How can convenience stores use unmanned technology to enhance experience?

It took only two years for the unmanned store bubble to burst in China. It wasn’t long ago that shopping without human interaction looked poised to become our new retail reality. 

Since 2016, when Amazon debuted its unmanned Amazon Go store in Seattle, tech companies in China have followed with their own versions that promised “grab and go” convenience for customers. There was a clear business case for unmanned retail—lower labour costs, powerful data collection capabilities and greater operational efficiency.

Unfortunately, the unmanned experiment in China hasn’t been the greatest success. Since early 2018, multiple chains have closed down stores or gone bankrupt. Investment has stalled, as have plans to expand the staffless concept across the country. An unmanned future, it seemed, was not one that Chinese customers wanted. 

Why did it fail? 

For one, many companies failed to deliver the seamless “just walk out” experience that was envisioned. Due to technological constraints, some stores could only handle a limited number of customers at once; others encountered glitches upon customer entry or exit. For Chinese consumers, accustomed to retail efficiency across all channels, unmanned convenience stores were just not convenient enough. 

Secondly, unmanned retail didn’t create any real value for customers. Unmanned store companies were so intent on proving their technological capabilities that they forgot all about creating a great customer experience. For customers, unmanned meant an impersonal and therefore unmemorable shopping journey. Once the novelty of the technology wore off, they had little reason to return to what was essentially a glorified vending machine. 

Now is the opportunity for convenience retailers to rethink the purpose of automation and unmanned technology. As demand for convenience retail grows in China—the number of c-stores in the country is forecasted to rise from 75,000 in 2018 to 117,000 units by 2024 (Mintel)—how can technology help provide a more valuable experience?

1. Inspire joy and play

Convenience stores are no longer just functional places to shop on the go. In China, 45% of consumers like to visit c-stores even when they don’t intend to make a purchase, according to a 2019 survey by Mintel. Like coffee shops before it, unmanned convenience stores have the opportunity to become “third spaces” that help customers enjoy and have a good time. 

Alipay offers a good example of using tech to (literally) putting a smile on customers’ faces at the point of purchase. In partnership with a KFC outlet in Hangzhou, they rolled out a “smile to pay” system, powered by facial recognition, at the store’s unmanned kiosks. Even though the technology serves a functional purpose of biometric authentication, it also adds unexpected joy to an everyday transaction. 

Unmanned stores should lean into the competitive advantages that draw people to physical retail—the warmth of personal interaction, the pride in being recognised as a valued customer—and bring them to life in new ways using tech. In Walmart’s “Intelligent Retail Lab” in New York, interactive walls dynamically change their content as customers walk by, playfully mimicking human recognition. It’s the smallest touches that can make the biggest difference to customer experience.

2. Spark personal discovery

The traditional proposition for c-stores has always been convenience, location and price. With their powerful data collection capabilities, unmanned c-stores have the opportunity to differentiate on personalisation, to provide tailored recommendations and relevant promotions that will resonate more deeply with customers.

In the US, grocery chain Kroger is piloting connected store technology that helps customers navigate smart shelves with an app. By creating a shopping list in advance, customers can streamline their in-store journey and be inspired as they move through the store.

Caper, a smart shopping cart startup, gives customers product recommendations based on what’s already in their basket, and provides a wayfinding function to help them find the best deals for them in the store. It’s not only about helping customers shop faster, but also smarter. 

3. Empower better human interaction

Despite the trend towards automation, there’s always going to be a place for people in retail. The role of technology isn’t to entirely replace human interaction, but to empower more informed exchanges. Automation can free up human staff to do what technology can’t achieve—use empathy to discover customers’ deeper needs, educate them with knowledge from their own experience, and surprise them with personal touches. 

For Singapore telco Singtel, FITCH created a store staffed only by a live bot connected to a remote customer service team. Equipped with facial recognition technology, the bot empowers service staff to have more personalised interactions with customers and provide stronger recommendations.

Ratio, a coffee shop in Shanghai, employs a team of human “Ratiologists” specialising in coffee and cocktails to complement its robotic staff. With the robotic barista focused on brewing coffee to exact measurements, the staff are freed up to talk to customers and to help them discover their perfect beverage ratio. The key to finding synergy between technology and human staff is to leverage their individual strengths, delivering an experience that is precise and efficient, but also warm and personal. 

As convenience retailers move forward into their unmanned future, they must appreciate the importance of building a human experience in their stores. As our lives become more saturated with technology, customers will care less about new features and functionality, and more about how tech empowers them to live bigger and better. It’s our job to make sure that technology goes beyond the functional to help people play, discover, learn and experience more—not less. 

By Emily Cheng, Strategist at FITCH Hong Kong
The expertise of LANDOR & FITCH APAC.

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