The news last week that the UK retail staple Marks & Spencer plans to close one third of its 300 stores was seen by many as a symbolic moment in the decline of the British high street.
Yet, while times are undoubtedly tough for traditional retailers, I believe we are now seeing the start of a profound and fundamental change across the wider economy.
Dramatic increases in the power of computing, at ever lower cost, are creating a whole host of new digital services – from ordering cabs instantly to paying bills at the touch of a button – that were unthinkable ten years ago.
As end-users, it’s easy for us not to think about this on a day-to-day basis. We don’t actually see smartphone models get more powerful – we only experience the end improvements in their functionality and resulting software. But it’s only by looking at the underlying technology that we can truly understand why the world is changing as it is.
Take financial services. The digitisation of everyday banking over the past two decades means many people can now use the internet and their mobile phones for many tasks – paying bills, buying foreign currency, opening accounts – that they previously had to do in branch.
As a result, traffic to bank branches continues to collapse. Branches received 30% fewer visitors in 2016 than in 2011, according to the British Bankers’ Association. The average bank branch now has fewer than 70 visitors a day.
As I recently wrote in the Financial Times, these reductions have led to an acceleration in the rate of branch closures. RBS has announced plans to close more than one-third of its branches over the past six months, and HSBC closed a third of its network in 2015-16. With superior technological alternatives, customers are voting with their feet.
As technology continues to become more sophisticated, the Uber moment I predicted back in 2015 – that up to 50% of bank branches and jobs could be lost over ten years – will affect more areas of our lives. In aggregate, that will radically change the nature of the economy.
So, what do we need to do?
We all need to be much more aware of these changes, so we can make people ready for what is coming. As I outlined on the Today programme on BBC Radio 4 last week, I believe there are three areas we should be focusing on.
Firstly, we need to be placing far greater emphasis on technological change in education, skills and retraining.
Our education model was created during an era of jobs for life when many people retired after spending 40 years working for the same organisation. But people now live longer, work longer, and often change employer many times throughout their working lives.
Coupled with the marked rise in the number of self-employed over the past 15 years, and the creation of new types of employment in the gig economy, it’s clear our education system needs to place greater emphasis on flexibility.
We need to be teaching people how to make work opportunities for themselves, and how to create value in changing circumstances. Beyond traditional calls for better numeracy skills, that means we need to be developing people’s entrepreneurship and creativity.
Secondly, we need to continue to make progress on high-speed internet connectivity. Trying to create a world-class digital economy without consistent high-speed internet is like imagining the Industrial Revolution without the steam engine. If we don’t get the very basics right, we simply will not be able to compete.
Finally, in the data-driven economy, it is important that we strike the right balance of privacy, security and data-ownership policies that allow companies to bring new products to customers without infringing on people’s fundamental rights over their data. Europe’s new General Data Protection Regulation is likely to be the first of many more efforts around the world to strike a path that benefits both consumers and innovators.
The squeezed middle
As my company 10x Future Technologies continues to define the future of digital services, I’ve spent a great deal of time thinking about the impact that new technologies, such as artificial intelligence, will have on the future of employment.
To my mind, one of the most pressing risks for employees is that automation caused by increasingly sophisticated technology spares the top jobs, which can’t yet be automated, and the bottom jobs, which business might not consider worth automating. That would leave the jobs in the middle – jobs in traditional industries like retail – at risk of being hollowed out.
Such questions will only become more important for business leaders over the coming years, and it’s vital that they engage in the conversation. The Institute for Apprenticeships, which I chair, is always eager to hear from employers who could help shape standards in technical education, so businesses can get the skills they need.
Unless we all grapple with these issues proactively, retail employees won’t be the only people feeling the sharp end of technological change.