An apology for the grab-and-go stores
After unmanned vehicles and driverless trains, what is next?
The answer, it appears, is unmanned convenience stores. Two news items that recently went viral on China’s social media happened to be about the same thing: Self-service convenience stores.
BingoBox, a container-like structure filled with goodies supplied by Auchan, a French supermarket chain, opened amid much fanfare in June in Shanghai.
Customers shop in a grab-and-go mode after they are admitted into the cashier-free store. Sensors scattered throughout the place identifies items in shoppers’ carts and then charges them to their PayPal or WeChat Wallet accounts when they walk out the door.
Roughly around the same time, Chinese e-commerce tycoon Jack Ma unveiled his first unmanned retail outlet, Tao Café, in Hangzhou, where his business empire Alibaba is headquartered.
Shoplifting is no longer a concern at these stores because anti-theft systems installed at the checkout gate will detect the merchandise and ring them up, even if they are hidden in backpacks or underneath clothes.
Not long after its inception, the BingoBox was forced to close because of technical glitches. This, however, did little to dampen the enthusiasm of investors. Its operator has hitherto been showered with more than 100 million yuan (US$14.7 million) in VC or PE funding.
Better still, it has been interpreted as the next window of opportunity, or feng kou, that many are hankering for.
Jack Ma and Zong Qinghou, ex-richest Chinese billionaire and president of the country’s largest beverage company Wahaha Group, have jointly announced a plan to open 100,000 unmanned supermarkets across the country.
JD, Alibaba’s archrival, quickly followed suit, with its CEO Liu Qiangdong vowing to open an unspecified number of unmanned supermarkets in the few years to come.
China’s self-service convenience stores are actually an answer to Amazon’s innovation. The online retail giant launched the world’s first cashier-free store in Seattle in December.
Observers argue that owing to China’s omnipresent mobile payment options, the cashier-less stores might have a better shot in China than in its country of origin.
Popular responses to this innovation vary. Some hail it as a thing of the future, but I have seen plenty of commentators fretting over the possibility of massive layoffs of shop assistants once the unmanned stores become the trend.
There are even authors who write, a bit too sentimentally, about convenience stores being an “integral” part of the urban social fabric. People pulling all-nighters know where to find warm food and drinks; the coziness of these stores provides a solace to overworked urbanites, they say.
The elusive human touch
Today offline vendors, small-time retailers and mom-and-pops are struggling to hold their own against the onslaught of online shopping. Most barely manage to get by on a very lean profit margin. A few try to turn things around by enhancing the customer experience, such as Eataly, an Italian retail brand more akin to a culinary Disneyland than a traditional supermarket. Alas, they are a minority fighting a losing battle.
Many bemoan that with the gradual disappearance of convenience stores, coupled with the imminent arrival of their cashier-less competitors, we are witnessing the loss of personal touch that has been vital to the grocery business.
Nonetheless, technology is unstoppable. It is one thing to sympathize with shop assistants and even feel a neo-Luddite impulse to smash the unmanned stores, it is quite another to argue against huge potential savings in labor and management costs as a result of this innovation.
And the so-called personal touch is elusive, because at least in Shanghai I never saw or felt it.
As a frequenter of convenience stores, I have grown used to not being greeted by shop assistants. Once I got a little peevish when I had difficulty locating a product on the shelves and a shop assistant close by did nothing to help. When my turn came to ring up the purchase, the cashier did not even look up from her mobile phone. She made little eye contact. She just scanned the barcodes while perfunctorily repeating that I could get something else for another 3 yuan.
She remained expressionless as if someone poured glue on her face. Mind you, this convenience store is famous for its tagline — “as comfy as being at home”. So much for the personal touch.
Imagine, in a futuristic scenario, everything is linked in a complex network called the Internet of Things (IoT). All human elements are removed from the shopping experience, thanks to built-in chips and sensors that allow merchandise to “speak” to the shelf, to the invisible cashier and to a remote supplier. After a product is sold, the shelf is quickly stocked with new supplies instantly ordered via the IoT. Inventory count becomes needless because every transaction is recorded in a trove of data.
These data are of tremendous value to high-tech or consumer product companies. In the past, data are lifeless digits in a book, now they are mined, collated, and analyzed for indications of mega-trends about consumer habits and preferences.
But don’t get me wrong. My advocacy for unmanned supermarkets isn’t tantamount to a lack of compassion or empathy for those who might lose their jobs. My point is, instead of lamenting about something one cannot change, why don’t convenience store proprietors take it as an opportunity to improve their services?
And a more important question to ask is what can be done to help them move up the value chain and land jobs that are irreplaceable — at least for now — by technology and innovation?
As such, I think it is incumbent on tycoons like Jack Ma to provide vocational training to the people threatened by his brand of innovation, to teach them skills that reduce their vulnerability to the impact of technology.
During my sojourn in Germany early this year, I went from being nervous to enjoying paying my parking fees on a toll machine. High labor costs in the West make machines a financially realistic alternative. But in China, even with the technology available today, some trades continue to be specimens of monumental inefficiency. Toll collection is a typical example.
The kind of roadside parking meters common in Europe are rare in Shanghai. Besides, many motorists appear clueless as to how to use them. Just as they are scratching their heads, a uniformed toll collector will appear and do the machine’s work. It leaves me wondering why bother installing the meters in the first place.
Things are worse in many shopping malls’ underground car parks. I had this awful experience of once driving towards the exit in the maze-like underground car park of Global Harbor, a massive commercial complex in Putuo District.
Due to poor designs, all outbound traffic is squeezed into a single motorway. Motorists scrambling for the exit cut each other off, resulting in severe congestion and unleashing a torrent of car horns. By the time I reached the toll booth, I had waited in line for 20 more minutes than expected. And for this delay I got charged an additional five yuan.
Technology could easily have made a difference. Payment can be made at the exit by simply scanning the PayPal or WeChat Wallet QR code. This proves far less time-consuming than stopping to return the parking card, wait for the computer to calculate the toll, hand in the money and reach out again for the change and an invoice.
Some parking lots in Shanghai have reportedly employed this cashless payment solution. Others stick to the old ways.
I can understand the good intentions behind not replacing men with machines. But this is not the rationale for tolerating egregious inefficiency just for the sake of job security. An unpalatable yet unavoidable fact is that many low-skilled workers who survive the current technological tidal waves may not be so lucky when the next, more violent technological tsunami comes crashing down.
What the authorities and socially responsible corporations should do is to prep them for bigger challenges ahead.
That’s perhaps the most important lesson we can learn from the recent brouhaha surrounding the unmanned convenience stores.