China Consumer

No man’s land

Are unmanned stores the retail market’s future?


A little more than a year ago, Amazon announced with some fanfare that it would unveil a revolutionary unmanned grocery store. It envisaged customers walking in, grabbing the items they needed, and then leaving without waiting in a line or fishing out their wallet. The store would use sensors and machine learning to determine what shoppers were buying and charge the amount directly to their Amazon account. So, as the tagline put it, they could “just walk out”.

This week, Amazon finally opened its cashier-less store in its Seattle campus. It took a little bit longer than expected but the delay is largely because the technology proved more difficult to master than expected, with glitches occurring when too many people were in the store or were moving too quickly. The unmanned store is dotted with hundreds of video cameras in the ceiling to identify what the shoppers are buying.

“The holy grail is video understanding,” Dilip Kumar, who oversees the technology behind the Amazon Go store, told the Financial Times. “To be able to understand and interpret and know exactly what is happening. Doing this at scale and getting transaction-level accuracy is what makes this challenging.”

Yet while the Western world raves about Amazon Go’s new unmanned store, the concept has already become pretty commonplace in China.

Back in June, WiC reported how French supermarket operator Auchon had launched the country’s first unmanned convenience store BingoBox, which now has about 200 outlets in the country (see WiC371).

E-commerce giant Alibaba quickly unveiled its own unmanned convenience store, called Tao Café, in Hangzhou, which uses computer vision, facial recognition and other sensor technologies to track their customers’ purchases.

Not missing a beat, Alibaba’s rival (see this week’s “Internet and Tech” section) also announced that it has partnered with property developer China Overseas Land to open hundreds of its own to take on Tao Café.

Smaller start-ups have also cropped up. Staffless shopping chain Easygo, which has partnered with Tencent, already has over 50 outlets around the country. F5 Future Store, which has six outlets, is backed by Sinovation Ventures, a VC fund run by Google’s former China head Lee Kai-Fu.

As Shanghaiist, a blog, puts it: “At this point, unstaffed stores are even becoming a bit old school [in China].”

There is a reason for the rush to build unmanned stores in China. “Alibaba and other e-commerce companies are able to collect data on consumer behaviour through these unmanned stores, which could in turn be used to boost their online sales,” Luo Xianfei, a retail analyst, told the South China Morning Post. “So they are obviously more motivated to be engaged with the business.”

Still, there is certainly room for improvement in the technologies that power unmanned stores. At the moment, most chains rely on electronic tags attached to every item in the store to identify the products the customers are buying. Some outlets also require users to scan them using a standard self-checkout machine before leaving. Others that claim to use facial recognition will only allow one customer in the shop at a time because of technology limitations in using multiple cameras scanning customers’ faces.

Another complaint is that the number of products available at such self-service stores is very limited. According to a recent survey conducted by Phoenix News, 70% of shoppers who have been to unmanned convenience stores claimed they were happy with the experience. However, 83% of those who were not pleased reckoned that the merchandise selection was too limited and the quality was poor.

There have been teething problems too: a reporter from the South China Morning Post was locked in when trying to exit a store without making a purchase. And even though most have surveillance cameras, the anti-theft technology is far from perfect. Supermarket chain China Resources Vanguard ran an unmanned pop-up store in Hangzhou for a day in June 2016 and ended up losing Rmb3,000 ($474) in goods to shoplifters, Beijing Business Today reported.

Others also complain that shopping at these cashier-less chains is not actually cheaper although they receive no service. “At present, most domestic unmanned supermarkets and stores have not cut their prices even though the labour costs have gone down. Instead, they have made the prices even higher to offset the instability of the technology. So whether an unmanned supermarket is a concept that will have a bright future in China will ultimately depend on the reception of the market,” one tech analyst wrote on Sohu, a portal.

But there are reasons to be optimistic about China’s foray into the new retail game. Although Amazon’s technology looks to be superior compared to its Chinese counterparts, the rapid expansion of the concept means that operators of unmanned convenience stores in China are now leading the world when dealing with its practical applications. Amazon meanwhile has no plans to roll out the concept store to other parts of the US. So “a store of the future,” as the New York Times calls Amazon Go, is definitely going to stay – largely – in the American future. Quartz, the business news site, concurs: “The speed at which the stores are opening suggests that such shopping could become widespread in China faster than it does in the US or elsewhere.”

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