In­no­va­tions trans­form re­tail in­dus­try

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Zhu Yanxia has been work­ing in the re­tail in­dus­try for decades but now her pro­fes­sional knowl­edge is be­ing chal­lenged by new tech­nol­ogy.

“The largest in­vest­ment of the lat­est re­tail fa­cil­i­ties is no longer rent and la­bor, but tech­nol­ogy,” Zhu said after wit­ness­ing the open­ing of the first un­manned con­ve­nience store in Shen­zhen by lo­cally listed Rain­bow Depart­ment Store Co Ltd last month.

Zhu, who heads the com­pany’s con­ve­nience-store sec­tor, said the op­er­at­ing struc­ture of the avant-garde store is com­pletely dif­fer­ent from tra­di­tional ones.

“Tra­di­tion­ally, one con­ve­nience store needs about six staff but now one em­ployee could man­age at least 10 self­ser­vice ones with the help of hard­ware and com­puter sys­tems,” she ex­plained. “And the ‘box store’ can be placed in res­i­den­tial com­mon space so rent is much cheaper than re­tail prop­erty.”

De­vel­op­ment of su­per­mar­kets and depart­ment stores used to rely on rapid ex­pan­sion but con­sump­tion up­grade and e-com­merce com­pe­ti­tion force them to trans­form to more ef­fi­cient busi­ness mod­els.

Tech­nol­ogy is re­garded as the new drive to win the re­tail revo­lu­tion, be­cause it can cre­ate new forms of sell­ing and es­ca­late op­er­at­ing ef­fi­ciency of tra­di­tional stores.

Zhang Yun, an­a­lyst at mar­ket con­sult­ing firm iRe­search, said ar­ti­fi­cial in­tel­li­gence and other ad­vanced tech­nol­ogy can pro­vide so­lu­tions based on big data anal­y­sis for re­tail­ers to make busi­ness de­ci­sions.

Ap­pli­ca­tion of such tech­nolo­gies in­volves pric­ing, pro­mo­tion man­age­ment, de­mand pre­dic­tion, lo­gis­tics and al­most ev­ery process in the re­tail in­dus­try, he noted.

Machine vi­sion

Ding Xiao­gang, founder and chief ex­ec­u­tive of Shen­zhen Xiaozhou Tech­nol­ogy, said tra­di­tional re­tail­ers ei­ther don’t col­lect data on op­er­at­ing pro­cesses, such as num­ber of vis­i­tors, or rely on re­ports from staff at each store. The ac­cu­racy and up­date rate of man­ual records is rel­a­tively low, how­ever.

Es­tab­lished in 2014, the startup de­vel­oped a cam­era that can ob­serve, record and an­a­lyze cus­tomer traf­fic and con­sump­tion be­hav­ior based on machine-vi­sion tech­nol­ogy so re­tail­ers have ac­cu­rate knowl­edge of each out­let’s per­for­mance.

In­stalled at the ceil­ing of a store’s en­trance, the cam­era can make video record­ings and, more im­por­tantly, count the num­ber of peo­ple pass­ing by, en­ter­ing and leav­ing the store by rec­og­niz­ing the head and shoul­ders of hu­mans.

The smart hard­ware is also con­nected to soft­ware which an­a­lyzes de­tailed op­er­at­ing statis­tics such as num­ber of vis­i­tors, ex­pe­ri­ence ra­tio and num­ber of re­turned clients, in each out­let of a chain store all over the Chi­nese main­land. The cloud-plat­form up­dates ev­ery two min­utes and op­er­a­tors can check it real-time on their mo­bile phones.

Ding be­lieves th­ese are all sig­nif­i­cant in­di­ca­tors to tell if a re­ally make the con­cept of dig­i­tal pay­ment a game changer, the city is still look­ing to take the first step, Lee noted.

De­spite a steep learn­ing curve in the lo­cal mar­ket, Lee be­lieved the ter­ri­tory would join the e-pay­ment fray in a more proac­tive man­ner within the com­ing three to four years.

Dairy Farm In­ter­na­tional Group, par­ent com­pany of lo­cal su­per­mar­ket chain Well­come, ad­mit­ted in a writ­ten re­ply to China Daily that mo­bile pay­ment only ac­counts for a small pro­por­tion of over­all sales at their su­per­mar­kets and store is op­er­at­ing well or poorly so proper man­age­ment de­ci­sions could be made ac­cord­ingly that some re­tail­ers may over­looked be­fore.

“Based on our clients’ sales record, we can help one store in­crease sales vol­ume by 3 to 5 per­cent on av­er­age,” he noted.

The startup also states their ac­cu­racy rate is as high as 95 per­cent and more than 50,000 stores have been equipped with their de­vice on the main­land, in­clud­ing su­per­mar­ket op­er­a­tor Yonghui Su­per­stores, Chi­nese sports­wear com­pany Anta Sports and shoe seller Crocs.

Cashier-less pay­ment

Ra­dio Fre­quency Iden­ti­fi­ca­tion (RFID) is an­other tech­nol­ogy that has be­come pop­u­lar in re­tail-store man­age­ment. The RFID mini-chip can emit a mi­crowave sig­nals to quickly rec­og­nize mul­ti­ple tar­gets from a rel­a­tively re­mote dis­tance.

“Tra­di­tional bar codes uti­lize op­ti­cal tech­nol­ogy, so we could only scan one prod­uct in a close dis­tance to pay,” said Tang Jun, pres­i­dent of Shen­zhen-based In­vengo In­for­ma­tion Tech­nol­ogy, a listed com­pany which has de­vel­oped and ap­plied the tech­nol­ogy in many in­dus­tries for more than 20 years.

RFID tags per­mit sev­eral things to be scanned to­gether from a dis­tance as re­mote as 20 me­ters, Tang said. Many re­tail­ers de­vel­oped cashier-less pay­ment sys­tems based on the tech­nol­ogy.

RFID tags can also help shop as­sis­tants lo­cate a prod­uct more quickly and in­crease hy­per­mar­kets in Hong Kong but ex­pects this trend to in­crease.

“For re­tail­ers, they may tend to view the golden op­por­tu­ni­ties ahead from dig­i­tal pay­ment in a more lo­cal­ized con­text,” said Alex Kong, founder and chief ex­ec­u­tive of TNG, a Hong Kong­based dig­i­tal wal­let op­er­a­tor founded in 2013.

As a high-pro­file home-grown dig­i­tal wal­let in Hong Kong, TNG set its sights on eas­ing ac­cess to fi­nance for the un­banked and un­der-banked pop­u­la­tion that is said to ac­count for half of the global pop­u­la­tion, with lo­cal re­tail­ers such as Maxim’s Cakes, in­ven­tory-check ef­fi­ciency. In lo­gis­tics pro­cesses, the com­pany said it can also boost stock ac­cu­racy 99 per­cent.

The tech­nol­ogy has been widely ap­plied in dif­fer­ent sec­tors, such as train-sig­nal recog­ni­tion and self-ser­vice book re­turns in li­braries, but the re­tail in­dus­try did not start us­ing RFID un­til re­cently.

Tang said the cost and in­nate prob­lems with the tech­nol­ogy had hin­dered its up­take. “It has high-de­mand work­ing en­vi­ron­ment,” he said. Large amounts of metal of water in the en­vi­ron­ment can block sig­nals.

Each RFID tag costs less than 1 yuan (15 US cents) now but some an­a­lysts fear this is still too high for the re­tail in­dus­try, con­sid­er­ing tags are usu­ally dis­carded once a prod­uct is sold.

But he be­lieves the cost will de­crease when RFID chips are mass pro­duced, as the mar­ket is boom­ing with sales grow­ing 40 per­cent a year and ex­pected to reach $10 bil­lion this year.

Th­ese are just the tip of the re­tail tech­nol­ogy ice­berg. Like mo­bile pay­ment chang­ing our way of shop­ping, just imag­ine how AI, ro­bots, vir­tual re­al­ity, drones and in­ter­net of things will shape the re­tail in­dus­try in fu­ture?

How­ever, Zhu Yanxia be­lieves tech­nol­ogy alone is not enough to make re­tail suc­cess­ful in fu­ture. The core of re­tail is still im­prov­ing pro­duc­tion qual­ity and con­sumer ser­vice, she said. 759 Store and con­ve­nience store chain 7-Eleven los­ing no time to jump on the band­wagon.

Kong be­lieved there are too many time-con­sum­ing dis­cus­sions on the po­ten­tially huge op­por­tu­ni­ties lo­cal re­tail­ers could reap from dig­i­tal pay­ments, as well as to what ex­tent lo­cal con­sumers could put aside pri­vacy con­cerns a lit­tle bit and de­velop the habit. That may ex­plain why re­tail­ers with the fore­sight could not af­ford to miss the boat.


Alex Kong, founder and chief ex­ec­u­tive of TNG, hopes Hong Kong will catch golden op­por­tu­ni­ties from the dig­i­tal pay­ment trend.

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