2018, The Rise and Falls

Retailers see a rough year with mounting pressure in year 2018. One specific channel, however, managed to stand strong. It is currently the only retail channel that has not been impacted by E-commerce, maintaining steady growth in the last few years in China.

Going back in history of the evolution path of retail channels, from shopping malls – hypermarkets – supermarkets – convenience stores – Vending machines all the way to unmanned stores, which can be seen as the upgraded convenience stores.

Unmanned Stores

Since the first unmanned store was launched in China last year, the word “unmanned” had since become a national sensation with the whole world watching closely in awe. (Click here to read the article about Top 10 Chinese Unmanned Stores in 2017) . But it had soon seen its limitations – theft, label misplacement, sensor accuracy, refrigeration, maintenance, distribution, supply chain management, assortment, etc.

But the heat didn’t simply die down. After a year of trial and error learning period, the unmanned retail industry is now seeking more viable use cases that would intrigue the younger generation by providing better experience.

Decathlon self-checkout

Leveraging RFID technology for quick self check-out. QR code for in-store online purchases.

EBookstore @ Shenzhen Book City

Customers can enter the store by scanning a QR code, and find the precise location of a book and complete payment with WeChat or Alipay

Hi-Smart @ Guangzhou 

QR code + RFID technology. Only one staff in store. QR code is used for linking to mini-program, and RFID is used for product information and security system. It is positiioned to be the "Offline Tmall".

Zone Zero Unmanned Store 

 Over 300 SKUs, sales revenue of 2000 RMB/day on average. Leveraging technologies of Customer ID card and iFace recognition + Zhima credit and A.I. Analysis. Product recognition – image recognition using “smart eye” “mirror” and iFace hardware with 99% accuracy saving labeling costs.

Vending Machine

New Retail is Not That New

According to the data of “2018-2023 Vending Machine China Market forecast and Investment Strategic Planning Analysis Report” based on research by the Institute of Forward-looking Industry, the stock of vending machines in China was around 190,000 units by the end of 2016, which is 14 times the number of units in service in 2011. But compared to China’s huge population base, in comparison with Japan and US, the overall penetration rate of China vending machines is still very low.

In the essence of providing flexibility and convenience to the consumers, unmanned retail is focused on solving the traditional retail pain points of heavy overhead costs in construction, rent, labor to improve operational efficiency. Among other technologies, RFID plays the most important part in self-checkout and security. The biggest issue, however, is that RFID itself is a self-interference system. Each additional tag on the scanning surface will reduce the accuracy of the tag by an order of magnitude.  

Yet with the limitations we mentioned above, an even more conventional and simple version is coming back atop the trend again, but only better and “smarter” this time – The Smart Vending Machine, hybrid of unmanned stores and traditional vending machines.

It has been around since the 1970s in Japan. In many countries, vending machines are known as “24-hour robots that bring wealth”. The ratio of US vending machines to convenience stores is 30:1 according to TechNavio’s data. The CAGR of US vending machines is expected to be higher than 54.3% from 2014 to 2018, and the US vending market will reach 13.34 billion USD in 2021. Japan has around 5.8 vending Machines contributing to 70% of can drinks that are sold all around Japan.

China introduced its first vending machine in 1994. Thanks to the rapid development of internet, Ecommerce, Mcommerce, technologies on payment, tracking and identification etc. over the last decade, vending machines has never been more interesting and diversified.

The beauty of it, lies in the unlimited possibilities and more strategically targeted, more integrated, more creative assortment, and  faster experience for the consumers.

Zone Zero Unmanned Store 

Customer pays a minimal price, follows the Tmall store offering the samples, and take the sample out of the machine.

OJ Vending Machine

It is expected that the number of vending machines China will be over 1.4 million units in 2022 and sales will be nearly 44 billion RMB.

Is this an unmanned store?

No, it’s a larger “smart” vending machine.

If you think the size of new retail seem to be getting smaller and smaller, you definitley need to look at this: 

 It is an exciting age for the retail industry indeed, as we are looking at the turning point of a new industry revolution, Unmanned Retail is clearly still learning to find its right path, possibilities can still go far. But one thing is certain. Unmanned Retail will definitely be a lot more interesting in the years to come.

What's your take on this?

Author: Jackie Fong

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