Effects of technology in retail not clear-cut

Retailers rely on high-tech advances to increase sales.

WASHINGTON (AP) — Red pumps. Silver slingbacks. Bronze flats. Black suede boots. Size 71⁄2, please.

Without leaving the customer’s side, Macy’s sales associate Felicia Dixon uses a small, hand-held electronic device that essentially summons the shoes in the right style, color and size, from the stockroom. It is not quite magic: A clerk in the backroom receives the request electronically and brings out the merchandise.

The shopper does not have to hunt around for a clerk each time she wants to try on a different style or needs a different size. Better service means happier customers, and that could lead to more sales.

At least that is the hope, from the retailer’s perspective.

Stores spend $34.5 billion a year on all kinds of technology, from the cables and routers behind-the-scene to in-store devices such as price checkers, self-service checkout stations and electronic kiosks for customers, says the National Retail Federation.

With older equipment needing to be replaced, spending for high-tech upgrades is expected to increase, the federation says.

Some workers might view technology such as self-checkouts threatening their job. Other devices — electronic price checkers or Macy’s shoe locator — might make their jobs easier.

Still, the number of jobs in some segments of the retail industry is diminishing, and economists believe that technology has played a prominent role.

An Associated Press analysis of Bureau of Labor Statistics’ employment data found that department stores have slashed 247,100 jobs since June 2001, when employment in that sector peaked. The number of jobs at food and beverage stores has fallen by 118,800 since April 2000.

Technology that allows companies to produce more goods or provide service to their customers with fewer workers or with their current staff is a factor in some job losses, economists say. A second is consolidation when a company buys out a rival or merges with a competitor.

Productivity — the amount a worker produces for every hour on the job — has grown at a faster rate in the retail industry than in all industries across the economy. Had this not occurred, there now would be nearly 4.5 million more jobs in retailing, according to Mark Zandi, chief economist at Moody’s Economy.com. “Arguably it has been hard on workers,” Zandi says.

Yet companies say a reduced work force is not the main goal of technological innovations.

At the Macy’s in Arlington, Va., store manager Paul Gassner says extra workers were hired when the shoe locator technology was brought to the women’s shoe department some two years ago. He said it has “significantly improved sales” and proved to be a big time saver. It lets associates such as Dixon get shoes on customers’ feet more quickly by saving employees the time of having to keep running back to the stockroom.

More familiar to customers is the self-checkout.

The retail industry spent $380 million on installing new self-service checkout units in 2006 and is expected to rise to $457 million this year, says Greg Buzek, president of IHL Consulting Group, a research and consulting company that specializes in technology for the retail and hospitality industries.

Making the investment in self-checkouts may not necessarily yield a big payoff for the retailer.

The average self-service checkout machine costs $21,000 and has a typical life of five years, Buzek estimates.

In contrast, a regular cash register costs on average $4,000 and has a longer life — typically nine years, Buzek says.

The average wage of a grocery store cashier is $19,060 a year, according to the Labor Department.

In addition to cost, there are concerns about theft. Some stores have a clerk watch and help customers at self-checkouts. Many stations at grocery stores have scales that weigh customers’ bag as a way to detect cheating.

At one grocery store, David Hogan, the National Retail Federation’s top technology guru, noticed that the fairly high-margin items such as gum, candy and magazines were no longer in the aisle with a self-checkout machine. People were not buying them there.

“They are so focused on getting in line, not screwing up that they are not grabbing the candy, grabbing the magazine, grabbing all this stuff,” Hogan says he was told by a grocer. Now the grocer is trying to sell different items, including produce and roasted chickens, in the self-checkout lanes, Hogan says.

Experts say the appeal for companies of self-service checkouts is to free workers in the store to do other tasks and to give retailers more flexibility in scheduling workers where and when they are most needed.