FRIEDRICH-EBERT-STIFTUNG – Artificial Intelligence and Auto­mation in Retail 2 USES OF AI AND AUTOMATION TECHNOLOGIES IN THE RETAIL SECTOR: BENEFITS AND CHALLENGES Advances in AI, computer processing power and the avail­ability of big data are enabling computers to automate an increasing range of tasks and process than previously possible. 13 Such systems are already being deployed in a wide range of industries to automate tasks, ranging from warehouse robots and customer service chatbots to analysis of legal documents and tools to aid early cancer detection. 14 While the retail sector has been slower than some sectors like manufacturing to adopt technologies, perhaps due to the low cost of labour in the sector, recent developments have increased pressure on employers to enhance productivity through investment in technology. This section outlines a number of key technological devel­opments in the retail sector that were highlighted by focus group participants as having particular implications for work in the sector. For each, we outline the technological devel­opment and discuss the implications for consumers, retail organisations and workers. Applications cited by focus group participants were not necessarily entirely new technologies, but rather innovations which make use of or combine existing technologies in new ways. In most cases, these applications make use of or are made possible by advanced processes such as machine learn­ing, natural language processing, advanced image process­ing or advanced networking that can connect systems and produce outputs in real time. Figure 1 shows the applications reported by participants(right) that were felt to be new and that were felt to have particular implications for retailers, consumers and workers, and lists some of the technologies (left) and processes(centre) that feed into them. The remainder of this section discusses each of these ap­plications in turn, highlighting the main implications for consumers, retail organisations, workers and unions. 2.1 E-COMMERCE PLATFORMS AND OUTSOURCING icant implications for the wider retail sector and for unions. Specific innovations that make use of AI and automation, many of which originated in e-commerce, are outlined in the following sections. However, a number of key developments related to e-commerce, raised by focus group participants and discussed here, have implications that go beyond those related to specific technologies and practices. While e-commerce was expanding rapidly before the pan­demic, Covid-19 has greatly accelerated online sales and de­mand. In the UK, for example, internet sales as a proportion of all retail sales increased dramatically from around 20% at the outset of 2020 to between 30% and 35% during the remainder of that year. 15 This has prompted many brick­and-mortar stores to enter e-commerce markets or expand their existing online offerings. For some, particularly smaller, retailers the cost of setting up an online operation and the necessary technological and logistical infrastructure is prohib­itive, thus excluding them or forcing them to outsource parts of the process to existing retail platforms such as Amazon or other large players. This presents a number of challenges for retailers, workers and unions. Omnichannel retail offers brick-and-mortar stores the op­portunity to extend their market reach beyond customers physically present in-store at any given time to those pur­chasing online for pickup at a later point. The possibility of warehousing provisions for later pickup also saves valuable floorspace costs. On the other hand, e-commerce and omnichannel retail places intense price competition upon retailers given consumers’ ability to very rapidly compare prices using smartphones and examine goods instore before purchasing online. While this has benefits for consumers, it can squeeze profit margins for brick-and-mortar stores given their higher rents and staffing costs compared with online-only retailers. Consumers’ ability to compare prices in real-time also has implications for in-store staff as they need to be aware of competitors’ offers and be prepared to deal with customers requesting price matches. Probably the most disruptive developments in retail in recent years has been the growing market share of e-commerce. In and of itself e-commerce is not a new innovation. But devel­opments within e-commerce(and in adjacent sectors such as deliveries and logistics), facilitated by AI and automation, are leading to new practices and pressures which have signif­E-commerce and the switch to omnichannel provides some smaller retailers to access a wider market, offsetting declines in footfall witnessed in many town centres. As one partici­pant commented(F2S3): 4