Monday, May 22, 2017

What's the price of retail jobs?

The pussygrabber ranted on and on about jobs in the coal mines, as if he knew anything about the industry or the people who work.  But, 63 million suckers voted for him anyway!

If only his voters had paid attention to the real world, they would have been worried about an entirely different industry: "The retailing industry employs 15.9m people, accounting for one in nine American jobs."

The retail industry is shedding jobs, and closing stores, are frightening speeds:
 Since January the industry has shed 50,000 jobs, with more lay-offs sure to come. Mr Mathrani reckons that, for shopping centres to match demand, 30% of space should close permanently. In one particularly gloomy scenario, all retail property would shrink by as much. If staff dropped by the same proportion, 4.8m would be at risk of the sack—around half the number of American jobs lost during the financial crisis. Eventually, even more may be laid off, as remaining stores cut costs through automation.
Did you notice that "a" word?  Automation!
The result is that America’s rich landscape of shops now looks like a dangerous glut. Since the start of 2016 Macy’s has announced that it is closing 140 shops. J.C. Penney said in March that it would shut 138. More closures are sure to come. Department stores’ floor space has contracted by 11.5% since 2006, but sales have shrunk more than twice as fast, according to Green Street Advisors, a real-estate research firm (see chart 2). To reach the inflation-adjusted sales productivity of 2006, at least another 800 department stores would need to close, reckons D.J. Busch at Green Street.
In the world of politics, it is coal that translates to diamond when it comes to votes:
This slow melt has so far attracted little attention from politicians, despite jobs in retailing outnumbering those in coal mining, which has caught the political eye, by a factor of 300.
Meanwhile, automation in retailing is taking on another fundamental aspect of the transaction: price.
The right price—the one that will extract the most profit from consumers’ wallets—has become the fixation of a large and growing number of quantitative types, many of them economists who have left academia for Silicon Valley.
Yep, "the right price can change by the day or even by the hour" thanks to automation, which is killing the real world stores:

Guru Hariharan uncapped a dry-erase marker in a conference room at Boomerang’s headquarters in Mountain View, California. He was talking about what had led retailers to this desperate place where it’s necessary to change prices multiple times a day. On a whiteboard, he drew a series of lines representing the rising share of online sales for various kinds of products (books, DVDs, electronics) over time, then marked the years that major brick-and-mortar players (Borders, Blockbuster, Circuit City and RadioShack) went bankrupt. At first the years looked random. But the bankruptcies all clustered within a band where online sales hit between 20 and 25 percent. “In this range, there’s a crushing point,” Hariharan said, clapping his hands together for emphasis. “There’s a bloodbath happening.”
Beyond this crushing point, traditional retailers with both a brick-and-mortar and an online presence feel compelled to compete purely on price. Hariharan talked wistfully of the days when he’d walk into RadioShack and have a salesperson direct him to the exact connector cable he needed. But once retailers enter the crushing zone, expenses like staff, training, and customer support typically are slashed. Profit margins keep falling nonetheless—why go to the store at all if no one there can help you?—and a death spiral ensues. (RadioShack traced just this path before filing for bankruptcy in 2015.)

Yet, the pussygrabber always talks about those few thousand coal mining jobs?


Ramesh said...

Yes automation is a far greater threat to jobs than any other single factor, including offshoring or immigration. But then in today's America, who cares about facts.

But you are overlooking the tremendous growth of jobs in the online retail industry. The trend towards online is actually a net addition of jobs, I believe. This is because when you go to a store and buy something, you are doing the "delivery" yourself. In the online world, somebody has to come and deliver it for you. However much you automate it, somebody has to do that job. For every store clerk's job lost, there's a job created in the call centre.

So overall, it ain't so bad. (OK I used that abominable American expression !)

Sriram Khé said...

Nope, the job creation is nowhere at the same rate of job destruction. Have you seen, for instance, the videos of the Kiva robots that Amazon uses in its warehouses?

From that Economist piece:
"At its current pace, by July 2018 retailing will have shed three times as many jobs as Amazon is due to create. ...
Couriers need less training to ferry goods to customers’ doors. Their ranks have grown to 655,000 workers last year. But that is a tiny sliver of the total retailing workforce. Retailing workers might switch to the companies that are taking over empty stores, including restaurants, beauty salons and health clinics. But it is as improbable that such firms will replace all of America’s boarded-up shops as that they will offer jobs to every former shop worker, particularly those without training"

And even when those jobs are created, they are not always full-time, and don't pay well, .... but, the pussygrabber potus talks only about coal mining jobs!

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