What are Unmanned Convenience Stores?
Unmanned Convenience Stores as the name suggests are departmental shops that do not make use of manned cashiers or operands. The store is fully automated owing to the integration of ICT technologies. The concept relies on smartphone-related technologies and the inclusion of Artificial Intelligence-based tools to remove traditional features of the store. The concept of Unmanned stores was first mentioned in research conducted by Cisco Internet Business Solutions Group. The paper was based on the increased proliferation of end-user devices like mobile phones, tablets, etc. The first version of an Unmanned Store was developed by the company ShelfX in the year 2014. This version of an unmanned store had a cashier-less payment gateway that allowed the customers to swipe their cards on the phone to make a payment. Sweden was one of the first countries to have a fully automated Unmanned convenience store, it was set up in Viken.
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Market Trends for the Unmanned Convenience Stores Vertical
Digitalization continues to transform several industries impacting the worldwide economy, society, and environment as a whole. The retail business is no exception. The development of unmanned convenience shops concepts is one of the most recent innovations in this industry. These unique business models are primarily applied in the grocery store segment, to eliminate check-out queues and increase efficiencies throughout the shopping process. The growth in digitalization across the convenience store vertical is anticipated to enhance a customer’s shopping experience and their level of satisfaction with the same. Moreover, from a B2C perspective, the use of unmanned technologies across grocery stores and other general departmental stores reduces the waiting time for the customers.
Customers today expect instant service and are increasingly turning to automated technologies to minimize their manual operational tasks. As a result, self-service technologies are gradually changing the way customers interact with businesses to get service results. In today’s environment, many merchants are installing self-checkout systems that allow customers to check out with their purchases without having to deal with cashiers. As a result, businesses employ this method to improve their consumers’ shopping experiences by speeding up the checkout process.
The growing penetration rate of disruptive technologies such as artificial intelligence, radio-frequency identification (RFID) tags, the Internet of Things (IoT), AR, VR, and near-field communication (NFC) devices are now aiding and encouraging traditional retailers in meeting their customers’ emerging expectations.
Alibaba, Suning, and JD.com in China, as well as Amazon in the United States, have opened unmanned convenience stores in major cities, using these technologies. In early 2018, Amazon, the online retail giant, opened the first full-fledged cashier-less supermarket. Additionally, Amazon Go is another market enterprise situated in the United States which is expected to drive the competitiveness within this sector.
With a fresh vegetable department, a bakery, and an alcohol section, a supermarket currently has around 5,000 products and 10,000 square feet of space approximately. The emerging technology AI is used for essential functions such as store monitoring, payment, and checkouts. In the same year, Nayasale Retail Pvt. had opened an Indian fully-automated, cashier-free shop. Watasale at Kochi’s Gold Souk Grande Mall is another example of the same. The business uses a combination of cameras, Artificial Intelligence, and other sensors to run unattended 24 hours a day, seven days a week.
As per Global Market Database, in April 2021, the number of unmanned convenience stores reached more than 850 in South Korea. GS25, CU, e-mart24, and 7-eleven are the key brands in this country. These stores are mostly placed in urban areas where the penetration of automated hardware and solutions is higher. Market players place such stores at high-frequency locations such as train stations, gas stations, hospitals, and universities among other crowded places which can attract more customers and lead to higher purchasing rates. For instance, JR East opened its first cashier-less store “Touch to Go” in JR Akabane Station, Tokyo. By 2024, the East Japan Railway Co. is planning to install more than 100 unmanned stores.
COVID-19 Elevated Convenience to a Whole New Level
COVID-19 sharpened the existing trends in the market thus boosting the existing customer base for E-commerce and omnichannel purchasing. The change in purchasing patterns amongst the population served as one of the key drivers for e-commerce portals. However, the increased ease of purchase associated with e-commerce sites has hereby increased the expectations of the customers for unmanned convenience stores.
For instance, Morrisons, a supermarket company in the United Kingdom has planned on launching an unmanned Store post the pandemic. By 2024, FamilyMart Co., a Japanese convenience store chain, plans to open 1,000 unmanned stores.
On studying the product life cycle, it is observed that the market is in its nascent stage. The e-commerce market players are teaming up with players in the retail market like convenience stores, retailers/companies, etc. Moreover, these B2C business enterprises are required to prioritize their customers’ requirements through the integration of digital technology in their day-to-day operations to offer high-quality service continuously. The introduction of applications like Dunzo and Swiggy One in India is expected to spur the growth of both e-commerce as well as the retail segment.
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