Automated Stores

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Tired of long checkout lines? Do not worry. We think 2018 could be the year when checkout-less stores go mainstream, thanks to a glut of new technologies that will turn our local shops into something akin to giant vending machines.

Last weekend, we attended Alibaba Group’s Singles’ Day event in Shanghai, and we took the opportunity to tour one of the group’s Hema grocery stores. These stores blend channels as part of Alibaba’s online-to-offline concept: Hema shoppers can use their smartphones to scan bar codes on items in order to learn more about the products. Then, when they check out, they can use the Hema app, which is linked to their Alipay account, to pay. The retailer is now trialing payment by facial recognition. In late September, Alibaba announced that it had opened seven new Hema stores in China.

Almost one year after the first high-tech, checkout-less Amazon Go store launched in trial mode, other retailers are now also offering automated checkout. In recent weeks, we have seen a flurry of announcements from retailers worldwide that are automating the checkout process.

On November 8, Auchan Retail China, part of France’s Auchan Group, announced the rollout of its Auchan Minute stores in China. These unstaffed microstores are just 18 square meters (194 square feet) in size, and they stock only 500 products. Shoppers use the WeChat app to enter the store, then scan the items they want before confirming and paying for them—all with their smartphone. Through a partnership with hardware firm Hisense, Auchan hopes to open “several hundred” such stores in China before the end of this year.

In what may perhaps be termed the “micro-microstore segment,” a fancy vending concept called Bodega launched in September in the US. The company uses artificial intelligence to determine what 100 nonperishable pantry items its customers in a given location will likely want to buy, and then stocks those items in the Bodega boxes. At launch, the company’s cofounder, Paul McDonald, told news website Fast Company that he hopes to ultimately have 100,000 Bodega points in the US.

Elsewhere in grocery, UK supermarket retailer Sainsbury’s launched an app in September that allows shoppers to bypass the checkout line when buying selected items. And, just this week, UK trade website The Grocer reported that Ireland’s Musgrave is set to open a checkout-free convenience store in Cork.

In the pursuit of frictionless shopping, a promising third-party technology looks to be MishiPay. Its “scan, pay and leave” technology allows in-store shoppers to scan bar codes on product labels with their smartphone and pay by card or Apple Pay. Once payment is complete, the RFID security tags attached to the items are deactivated, and shoppers can walk out of the store without setting off alarms. Rivals to MishiPay include the SkipQ app in the UK and QueueHop in the US.

We think that 2018 could shape up to be a year of supersized vending as many more retailers—particularly in the grocery convenience sector—leverage smartphone technology to reduce friction in the in-store shopping experience over the coming months