they eliminate jobs often held by the least well off and most vulnerable in society. These jobs are typically held by those with relatively few transferable skills or education credentials and they will face government retraining programs that are currently ineffective.
This begs the question: what is the role of government in managing potential job loss and displacement? Innovation through technological advancement is integral to increasing standards of living and every effort should be made to support this pursuit. Government should instead provide a safety net for those disrupted by innovation and assist them in shifting their labour to where it is most desired, potentially in industries that do not yet exist. Government agencies must prepare themselves to play the primary retaining roll as technological advancements continue to displace greater numbers of workers.