PAYING for your groceries by scanning a QR code on your smart phone is a perfectly normal thing to do in China today.

As cold hard cash vanishes into the mists of time, it seems that the cashiers are about to evaporate too.

Yiqishan, a cashier-free store in southwest China’s metropolis Chongqing, registered its 1,800th sale two weeks after opening July 9.

The 24-hour convenience store is on the first floor of an office building in an industrial park. It offers various beverages, fast food and snacks in a space of just 12 square meters.

First-time customers sign up by scanning a QR code at the entrance, choosing a password, registering their phone number and submitting a selfie. They are then admitted through a ticket gate similar to those at subway stations.

Scanning bar codes is hardly a highly skilled job and customers — honest customers — can do it just as well as any cashier. When the subsequent mobile payment is complete, another QR code is generated which allows the customer through the ticket gate and out of the store.

Deng Jie, deputy director of the company that owns the store, described three measures that have been taken to prevent shoplifting. First, the customer’s selfie is compared with the Public Security Bureau’s national ID database.

Second, every corner of the store comes under the steely gaze of surveillance devices that never sleep.

Third, if a customer somehow manages to escape from the store without paying, he or she receives a friendly reminder by text message requesting payment. If the warning is ignored, the customer is banned from the store and a black mark added to his or her personal credit record.

“The cashier-free store is the result of the coming together of new technology and consumer demand,” Deng said. Her technical team worked on the app for over three years with 300,000 yuan (US$44,000) poured into the project.

A hot tech trend

Venture capitalists believe cashier-free stores could be “the next big thing,” and Deng’s company plans to open 25 more this year in various parts of the country, with 200 franchised stores in Chongqing.

Earlier this month, Alibaba opened its first brick and mortar store Tao Cafe in the company’s hometown, Hangzhou, capital of Zhejiang Province. The online group has joined other retail chains and tech startups flocking into the market with their own solutions, making staffless retail one of the hottest tech trends.

Tao Cafe opened for a trial run July 8. In the footsteps of the Amazon Go store that made a big debut last year with its use of tracking cameras, it utilizes a facial and voice recognition system.

Purchases are tracked by facial recognition cameras, and the system automatically generates bills as soon as customers walk out of the specially designed gate that can identify them with biological sensing technology.

Kicking it off before Alibaba, Guangdong-based tech startup BingoBox started to spread its version of staffless stores, after being granted 100 million yuan in its first round of financing.

Unlike Tao Cafe, Bingobox is more of a hybrid between convenience stores and vending machines, where customers can walk in and pay by scanning QR codes on their phone. This bypasses eye contact and small talk that normally take place with cashiers in traditional stores.

“By the end of August, we are expecting to open 200 more Bingobox stores,” said Chen Zilin, CEO of Bingobox.

“We only cost a quarter of a traditional convenience store, and running costs are one-eighth.”

Neil Wang, president of global consulting firm Frost & Sullivan China, said staffless stores will bring the “next spring” to the retail industry.

“Staffless stores are a combination of digital payments, radio frequency identification technology, biological recognition, big data and AI,” Wang said.

“They will lower the risk of shop lifting, optimize the goods and reduce costs, from running and maintenance costs to human labor.”

Chen Haibo, CEO of Shenlan Technology Co., said that rental and human labor costs were holding the traditional retail sector back.

“In 2017, staffless stores will boom,” Chen added.

Beverage giant Wahaha Group Co. recently signed a nearly 10 billion yuan deal with Shenlan Technology (Shanghai) Co. to build 100,000 self-service Take Go smart stores in three years.

Japanese convenience store chain Lawson Inc. is currently running trials with an unmanned store in Osaka which is expected to go into commercial use soon.

Future vision

Whleeys Cafe, a Silicon Valley backed startup, has taken its vision of future retail one step further with Moby Mart — a staffless self-driving vending car with an AI hologram assistant.

“We will have a membership system where we can collect our users’ data, so we can deploy our cars into the areas with the optimized products selection,” said Per Cromwell, lead designer of Moby Mart.

Cromwell said China had the world’s largest number of mobile payment users. It had gone much further than Europe and made Moby Mart possible.

“Currently it costs US$200,000 to US$300,000 to make one Moby Mart, and we can lower it down to US$40,000 when it comes to mass production,” he said. “Also, we don’t need to pay rent but something like a parking fee,” he added.

As a retailer and staffless solutions provider, Cromwell said mobility would become the next turning point. He said they were talking with some of the world’s top retail chains, which were interested in upgrading from the traditional retail mode, but preferred not to disclose names.

One potential road block, however: Cromwell said the startup was still waiting for the self-driving car to be legalized before they could achieve their vision of a future retail where the shop comes to the customers’ door.

Big data, big attraction

In addition to saving on staffing costs, the use of big data and mobile technology is a big attraction of these smart stores.

New technologies are providing more opportunities for the retail sector and can also better meet consumer demands.

Dong Benhong, CMO of Alibaba, said this data collection could help retailers. It can provide information such as how long consumers look at a product and what they buy, which could help retailers efficiently arrange product displays.

With AI, a so-called “new retail” model has emerged. With the combination of online and offline tools, it’s believed that the retail sector will get a growth boost.

China’s AI sector has grown into a 8-billion-yuan industry in the first half of this year. While sectors associated with AI have ballooned to 50 billion yuan, AI is helping to reduce overcapacity and lower manufacturing costs.

But Tesla CEO Elon Musk issued a warning about artificial intelligence and said AI should be proactively regulated.

The billionaire has long been concerned about the threats he believes AI can pose, from automation to apocalypse. Musk also stressed that AI is “not a physical thing, it is a kind of a deep intelligence in the network” and the potential harm that could bring to humanity is incalculable.

(SD-Agencies)