27th October 2026
From technology companies to supermarkets and small shops, artificial intelligence is changing the way businesses operate. The benefits could include greater productivity and lower costs, but workers and local communities may pay part of the price.
The announcement that Microsoft is offering voluntary exit packages to around 60,000 employees has brought the future of work back into the spotlight. The technology giant is investing heavily in artificial intelligence while giving eligible employees an opportunity to leave the business.
The figure needs to be put into context. These are employees eligible for a voluntary exit offer, not 60,000 confirmed redundancies. Microsoft has not said how many will accept. Nevertheless, the announcement illustrates the pressure on large companies to reshape their workforces as technology develops and investment priorities change.
The question is whether this is principally a story about the technology industry, or an early warning of changes that could affect employment throughout the economy.
The answer is that the risks extend well beyond technology.
AI is changing more than computer programming
Artificial intelligence can now assist with writing, research, software development, data analysis, customer enquiries and routine administration. Tasks that once took several employees hours to complete may be carried out more quickly with the help of AI tools.
This does not necessarily mean that an entire job disappears. A business might use AI to help existing employees serve more customers, improve its products or reduce paperwork. Alternatively, it might decide that it can operate with fewer people.
The Bank of England has examined this question and found that businesses expect AI to reduce employment slightly over the next few years, although the overall effect remains uncertain. Finance and insurance, professional services, and wholesale and retail are among the sectors where businesses anticipate employment reductions.
The distinction matters. Some jobs will change, some tasks will be automated, and some positions may disappear. New jobs may also emerge as businesses develop new products and services.
The difficulty is that the people losing work will not necessarily be the ones who find the new opportunities.
Retail faces a particular challenge
Retail employment was already under pressure from online shopping, changing consumer habits and rising operating costs before the latest generation of AI tools arrived.
Walk into a supermarket today and the changes are visible. Self-service checkouts, electronic shelf labels, automated stock systems and handheld scanners have already altered the work once carried out by shop assistants and checkout operators.
AI adds another layer to this process.
Retailers can use it to forecast demand, plan stock orders, manage deliveries, analyse customer behaviour and automate administrative tasks. Online retailers can generate product descriptions, personalise recommendations and respond to routine customer questions through automated systems.
Warehouses may increasingly combine AI software with robots that move, sort and pick goods. Customer service departments may need fewer people to handle straightforward enquiries about deliveries, refunds and opening hours.
None of these developments means that all retail jobs will vanish. Shops still need people to replenish shelves, deal with difficult customer problems, maintain premises and manage day-to-day operations. Many customers also value personal assistance, particularly when buying unfamiliar or expensive products.
But retailers operating on narrow profit margins have a strong incentive to examine every opportunity to reduce costs. Labour is a significant expense, and technology that allows a business to serve the same number of customers with fewer employees can be attractive.
The danger is that the cumulative effect of many small changes could be substantial.
Will technology save shops or cost jobs?
There are two sides to this argument.
Retailers facing rising costs may be able to use technology to remain competitive, keep prices down and avoid closing stores. A small business may also use AI to undertake marketing, bookkeeping or customer communications that would otherwise require additional paid help.
Higher productivity can be beneficial for the economy. If businesses produce more with the same resources, they can potentially invest, expand and create new opportunities.
However, the savings do not automatically translate into lower prices or more employment. A retailer might use the money to improve profits, pay for expensive technology or reduce its workforce.
There is also a risk that customers receive less personal service as more transactions are automated. Anyone who has struggled to find assistance in a shop while several self-service tills remain unattended will understand the frustration.
The balance will differ between businesses. Some will use technology to support their staff, while others will see it primarily as a way to reduce headcount.
The problem of entry-level jobs
One of the less discussed consequences concerns young people entering the labour market.
Retail has traditionally provided a first job for school leavers and students. Working on a checkout, replenishing shelves or helping customers can provide income, confidence, experience and an introduction to the responsibilities of employment.
Similar opportunities exist in offices, where junior employees learn by preparing reports, checking documents, conducting basic research and assisting experienced colleagues.
If AI and automation reduce the need for these tasks, employers may recruit fewer beginners. The consequences could extend well beyond the immediate loss of a job.
Businesses still need experienced managers, technicians and professionals. But if fewer people enter these occupations through traditional routes, how will the next generation acquire the necessary skills?
It is too early to conclude that AI will eliminate entry-level work on a large scale. Nevertheless, employers, colleges and policymakers need to consider how people will gain experience if the first steps on a career ladder become less available.
What happens to local communities?
The wider economic consequences could be particularly important for smaller towns.
In places such as Wick and Thurso, retail employment contributes to household incomes and supports other local businesses. Shop workers spend their wages on food, housing, transport and services. Their employers also help sustain activity in town centres.
If technology allows retailers to employ fewer people, the immediate savings may benefit individual businesses. But if the cumulative effect is lower employment and weaker household incomes, other shops, cafés and restaurants may also suffer.
This is not an argument against adopting technology. Businesses cannot be expected to ignore useful innovations simply to preserve existing working practices.
It is, however, a reminder that employment has a wider economic role. Workers are also customers, and an economy cannot rely indefinitely on increasing productivity if the benefits fail to reach the people who buy its goods and services.
The effects will also depend on what happens to displaced workers. If new businesses and better-paid jobs emerge, communities may benefit in the longer term. If replacement employment is scarce or poorly paid, the transition could be much more difficult.
Will AI create as many jobs as it removes?
That remains one of the biggest unanswered questions.
Previous technological revolutions have eliminated some occupations while creating others. Computers reduced the need for certain clerical tasks but created demand for software developers, IT specialists and digital services.
AI could follow a similar pattern, supporting new industries and making some businesses more productive. It could also affect a wider range of office-based occupations than earlier forms of automation because it can work with language, information and analysis as well as numerical data.
But history does not guarantee that every worker will benefit equally or that new jobs will appear quickly enough to replace those lost.
Governments will need to monitor employment, wages, recruitment and training needs. Employers will need to consider how workers can adapt rather than treating staff reductions as the only route to greater efficiency.
For Britain, there is also a public finance question. If employment and earnings weaken in some sectors, income tax and other receipts may come under pressure just as demands for retraining and employment support increase. Conversely, stronger productivity and profitable new industries could expand the tax base over time.
The eventual outcome will depend on how the transition is managed.
The real test is who benefits
Microsoft's announcement does not prove that AI is about to cause mass unemployment. Nor does the spread of self-service checkouts mean that supermarkets will soon operate without shop staff.
What it does demonstrate is that employers are reconsidering how much labour they need and where that labour should be deployed.
For retail, the pressure comes from several directions at once: online competition, automation, AI and the need to control costs. For workers, the challenge is finding secure employment as the tasks required by employers change.
The benefits of AI could be considerable. Businesses may become more productive, customers may receive better services and entirely new opportunities may emerge.
But productivity is not the same as prosperity for everyone.
The central question is whether AI will help create a more prosperous economy in which people share the gains, or a more efficient economy in which businesses need fewer workers and too many households struggle to keep up.
For Britain's high streets and smaller Scottish towns, that question is about much more than technology. It is about jobs, spending power and the future of the communities that depend on them.