The food sector is Britain’s largest private sector employer, employing 3.9 million people in 2016. Around 10,000 years ago, all human beings were nomadic hunter-gatherers. Since then we have been gradually reducing our devoted human capital to food production. We are reaching new frontiers in all aspects of the supermarket industry. The world’s largest vertical farm has been built in New York with the potential to harvest 2 million pounds of food a year using 95% less water in a 70,000 square foot warehouse. Driverless trucks are poised to hit the roads in the UK by 2020 with potential savings in the US of $168Bn annually. Amazon Go is opening a store in the US this year with no cashiers and no checkouts. The future is as unconceivable as smartphones were 10 years ago. Automation is set to ignite an economic revolution as big as the industrial revolution 200 years ago, only faster and with greater benefits. With this in mind, where could the supermarket industry be heading in the next ten years, and what will happen to all those workers?

Manufacturing

Automation is becoming increasingly used despite manufacturer’s apparent “guarded attitude”. Brexit, increasing costs of raw material and energy, and pressure from large retailers are making purchasing more advanced industrial automation equipment justifiable.

Brexit is a large factor in firms innovating in automation. There is a big unknown in what will happen to the supply of labour. Mike Stones of Foodmanufacture.co.uk describes it as the “big unknown”. The food industry in the UK will be subject to new tariffs and therefore more things may have to be manufactured in the UK as opposed to importing/exporting. This will be very difficult to achieve without the free movement of labour from Europe. Therefore, automation will have to be a big part of post-Brexit Britain, if we are to keep living standards at or above their pre-Brexit levels. In total, 60 percent of UK total income from farming comes from the EU’s Common Agricultural Policy (CAP). The question is what if anything will replace funding from CAP in post-Brexit Britain. Consultancy Agra Europe concluded, “What is certain is that no UK government would subsidise agriculture on the scale operated under the CAP.” Without this funding that UK farmers are so dependent on, surely most farms will become infeasible. This will likely shift aggregate supply inwards. The UK will be subject to tariffs on imports from Europe, given a hard Brexit, and the cost of importing will likely rise. This will lead to greater raw material costs for firms, further shifting Aggregate supply inwards, and higher prices for consumers. This leads to a fall in producer and consumer surplus, which means there is a fall in the amount of consumers willing and able to buy goods from supermarkets in the UK, and firms are less willing and able to sell goods. I think this could force firms, or the UK government to invest and innovate in food manufacturing technology. We could see automated vertical farms, as seen without the automation in AeroFarms, the world’s largest vertical farm that recently opened in New York. A 70,000 square foot facility that has the potential to harvest 2 million pounds of food a year. They claim to be able to produce 75% more yield than outdoor farms, and use 95% less water. This would reduce the land required for agriculture, which was 70% of land in the UK in 2015 and increase the amount available for housing, given the housing crisis in all major cities of the UK, also creating more space available for more value-added industries than agriculture, such as information technology. This may also increase the available land for tourism and the quantity of destinations available for the rising middle class of developing nations like China. Production could also become more localised, with a vertical farm for each town or household, reducing the inefficiency of transporting goods and retailing them. The 95% reduction in water usage could be revolutionary in countries where water is scarce, like California or sub-Saharan Africa.

I think Brexit will bring short-term uncertainty, especially with agricultural firms and their supply of labour and supermarket imports of foodstuff. However, in the long term, given major innovation or government investment, we could become better off than before with inefficient producers dependent on subsidies.

A major challenge faced by food manufacturers is traceability. According to the European commission, traceability is the ability to track any food, feed, food-producing animal or substance that will be used for consumption, through all stages of production, processing and distribution. Traceability is essential in ensuring that food is safe for people to eat. It allows manufacturers to trace an identified risk back to its source and isolate the problem, preventing contaminated products reaching consumers. Past food crises include dioxin contamination and BSE (Mad cow disease), which were both identified and prevented from reaching the consumer. Certain products can travel thousands of miles before reaching the consumer, who is unaware of this fact. Automation allows for symmetric information in the food industry, where both parties in a transaction have equal information about a product. This may influence consumer decisions reducing the market failure associated with not knowing whether your food has come into contact with allergens, the nutritional contents of your food, or the pollutants emitted during certain manufacturing processes and transportation. The greater provision of information allows consumers to make more informed decisions for them and their families. Automation also allows for paperless solutions that improves the accessibility of tracing information for manufacturers and consumers. I think this is good because it increases transparency in the industry. The extent to which this can be effective has been relatively exhausted, since most products already have labels saying what allergens they may contain, their macronutrient composition, and where they were produced. However, at Milan Expo 2015 there was a digital supermarket concept that depicted products beneath digital mirrors with information about the origins, ingredients and manufacturing of the foods. “Today, this information reaches the consumer in a fragmented way. But in the near future, we will be able to discover everything there is to know about the apple we are looking at: the tree it grew on, the CO2 it produced, the chemical treatments it received, and its journey to the supermarket shelf,” the architect of the exhibit Carlo Ratti explained.

FarmBot is an open-source, automated farming robot. FarmBot costs $3450 and pre-orders are already sold-out. FarmBot will automatically plant, water and deweed your plants using its self-changing modular head on its robotic arm. It is a large 3D printer design that grows plants in a grid. By Farmbot creator’s own calculations, Farmbot grown vegetables emit approximately 30% less CO2 than vegetables you can buy in the supermarket.

(Aronson, Exploring the Carbon Footprint of FarmBot, 2016)

This kind of technology will allow for localised food production, with little to no human interaction in the process. Combining this technology with hydroponics I believe is the future of agriculture for two reasons. One it creates much higher quality vegetables, given humans tendency to harvest early or at a suboptimal time, and two it reduces costs so much that it will become inevitable to implement all over the world. Because firms who do not introduce this technology will be competed out of the market. Rory Aronson, the creator of Farmbot, also estimates Farmbot will have a return on investment of less than three years, with savings of approximately $1400/year, accounting for $3500 for the FarmBot and $500 for installation time (20 hours at $25/hour). These calculations also do not account for things that have no clear dollar value, such as the value of owning your own food production process.

Overall, the manufacture of food will become more efficient and much less labour intensive. This will be a great boon for the supermarket industry as it means lower unit costs and higher profits, and a more flexible labour market with less risk from unions and workers taking sick days. In the long term, this is likely to be inevitable and all food production will be non-labour intensive.

However, there are likely to be added costs of capital goods and computer programmers to design the systems. Which may lead to a more monopolistic market where only large firms can exploit the benefits of automation. This may lead to higher consumer prices.

Transport and Distribution

Distribution Centres allow supermarkets to stock goods to be redistributed to retailers, wholesalers or directly to consumers. They allow retailers to stock a vast number of products, which would otherwise be inefficient to ship directly from each vendor to each store. The basic principle of a distribution centre is many different goods from warehouses or directly from manufacturers are delivered to the distribution centre in cases (A collection of items packaged together) packed onto pallets. The cases have to be removed from the pallets (full case palletising), and then stored in a warehouse facility where they can be retrieved when an order comes in for that particular good. Cases of goods then need to be packed onto Trucks for delivery to stores, wholesalers or consumers in the distribution centre’s catchment area.

Distribution centres are some of the most labour-intensive facilities in the world. Given the high labour costs, the pressure on innovation of new automated solutions for the distribution sector is large, with more than 80% of large distribution centres throughout North America and Europe expanding automation spending between 2013 and 2015.

Sobeys is the second largest grocery retailer in Canada by market share, operating 1,544 stores in all 10 provinces with 26 distribution centres. Sobeys opened its first automated distribution centre in 2009 working with Witron, a German logistics firm who specialize in fully automated solutions for logistics networks. Executive vice-president, François Vimard, describes the reason behind the new, highly automated Distribution centre being “efficiency improvements”. Loblaws, the grocery market leader in Canada, can have a picker running an aisle and filling a pallet. While Sobeys, who have many smaller stores and are involved in a lot of wholesale business, could have pickers running the entire warehouse to fill a pallet. This is because of the greater number of SKUs (Stock keeping unit, the number of different products stocked), which greatly reduce efficiency of a distribution centre. A typical warehouse can hold anywhere from 8,000 to 12,000 SKUs. Sobeys automated distribution centre can hold one and a half times more thanks to Witron’s automated case picking and palletizing system. Adding new stores is just a matter of programming the system to pick another store. In a conventional environment, humans can pick an average of 160 to 180 cases per hour, Witron’s system can pick 500 cases, without humans, errors, and damage to goods on pallets. Many employees work part time and employee turnover can be high, Marc Coderre, the senior director of automated distribution operation in Ontario says “it takes two to three months before they’re building a decent pallet, but with this system it always produces a perfect pallet: cubed, nice and high, with no overhang.” The machines used in the automated distribution centre have been proven to get 8-10% more product on a pallet using engineering software.

Because of the new distribution centre, and the acquisition of Safeway, Canada’s fourth largest supermarket by market share, Sobeys cut jobs by 1300 between 2015 and 2017. These job cuts will cost Sobeys $100 million and along with the acquisition of Safeway suggest how much leading distribution automation in Canada has been of benefit to Sobeys financially.

(Sobeys Inc, 2016)

Looking at Sobeys Operating income (The profit after deducting operating expenses before interest and taxes) over the past 10 years, excluding 2016 where the acquisition of Safeway affected income considerably, Sobeys income has been steadily increasing, despite a fall in 2008, likely due to the global financial crisis depressing consumer spending. After building their first automated distribution centre in 2009, operating income has recovered in line with projected growth, and projecting forward will continue to grow in the future. Operating income is an indirect measure of efficiency. The higher the operating income, the more profitable the core business is. Therefore, it is likely that automated distribution centres have had a large efficiency gain for Sobeys.

(James, 2014)

There is a similar trend in the market share of Canadian supermarkets. Loblaw, the market leader, has faced a fall in its percentage of total Canadian grocery sales since 2008. Metro, another large Canadian supermarket, has also seen a falling market share. Whereas Sobeys has seen an increase in its percentage of total Canadian supermarket sales, along with newcomers, Walmart and Costco, from the US. Despite increased competition, Sobeys continues to increase year on year operating income and its share of total grocery sales. This could be because Canadian consumers derive greater utility from products bought at supermarkets with automated distribution systems. Otherwise, Sobeys is making large strides in efficiency. Leading to lower operating costs and more products available on supermarket shelves to be bought. Leading to greater consumer satisfaction and higher profits. Either way, automation has been a very good thing for Sobeys, which can be seen in the opening of its third automated distribution centre in mid-2017.

Automation requires significant capital investment. Firms must be making supernormal profits (profits above the minimum level of profit needed for the company to remain competitive in the market) to invest in this and this may lead to the supermarket industry becoming more monopolistic. Automation costs create significant barriers to entry (costs that prevent new competitors to easily enter an industry) and this makes new firms reluctant to enter the market. This can be seen in Sobeys purchase of Safeway. This will push Sobeys market share above 25%, legally considered the level of market share where a firm becomes a monopolist in the market. Sobeys may use its efficiency advantage to deliberately push down prices to force rivals out of the market. This would be detrimental to Canadian consumers in the long term as Sobeys is likely to increase its price back again in the future, maybe even higher than before due to the lack of competition in the market (Price gouging), and the lack of a threat of competition due to the high entry barriers. On the other hand, Sobeys will have higher profits to invest in Research and Development, which will have benefits for consumers as well as the efficiency of the company.

Overall, it can be seen that automation will bring large efficiency gains for firms, as well as reduced labour costs. However, jobs will be lost and the market may become less competitive, causing consumer welfare losses in the long term if automated firms carried out price gouging practices. As long as the industry is regulated properly and is not allowed to impose excessive prices on consumer in the long term, consumers will benefit from the large internal economies of scale (falling costs as output increases) savings made.

Another aspect of the Supermarket supply chain that will be revolutionized by automation is transport. The UK government expects self-driving cars to be available to purchase by 2020 and heavy goods vehicles (HGVs) delivered 1.6 billion tonnes of goods in 2013, generating £22.9 billion in the road freight industry overall in 2013. This is an obvious target for Silicon Valley’s “disruptive technology”, where technology innovators target a traditional industry and upend the status quo. Disruptive technology has been an increasingly common societal phenomenon in recent years. Uber has threatened the existing black cab market with cheaper, more convenient services thanks to their utilization of new technology. This large change in such a small period of time creates winners and losers. Using Uber, the same trips from Hampstead, London to different London airports on average costs less than half the price of a black cab. This reflects the decrease in wages Uber drivers are experiencing. It is also known that there is a large divide between Uber’s executives and its labourers with respect to earnings. Uber is actively pursuing autonomous driving technology, removing the taxi driver profession from existence entirely. This will cause millions of drivers across the world to lose their jobs and I believe could cause mass unemployment and increase relative poverty in the UK considerably as Uber drivers tend to have average or below average salaries. The extent to this damage depends on the degree to which drivers are able to retrain and undertake new professions. However, given their low incomes, this is likely to have a significant time lag, if it is ever able to happen at all. Parallels can be drawn with the lucrative and as of yet undisturbed road freight industry. There are currently 285,000 HGV drivers in the UK, with HGV license applications dropping by more than 32,000 in the past five years. MPs have described this driver shortage as “a ticking time bomb” for the UK logistics sector. Qualifying for a license will cost a new driver at least £3,000, with no student loans available for this. Insurance companies insist drivers under 25 have two years HGV experience and finding an employer “willing to take the risk on a young person, with no experience and background” is very difficult. Even with the Freight Transport Association pressing the government for vocational loans and training grants, there is a clear opportunity for disruptive technology. Denis Sverdlov, CEO of Charge, says, “We find trucks today totally unacceptable. Loud, pollutive and unfriendly. This has to change. At charge we are making trucks the way they should be.” The company aims to lower the price of electric trucks to that of conventional vehicles. The vehicles will be “autonomous-ready” and be manufactured in a new factory in Oxfordshire in 2017. Tesla vehicles, after having autosteer technology installed, saw crash rates drop by almost 40 percent. CEO, Elon Musk, targets a 90% reduction when full autonomous features are enabled. In the UK, there was a total of 186,209 road casualties of all severities in 2015, with 23,869 Killed or seriously injured. Autonomous technology could prevent the majority of these casualties.

“Individuals can make their own choices about whether they want to get into a driverless car or taxi, but labour-saving technology will be deployed by businesses much quicker,” Andy Stern, former president of the Service Employees International Union told the guardian. Australian mining company, Rio Tinto, already has 69 driverless trucks in an effort to cut costs and boost safety. Andrew Harding, the chief executive, says “We have seen a 13 per cent reduction in load and haul costs due to the greater efficiency, our iron ore cash cost was $16.2 per tonne in the first half of [2015], down 21 per cent from the same period in 2014.” In the US, the potential savings to the road freight transportation industry is estimated to be $168bn annually. Savings coming from labour ($70bn), fuel efficiency ($35bn), productivity ($27bn) and accidents ($36bn).

This makes automated transport an obvious, inevitable next step for the supermarket industry in my opinion. It will reduce casualties, costs and increase efficiency. What human-powered freight Transport Company will survive after automated trucks are widespread with human trucker’s salaries at a median of £26,095? The landscape of the transportation industry will change. Currently the industry relies on self-employed and agency staff to cover extra traffic. In the future the barriers to entry (the sunk costs of purchasing the trucks to deliver freight) will be very high and may pave the way to a monopolistic market where only the firms that have the technology and the capital to have autonomous trucks can act in the market. On the other hand, maybe you will be able to have your autonomous car perform deliveries during the 95% of the time that it is not used. Creating a very competitive market, with many different automated cars and many different people owning them. In this scenario you may not even need to own a car as you just use an autonomous car when you need to and there is always one available. However, this brings us back to a company like Uber controlling all of the people and freight transporting vehicles, and potentially price gouging the market.

Amazon’s Prime Now service provides one-hour deliveries to a number of test cities. This is achieved using its widespread, extremely efficient distribution centres (fulfilment centres) in order to quickly ship products to consumers directly, rather than through a courier. In the future it is likely amazon will have fulfilment centres in every city in the world, and will offer this service to everyone. This adds pressure to incumbent firms in the supermarket industry as companies like amazon will be very competitive with the efficiency savings they make. This may even drive out competitors and leave us with a monopoly if firms do not react quickly enough. The spread of automation in distribution is inevitable as it will be the deciding factor in what firms gain the greatest market share of the future supermarket industry. With widespread automated fulfilment centres and automated trucks, what will happen to all the people who will lose their jobs? In addition, with a dramatic fall in incomes because of job losses, who will buy the food supermarkets are selling? This might cause large-scale problems for all industries all over the world. A solution to this is the quaternary sector of the economy. This is a knowledge-based sector, comprising information technology and research and development. It will take time and money for distribution workers to be able to train in these industries, it may even be impossible for them, but in the next century, there will be no truck drivers left. Only people sat behind computers controlling millions of trucks at one time. This may be difficult for developing countries who do not have the infrastructure to train all of these highly skilled workers for the quaternary sector. This may exacerbate relative poverty and cause less developed countries to fall even further behind their developed counterparts. In the short term this may also increase relative poverty in developed nations as truck drivers lose their income and find it hard to adapt to the new economy. In the long term all food distribution and transport is likely to be automated. With the assistance of humans in the short term, but wholly independent in the long term.

In my opinion, the demise of sedentary, repetitive, dangerous distribution and transport jobs is ultimately a good thing. Despite the short-term uncertainty, I think in the long term we will all be better off, with more fulfilling jobs, higher income and a greater quality of life. Although, I admit it is hard to imagine a world without work, and how we would fit into that world, I hope we will be preoccupied with colonising the universe while our automated trucks, and later automated spacetrucks, transport our goods and people around the universe.

Point of Sale

The retail sector is the UK’s largest private sector employer with around three million employees, equating to around a tenth of the UK workforce. Tesco is Europe’s biggest private sector employer, with almost half a million employees around the world. The idea that these jobs can be automated should be very alarming as it could cause a significant global crisis if that many employees become redundant.

An already existing form of automation used in supermarkets are self-checkouts which since being first introduced in 1992 have “grown exponentially due high consumer acceptance and the benefit that it offers retailers in improving customer experience.” A 2014 study conducted by The NPD Group, a market research company, found that of the 2,803 consumers surveyed in Australia, France, Germany, Italy, Japan, Russia, Spain, UK and US, 90% identify themselves as users of self-checkout. Of these, seven percent always use a self-checkout regardless of how many items they are buying or how long they need to wait to use it”. In the UK, US and Australia, self-checkouts are no longer a service differentiator; they’re an expectation. Self-checkouts can help free up store assistants to provide additional service elsewhere in the store, such as stocking shelves and providing in-aisle assistance, with 49 percent of retailers improving on-shelf product availability due to self-checkouts. Self-checkouts can also enable retailers to reward shopper loyalty, such as Sainsbury’s coupons that print out at random when customers check out. This exists to increase further sales by handing out further points for return visits. Where Sainsbury’s hopes more, higher value purchases are going to be made.

On the other hand, Morrison’s supermarket announced it was installing 1,000 express tills in its supermarkets. Manned tills for shoppers with 10 items or less. This might be seen as a tacit admission that customers do not like self-checkouts. Harry Wallop of the Telegraph tested the time it takes to buy the same items at self-checkouts compared to human assistants. He found that it was overall a draw. But this was only because there was no queue for the self-service machines. The process of scanning and paying took longer in all cases. The fact that there was a smaller queue at the self-checkouts was likely due to the fact that customers buying more goods are more likely to use an assistant. An advantage of traditional checkouts is the human interaction that can be comforting, especially for those in society who may live on their own. They can also handle unforeseen complications much better than self-checkouts, such as using student discount, or weighing loose vegetables.

Self-checkouts are not going away any time soon. The good thing is they are improving, and will be able to handle current obstacles better in the future. There is also always an assistant available to help you with problems at the self-checkout. However, as more self-checkouts are used assistants may become strained in their ability to assist all customers. In my opinion, self-checkouts will only grow in number, however there is a case to be made for traditional checkouts for large purchases.

One aspect of the future of supermarket sales lies online. Amazon Echo has created a new opportunity for technology to improve grocery shopping online. Amazon echo is a voice assistant that can be used to add things to your amazon shopping list, amongst many other uses. This allows you to just say “add paper towels to my shopping list” when you realise you have run out, and it will arrive in a few days. With Amazon moving into grocery delivery with Amazon Fresh, this is likely to become more widely used in the UK and beyond. IFTTT is an online tool to “bring your services together to create new experiences”. Tesco added support for IFTTT last year with its online grocery delivery service. This allows consumers to set up “applets” like “automatically add milk to your shopping basket every Thursday”, or allow you to use your Amazon Echo voice assistant to order your grocery’s, or even automatically add eggs to your Tesco basket when your internet-connected egg box has less than two eggs. These items will then arrive in your regular delivery in your pre-determined delivery time slot. For many people, professionals, the elderly, or those with illnesses, this is a very useful feature that takes the hassle out of online-shopping. It can also save time, as many people can spend lots of time every day buying the same things at supermarkets, when it could be delivered with no extra cost of time or money.

Amazon Go is a new concept convenience store. Shoppers can scan their phone to enter the store and then leave, with the items they take billed to their amazon account. Costs saved from staff wages could allow amazon to reduce prices. Automated stores also make stores in more remote areas viable, due to the reduced operating costs. Amazon is opening its first store in early 2017 in Seattle, with plans to open more and a trademark registered in the UK. If self-checkout use has grown exponentially since their debut in 1992, it is possible to predict that Amazon Go technology could be an expectation for convenience stores in the next decade.

However, technology can be inaccessible for the elderly and those with severe impairments, where they have no way of ordering grocery’s online. However, it can be said that people who currently cannot order food, would most likely have their food bought for them already. Amazon go may have increased thefts with its cashier-less design, as technology is notoriously susceptible to attacks. However, after the system matures it should become more secure and safe for all involved. I’m sure that at one point in time the same concerns were raised for self-service supermarkets where customers can pick up their own items. Another concern is that supermarket pickers may not choose the same food that you would, they wouldn’t be able to choose the ripest avocado for example. However, Tesco guarantees that pickers always choose the “freshest produce with the longest sell-by dates, carefully selecting fruit and vegetables, as if they were shopping for themselves. They ask themselves ‘would I buy it?’ so they always send you groceries of the very highest quality.” They also allow you to write instructions for your picker. This allows you to be confident you are getting the produce you would normally expect from your supermarket. In the UK, almost every supermarket offers a delivery service and there is a large degree of competition. However, in developing countries this is unlikely to be the case and the grocery industry there is likely to not have this technology for many years to come. The rise in online shopping reduces the social aspect of shopping in a local shop, and the community benefits a supermarket can create, such as noticeboards with advertisements for local businesses or events. However, online shopping may make buying food while abroad easier, as the service can remember your last/usual order. Online shopping also allows us to buy products which may not have been available in a local supermarket.

Technology will improve our access to food, especially for those who cannot access it currently. Lower business costs attributed to lower employee costs, real estate costs, and cleaning costs could increase profits or decrease consumer prices, leading to either increased investment from firms, or a greater consumer surplus. There will however be job losses and unemployment as a result of automation. However, in this case new jobs will also be created, such as order pickers and delivery drivers. Automation will make grocery shopping more convenient and it will become less noticeable and a less active activity in our daily lives. I believe that solutions like Amazon Go hint at a wholly state-provided society. Where the government owns the manufacturing, distribution and Supermarkets, which are all automated. We will then walk in and out with our goods, without paying anything. I admit there are gaping holes in this prediction, for example how will this be paid for? Or what will we do while we are not taking free goods from supermarkets? But, in my opinion, without this provision, there will be no economic use for the majority of humans in existence in the long term. Therefore, there would have to be a change in our underlying economic assumptions, and the role of human capital would be removed from the circular flow of income that we use today.

Conclusion

In the short term there will be large cost savings to be made from increasing automation. This will increase profits for supermarket firms.

However, I believe that automation will cause a socially unacceptable rate of unemployment and inequality. This is due to the rapid loss of millions of jobs in manufacturing, transport, distribution and in retail. It is an undeniable fact given the millions of workers who make a living driving taxis and trucks all over the world, in addition to the three million retail workers in the UK. The social issues can already be seen with Donald Trump blaming the loss of 5 million factory jobs in the US since 2000 on trade with countries like China, when in fact there has been no downturn in US manufacturing output, and US production has in fact grown 17.6% from 2006 to 2013. Factories do not need as many workers as they used to because increasingly the work is done by robots. If automation becomes ubiquitous in all industries the unemployment effect is likely to be calamitous. The majority of shoppers in supermarkets are normal workers, who will easily lose their jobs to automation. This means profits could fall, and many supermarkets could find themselves bankrupt. In this scenario the majority of the population would die out due to the lack of necessities. Therefore, for there to be a supermarket industry in the future, the population will need an income of some sort.

Automation may not even bring about the end of work at all. Referred to as the Luddite fallacy, the dream that machines will someday do most work for us is as old as mankind. The concern of unemployment existed for every past technological revolution, and here in the UK we have shifted over to the service sector, with close to 80% of GDP coming from the service sector. I think Ken Partch put it well in 1997 in his paper “The coming impact of Information Technology”, “Does this mean we have finally done it? We have freed the man from the plow, the horse, the tractor, the machine and made the computer our slave?” The Luddite fallacy assumes jobs lost are replaced by jobs we currently cannot imagine. The jobs that are replaced are monotonous and often dangerous, like the cotton and wool workers in England in 1811. These jobs are replaced by less physically demanding and higher paid jobs. Such as the new IT jobs that have emerged in recent years. These jobs did not exist 200 years ago. The economist John Maynard Keynes predicted that people would work only 15 hours a week by 2030, thanks to the escalation of the role of machines in the workforce. However, leisure time is not the only goal of work, people also derive self-worth from working hard and being successful. Given the value placed on employment, there is no guarantee that people will suddenly stop working when robots take our jobs. Jobs could evolve into the quaternary sector. A knowledge-based sector, comprising information technology and research and development. It could be predicted that the increased profits of automation are invested in the quaternary sector by companies looking for further profit growth.

In the future, a solution to the problems arising from automation is Universal Basic Income, where all citizens of a country regularly receive an unconditional sum of money from the government, in addition to income received elsewhere. This promotes innovation and entrepreneurship, as individuals do not take on risk if they start their own business as they are guaranteed a liveable income regardless. This creates a world where supermarkets can flourish as everyone has enough income to buy their food and necessities from the supermarket. However, there are concerns over how a universal basic income would be funded. A tax may be introduced on automation, which would reduce the incentives for firms to employ automation, slowing the progress of automation adoption. I don’t believe this government intervention would be efficient as in this case the free market will do a better job at allocating resources. It does not make sense to slow the decline of labour intensive work. Allowing us theoretically more leisure filled lives, with less stress. Supermarkets could also be replaced by government owned institutions, effectively providing a universal basic income but giving the goods directly to the individual, rather than an income. The manufacture, distribution and sale of these goods would be entirely automated, and provide for all of society. However, it is very hard to predict this far in the future.

Overall, in terms of the supermarket industry, there will be large increases in productivity and efficiency. I believe there will be an increase in monopolism in the supermarket industry, and an increase in vertical integration, where supermarkets will increasingly acquire or invest in their own manufacturing, transport and retail companies and infrastructure. This will benefit supermarket firms, as they will gain greater market share and profits. However, it may also have negative consequences in the medium-term, due to a decrease in profits from decreased consumer spending as a result of lost income from automation-related job losses. If these job losses are occurring across all sectors of the economy due to increasing automation, spending on supermarkets is likely to fall dramatically as consumers lose their income. It may also be bad for consumers in the long term if large conglomerate, multinational supermarket companies increase their prices due to the lack of competition and monopoly power they possess. On the other hand, production may become more decentralised and localised. Where production takes place very close to the consumer and the consumer likely owns the means of production. This removes the inefficiency of transport and retail of products. However, it does remove the choice generated by the ability to trade earned currency for other goods. Therefore, it can be said that consumers will continue to shop at supermarkets long into the foreseeable future maybe alongside their own production. We are likely to still have physical retail stores in the short term; in the long term it is likely they will be replaced with online ordering, depending on how quickly technology progresses as physical stores can be needed for necessity purchases. However, it is not impossible to predict that some kind of drone based rapid delivery system, which amazon is already testing, could exist in the long term.

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