Amazon’s Hiring Binge Does Not Portend the End of Traditional Retailing

Amazon’s Hiring Binge Does Not Portend the End of Traditional Retailing

The line between traditional and online retailing is blurring

The news that Amazon will hire 50,000 people to fill jobs in its distribution centers and sorting sites could be interpreted as another nail in the coffin of bricks-and-mortar retailing. A more nuanced reading of the online giant’s action is that the boundaries between online and traditional retailing models are blurring.

Amazon is beefing up its workforce in response to the dramatic growth in e-commerce sales, and in preparation for this year’s holiday peak season. In past years, companies have struggled to keep up with the holiday surge in demand from online buyers.

Many of the individuals that Amazon will hire could come from the bricks-and-mortar world.   “The workers that used to work in the retail stores, now we need those same workers in warehouses,” said Brian Devine, Senior Vice President at warehouse developer ProLogistix, in the Wall Street Journal Logistics Report.

Another connection between the two worlds can be seen in bricks-and-mortar stores that are supposedly being wiped out by e-commerce.

Brian Cornell, the CEO and Chairman of retailer Target recently announced a new generation of store designs that equip Target outlets to serve both traditional and online customers. The first fully “reimagined” store will open in the Houston suburb of Richmond this October.

“The new design for this Houston store will provide the vision for the 500 reimagined stores planned for 2018 and 2019, with the goal of taking a customized approach to creating an enhanced shopping experience,” said Cornell in a Target press release.

The innovative store design includes two entrances – one for customers looking to shop in the store and the other for customers who are picking up products they ordered online – as well as dedicated parking spaces where Target employees will bring online orders. Store personnel also will be equipped with new technology for searching inventory, and receiving payments from a mobile point-of-sale system. The design is part of Target’s strategy to “create a smart network, with stores, digital channels and supply chain working together to meet guests’ needs.”

The approach is commonly referred to as omni-channel retailing, and the model is maturing as retailers have come to realize that portions of their existing networks of outlets can complement – rather than be usurped by – the growth of e-commerce.

As Yossi Sheffi, Director of the MIT CTL argues in a recent LinkedIn Influencer blog post, while some store names are disappearing from High Streets, many will remain and new ones will appear – including some that currently lead the online retailing revolution. E-commerce specialists such as Amazon and eyeglass retailer Warby Parker are opening bricks-and-mortar stores because there is still consumer demand for these outlets. Also, online retailers can bring new expertise to physical stores, and can derive valuable market intelligence from physically interacting with their customers.

As Sheffi argues, “the death of bricks-and-mortar retailing has been grossly exaggerated. A decade from now people will still be visiting their favorite outlets – it’s just that the environment in which they shop will look very different than it is today.”

 This post was written by Ken Cottrill, MIT CTL. Contact the author at: kencott@mit.edu

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