Automated and open all hours
Benefits will become more evident when technology matures.” Jason Yu, general manager of Kantar Worldpanel China
On the first floor of a residential building outside the Renmin University of China campus in Beijing, young college graduates pop into an automated self-service convenience store.
They scan their QR codes to enter the shop and pay for their favorite items by using Wechat at a special checkout point before leaving.
After their first visit, facial recognition programs allow shoppers to get in and out of the 24-hour outlet without using QR codes.
Novel, yes. Unique, no, as this is just one of 12 cashierfree outlets unveiled by Xiao Maipu Technology Development Co Ltd, short for Xiaomai, in Beijing.
By the end of the year, the number is expected to rise to more than 50 shops.
“Staff-less stores can reduce the high costs that often keep traditional convenience stores from fast expansion and healthy revenue growth,” said Quan Bin, deputy general manager at Xiaomai.
The company has always catered for communities in colleges and universities. But last year, it upgraded its technology, turning its outlets into cashier-free zones.
In April, Xiaomai rolled out its first automated store.
Last month, Aplus Capital and Chenshan Capital invested 125 million yuan ($18.5 million) into the company.
Xiaomai plans to use the cash to build up its supply chain and upgrade its products and system. Most of the outlets are only 20 square meters, the size of a tiny room, and sell about 600 different kinds of products.
They are all automated with just one member of staff packing shelves. In-store cameras keep an eye on shoppers, while big data analysis highlights what products are hot and what are not among customers.
“The rate of shop lifting in staff-less convenience stores is about three people out of every 1,000 shoppers,” Quan said. “The rate is five out of 1,000 at traditional convenience stores.”
Xiaomai, of course, is not the only company in the automated store sector.
Alibaba Group Holding Ltd rolled out Tao Cafe, a cashier-free retail store, on July 8. It uses a facial and voice recognition system.
BingoBox is another player. The Guangdong startup has ambitious plans to open 5,000 automated outlets across China in the next 12 months after receiving 100 million yuan in first round funding.
The market could end up getting extremely crowded with technology and customer experience deciding the winners and losers.
“Benefits will become more evident when technology matures,” said Jason Yu, general manager of Kantar Worldpanel China.
“At the moment, no one can offer it at a good level of scale and the customer experience is still quite poor,” Yu added. “It is not superior to a vending machine.”
There are certainly challenges ahead.
Only a month after BingoBox opened its first automated store in Shanghai, it had to temporarily close because of a malfunction in the airconditioning.
Still, just as crucial are the products and getting the selection right, as well as the supply chain.
“The nature of convenience stores will not change through the evolution of technology,” Quan at Xiaomai said. “In the end, merchandise selection, quality management and excellent supply chains are vital to survival.”