gig

On demand workers in the gig economy, such as this Shipt shopper at a Target store,

have become an indispensible part of the retail world.

By Gina Acosta - 11/21/2018

If there was any uncertainty about the upward trajectory of

automation and the gig economy in the retail industry, one

need only look at Amazon’s recent move in San

Francisco. The company opened its sixth cashierless

Amazon Go store on Oct. 23, (it’s third market after

Seattle and Chicago) outfitted with mostly automated and

freelance labor: sensors and artificial intelligence have

replaced cashiers, and gig workers will be delivering

packages and groceries to customers.

The San Francisco opening is a curtain warmer to

Amazon’s reported plans to open at least 3,000 more Go

stores across the country. Rumors of a roll out rattled the

retail industry already reeling from disruptive forces, and it

prompted an outcry from union activists worried about job

losses. But what Amazon actually just did is solve a big

problem for retailers: It figured out how to greatly reduce

the need to find cheap labor in the face of wage hikes and a tightening labor market. The Amazon news is a fresh

example of the new labor dynamic in the retail industry, as companies race to follow the lead of Amazon, who seemingly

knew early on that it could leverage on-demand workers and solve the (escalating) human capital dilemma in retail by

investing in technology, automating some tasks and outsourcing others. Over the past few months, retailers such as

Kroger, Walmart and Target have moved quickly to adapt to the new labor market and hinted at a future that relies more

on checkout via app and less on humans, more on freelance grocery delivery and less on shopping from shelves.

Keith Ryu, the CEO and co-founder of Fountain, a hiring and onboarding platform for freelance workers, says that the

burgeoning gig economy is perfectly poised to fill retail job gaps. Ryu’s company helps retailers such as Safeway and

Shipt fill jobs with gig workers.

“More and more we are seeing retailers start to adopt and roll out a gig mobile type of employment model. That trend has

been really increasing over the past year, especially after the Target acquisition of Shipt and Amazon buying Whole Foods

Market,” Ryu said.

While Target works to expand Shipt all over the U.S., Kroger has gigified, or outsourced, its grocery delivery to other third-

party services, such as Instacart, and their shoppers and cars. The grocery chain has also just partnered with Nuro to

(HTTPS://RETAILLEADER.COM

/INDUSTRY-NEWS)

(HTTPS://RETAILLEADER.COM

/E-COMMERCE)

(/VIDEOS) (/MAGAZINE-ISSUES) (HTTPS://RETAILLEADER.COM

/WHITE-PAPERS)

ADVERTISEMENT

SUBSCRIBE (/#subscribe) (/)

RETAIL NEWS E-COMMERCE VIDEOS MAGAZINE WHITE PAPERS

Why the gig economy keeps growing | Retail Leader https://retailleader.com/why-gig-economy-keeps-growing

1 of 6 11/26/2018, 8:08 AM

launch in Arizona a test of driverless grocery delivery, which it says it plans to expand quickly.

“You will be the go-to-person on the ground as we launch our first satellite office/city,” Nuro says in a help wanted ad on

its website. “The City Manager will develop and oversee day-to-day operations of one of our first major delivery services.

You will be Nuro’s go-to-leader on the ground as we launch new partnerships and will help take our delivery service from 0

to 1 in the first city with our first partners. This is a high impact role which demands great breadth and depth of team

management, customer obsession, and determined execution.”

Kroger is also installing robots in warehouses with U.K. grocery partner Ocado. The supermarket operator reached a deal

in May to partner with and increase its investment in Ocado for an undisclosed amount. The companies recently confirmed

the Cincinnati area will be home to the first of 20 planned automated grocery fulfillment centers.

Meanwhile Walmart has been pulling out all the stops on tech and gig-type initiatives, most recently outsourcing furniture

and electronics assembly to Handy, an online marketplace for home services.

“Our program with Handy enables us to eliminate the friction of installation and assembly, and offer customers a

convenient, delightful experience from start to finish. We know Handy’s services are going to be a big help to our busy

customers,” said Daniel Eckert, senior vice president, Walmart Services and Digital Acceleration, Walmart U.S.

In June, Amazon announced a new program called Amazon Delivery Service Partners to address growing last-mile

challenges. None of the new Delivery Service Partners nor their staff will be employed by the company. An initial $10,000

will go to helping them start an independent business that has to begin with at least five delivery vans and ramp up to 20

vans over an undisclosed period of time. People have to apply at logistics.amazon.com and be approved by Amazon.

“We have great partners in our traditional carriers and it’s exciting to continue to see the logistics industry grow,” said Dave

Clark, Amazon’s senior vice president of worldwide operations. “Customer demand is higher than ever and we have a

need to build more capacity. As we evaluated how to support our growth, we went back to our roots to share the

opportunity with small-and-medium-sized businesses. We are going to empower new, small businesses to form in order to

take advantage of the growing opportunity in e-commerce package delivery.”

A workforce for next-gen retail

Relying more on automation and gig economy workers isn’t a new cost savings method for retailers. In fact, retailers have

been leveraging part-time, contracted labor to fulfill short-term and seasonal jobs (gigs) for years. But what’s different is

that today’s workers are increasingly seeking more flexible, non-traditional jobs. And thanks to technology, it’s easier than

ever for them to find these jobs, and for retailers to fill these jobs — a win-win in an ever-tightening labor market.

In fact, as the on-demand economy evolves, retailers may find that a smaller, better-compensated core of flex employees

are happier in their jobs and perform better. Not only does the gig economy provide flexibility to gig workers, but it also

offers significant flexibility to organizations, especially those in the retail industry. As more retailers embrace pop-up shops

and other innovative projects, for example, gig workers are a great fit for those kinds of jobs and in high demand. So who

are these workers and where do they live?

In a new report released in September, the JPMorgan Chase Institute, a unit of the global bank, found that among 23

states and 26 cities, Nevada and San Francisco had the highest “online platform economy worker” participation rates, with

roughly 2.8 percent of families generating platform earnings in March of this year. The non-employed and men were more

likely than the employed and women to participate on transportation platform gigs, in which drivers transport people or

goods (such as in grocery delivery).

One thing is for sure: The popularity of gig work shows no signs of slowing down. A leading annual report on the gig

economy, the State of Independence in America, paints another picture of the 42 million Americans who work as

independent professionals, contractors, consultants, freelancers, side giggers and more. The eighth iteration of the report

Why the gig economy keeps growing | Retail Leader https://retailleader.com/why-gig-economy-keeps-growing

2 of 6 11/26/2018, 8:08 AM

shows that even amid record low unemployment and the strongest jobs market in decades, independent work remains a

viable and desirable career path for many Americans. More than 41 million people, representing 31 percent of the private

U.S. workforce, were working independently as of 2017, according to MBO Partners. The group includes everyone from

Instacart shoppers to Lyft drivers to the in-store demonstrators at the grocery store. The 2018 study also showed how four

key trends emerged, each of which mirrors trends in the overall economy.

Traditional jobs aren’t going away. According to the Bureau of Labor Statistics, the U.S. economy has added payroll

jobs for 94 straight months, the unemployment rate is 3.9 percent, and there are 6.7 million open jobs.

Full-time independence continues to be a viable and attractive option for many workers, especially for those with in-

demand skills.

Companies are growing more comfortable working with independents, utilizing their skills in strategic positions, and

paying them more.

The need for and interest in part-time independent work continues to grow. Economic pressures and the continued

growth of platforms and technology are contributors to this uptick in interest and size.

The new norm is now more likely to be a mix of traditional and independent experience throughout one’s lifespan. An

individual’s career path may include working at a payroll job, working as a full-time independent, and having a side gig

while employed at a payroll job. It’s not necessarily an either or choice.

And many of those Americans working gig jobs are working in retail. Virginia-based job site Snag, the largest platform for

freelance work in the U.S., connects workers with open shifts at various employers, such as restaurants, hotels and

retailers. Snag connects more than 60 million active job seekers with employment opportunities at 300,000 employer

locations in the U.S. and Canada. In 2017, Snag launched Snag Work, an on-demand platform that instantly connects

hourly workers with available shifts across a variety of employers and locations.

More than anything, though, Snag fills a lot of retail positions. According to Snag CEO Fabio Rosati, more than 5 million

workers are hired each year via Snag, representing approximately one out of every four restaurant, retail and hospitality

hires made in the U.S.

Fountain CEO Ryu says a lot of retailers are realizing that while filling jobs with gig workers has certain benefits, it also

comes with hiring headaches.

“There are a lot of challenges with the hourly workforce that don’t exist when you are hiring regular employees,” Ryu said.

“About 90% of hourly, gig-type candidates don’t have resumes. About 50% don’t show up for interviews. Since 2015 we

have helped Shipt enable a lot of their growth. What they really needed was a quick and easy way to bring on a large

workforce to be able to launch into new markets really quickly.”

Shipt is now delivering groceries to nearly 70 million households in 200 markets across the country.

“Safeway is also rolling out same-day delivery across its markets as well. And so with the increased competition for these

types of workers what’s really important for retailers is that within 24 hours of a candidate applying is getting in contact

with them and bringing them in for an interview. Candidates are really driving the process at this time.”

More Hiring Hurdles

The rise in retail gig work comes as state and local leaders are trying to regulate and turn many of these types of jobs into

regular employment. In April, the California Supreme Court handed down a ruling that could make it harder for companies

such as Shipt, Roadie and others to claim their workers are independent contractors under that state’s wage laws. The

court ruling applies only to California, but companies worry that, along with blowing up their operations in the nation’s most

Why the gig economy keeps growing | Retail Leader https://retailleader.com/why-gig-economy-keeps-growing

3 of 6 11/26/2018, 8:08 AM

(https://www.facebook.com/sharer

/sharer.php?u=https://retailleader.com

/why-gig-economy-keeps-growing)

(https://twitter.com/home?status=https:

//retailleader.com/why-gig-economy-

keeps-growing)

(https://www.linkedin.com

/shareArticle?mini=true&url=https:

//retailleader.com/why-gig-economy-

keeps-growing&title=Why the gig

economy keeps growing)

(mailto:?subject=Why the gig economy

keeps

growing&body=I%20wanted%20to%20share%20this%20page%20with%20you.

%20%20https://retailleader.com/why-gig-

economy-keeps-growing)

populous state, it could be a harbinger of things to come elsewhere.

Over the months since, the leaders of some last-mile companies such as Instacart and Postmates have been lobbying

state officials. The companies are pushing to neutralize the ruling either through legislation or through executive action by

the governor — moves that would have implications across the country for retail, other sectors and their workers.

“The magnitude of this issue requires urgent leadership,” nine companies wrote in a July 23 letter obtained by Bloomberg,

which warns of the ruling “stifling innovation and threatening the livelihoods of millions of working Californians” and says

that without political intervention it will “decimate businesses.” The letter was sent on behalf of Uber, Lyft, Instacart,

DoorDash, Postmates, TaskRabbit, Square, Total System Services and Handy. It was addressed to the governor’s

secretary of labor and cabinet secretary.

The U.S. Chamber of Commerce has also expressed concern over the regulation of gig workers and is already lobbying

state and federal officials on behalf of its member companies. Yet despite any legal challenges, the speed at which

modern retail is evolving means that companies can no longer rely on traditional labor. And gig-based retail jobs will only

grow as retailers and workers further embrace technology. Retailers need to understand the demands of today’s labor

dynamics and create on-demand workforce strategies that will help them build the retail environment of the future.

ADVERTISEMENT

Why the gig economy keeps growing | Retail Leader https://retailleader.com/why-gig-economy-keeps-growing

4 of 6 11/26/2018, 8:08 AM