Augmentation, alternatives and apparitions

New roles and upskilling – In contrast to most reports regarding the future of jobs, The World Economic Forum’s latest review of the subject makes for relatively promising reading. The report recognises that if managed correctly, the ongoing transformation of the global labour market ‘could lead to a new age of good work, good jobs and improved life for all’. It cites four specific technological advances that are driving this global transformation: ubiquitous high-speed mobile internet, artificial intelligence, widespread adoption of big data analytics and cloud technology. 38% of businesses surveyed expected to extend their workforce to new productivity enhancing roles and more than 25% expect automation to be the lead factor in creating new roles in their business. An example of this is Lloyds’ recent announcement that it will be adding a net 2,000 new jobs (6,000 cut and 8,000 new roles) as it ‘refocuses its operations on digital technology’. Areas such as process automation, big data and human-machine interaction will all require a combination of new hires and upskilling of the existing workforce. An interesting statistic to emerge from the report is that 41% will ‘focus their reskilling provision on high-performing employees’, in contrast to 33% who ‘would prioritise at-risk employees in roles to be most affected’. The report concludes that employers should follow an ‘augmentation strategy’ when it comes to workforce automation as opposed to ‘narrowly focusing on automation-based labour statistics’.

Alternative Strategies – Alternative assets, including real estate, have benefited in recent years from high valuations for bonds and equities. However, with the same pressures of cheap and plentiful cash feeding into alternatives, returns are tightening and investors are having to be more inventive. A recent report by PwC ‘rediscovering alternative assets in changing times’ considers this further. For real estate a common theme in the past year has been traditional investors looking for ways to move up the risk curve by taking operational positions on real assets – an area previously dominated by private equity. PwC describe this as “less about ownership and more about access” as space-as-a-service becomes mainstream. A key challenge around this change is the skills and platform requirements needed to build an operating business. This doesn’t happen at the flick of a switch, and suitable skills within the industry are typically scarce. However, with operational exposure creating additional returns and often a positioning advantage, the ‘do nothing’ scenario increasingly leaves investors behind the curve. With greater exposure to less secure income also comes risk, and an industry shift towards property as a service is likely to result in greater diversity of fortunes in the years to come.

Scan & Go – In a bid to improve their in-store customer experience, Walmart has launched ‘Sam’s Club Now’ in Dallas, which will act as a ‘retail tech lab’ for the grocery giant. Using a Sam’s Club app, Walmart has introduced a number of technologies that combine the benefits of the digital store with the physical store. The app aims to resolve some of the specific pain points of the supermarket experience. Using machine learning and customer purchase history, a shopping list will be pre-populated with frequent purchases, prior to entering the store. Wayfinding technology then plots the optimum route through the supermarket for your shopping list and guides you to each product. Should the consumer wish to find out more information on the product, the app has an augmented reality feature that highlights ‘stories’ about the products, such as provenance. The ‘scan & go’ feature then allows customers to instantly purchase the products without visiting a cashier and generates a barcode which is checked by one of the in-store ‘member hosts’. This is in part symptomatic of the wider trend to reduce friction in offline retailing, but also has a clear focus on adding value to the customer journey. In grocery, this has not been a central focus to date, but with greater emphasis placed on provenance and product information, something we are likely to see more of in the future.

Feet³ – Real estate is a three-dimensional asset that we value using two-dimensional metrics. Strange? For certain sectors such as offices, measuring the floorspace is a fairly-accurate indication of the number of employees that can fit on the floor and hence the productivity that can be generated in the space, (albeit double decker desks are technically possible…). However, when it comes to warehouses, where pallets are stacked on top of each other, measuring the space purely by square feet looks increasingly insensible. On an earnings call last week, Amazon’s CFO, Brian Olsavksy stated that they are ‘debating whether the dynamics of the warehouse are changing, so that square footage may not be the main indicator – [it] might be cubic feet’. The growing demand for next or same day delivery from e-commerce companies is driving a requirement for urban logistics, where land costs are higher and the need to use space more intensively is hence greater. In these circumstances, the dimension of height is more relevant. Of the top 10 largest buildings in the world by floor area, only two (the Great Mosque of Mecca and the Boeing Everett factory) would make it into the top buildings by volume. The majority of those with large volumes are for construction of large vehicles, whereas those with large areas are typically for distribution. If the commercialisation of distribution formats changes to better account for volume, might this create a shift to fewer, taller sheds?

Multiplied – Do you ever wonder if the world is missing out due to the fact there is only one of you? You’ll be relieved to learn that a solution may have arrived to cast your greatness further afield. Imperial College is trialling a new hologram technology that will allow the university to beam the best lecturers from across the globe into their business school. Using technology developed by a Canadian company, Arht Media, Imperial intends to attract new students to the university using the lure of beaming in the world’s top academics to speak from the comfort of their own campuses. The lecturers will be filmed in real time in a portable studio and will have a ‘high-definition monitor in front of them which is calibrated so they can point at people and look them in the eye’. The ability to have one’s presence felt in multiple physical locations at the same time creates significant leverage to one’s commercial and social activities. However, the best news is that mortality is also no longer a barrier to indefinite earnings: Amy Winehouse is going on tour next year, and Carrie Fisher is rumoured to feature in the ninth episode of Star Wars. It seems that the term ‘a once in a lifetime experience’ may have become redundant. On a personal note, however, I’m very happy to be flying to sunny Lisbon today to speak in person at our Future of Real Estate conference, rather than being beamed there from a pod in our basement.