Economy Watch: Tech Set to Disrupt Retail, Industrial Employment

Many jobs in the transportation, warehousing and logistics sectors are at risk of automation, according to a new Citi report, but how these changes will impact real estate is not yet clear.

Factory automation resizedSome 80 percent of jobs in transportation, warehousing and logistics, and 63 percent of jobs in sales are susceptible to automation in the not-so-distant future, according to the latest Citi Global Perspectives & Solutions report. Retail is one industry in which employment is likely to vanish, but unlike manufacturing jobs, which are highly concentrated, the downfall of retail employment will affect every city and region.

Currently, U.S. companies employ 2 million people just to do stock and order fulfillment work and more than 90 percent of warehouse picking is currently done by hand. Migrating to automated picking results in productivity gains of two to three times compared to pick-to-conveyor operations, and five to six times compared to manual pick-to-pallet fulfillment centers, Citi said.

Unclear impact

The adoption of technology is by no means uniform, however. While one-hour delivery is available when buying online in some parts of the U.S. and Europe, the average promised delivery time in Brazil, for example, is nine days.

The virtual world is also subject to physical constraints, the report noted. Warehouse availability is now at an all-time low in the U.S. Online business models need 300 percent more warehousing space compared to store-based fulfillment, and as yet there isn’t enough space to satisfy the demand.

In short, there’s still a lot of uncertainty when it comes to the impact of tech on real estate, especially industrial properties, Citi asserted. Advanced robotics, autonomous cars, big data and 3D printing will drive changes in how businesses manufacture and distribute products and how consumers purchase those products, but it isn’t yet clear yet how such new technologies will impact site-selection for commercial real estate.