Unattended retail (cashierless payments) is projected to be a $34B industry by 2023, and over 70% of retail and consumer products executives in North America plan to implement intelligent automation across their value chains by 2021 removing employee contact, unattended retail aims to create a more seamless retail experience for the consumer.
From the retailer’s perspective, unattended retail also allows for lower labour costs, increased efficiency, and uniform remote inventory management & sales data. This article will discuss a unique example of unattended retail in China, walk through the customer journey it offers, and provide an in-depth analysis of what learnings can be applied to the Canadian market. Ultimately, it is essential to understand your customers and each segment’s rational and emotional drivers of purchase intent and brand loyalty.
Unattended Retail Profile: BingoBox
In China, self-service checkout is a growing trend, and competition is expected to increase. The world of unattended retail has come a long way and is growing rapidly—just ten years ago, only vending machines existed in this space. The unattended retail sector originally focused on speed and function over innovation. For example, a vending machine would be placed in a corner and little thought would be given to its appearance other than making it identifiable. Today, unattended retail stores must be more than just visually appealing—they need to have increased and differentiated functionality. Retailers are starting to look towards leveraging AI and automation not just for efficiencies, but also to differentiate from competitors and improve their CX by providing customers with more convenience.
BingoBox, a franchised convenience store chain, has logged over a million transactions in over 300 stores across 30 cities in China. What makes BingoBox unique is that each location is a 24/7 self-service convenience store on wheels—their mobility allows franchisees to easily relocate as desired. BingoBox stores, although small, stock 500-800 items, including a smaller selection of fresh foods compared to the average Chinese grocer. Built-in scanning features mean that stock-taking and refilling can be completed in under 20 minutes.
By using AI to develop efficient recognition and sorting algorithms to stock the store, BingoBox provides consumers with a seamless customer journey; self-checkout allows for a speedy process and with BingoBox’s automated restocking, customers have the assurance that their products will be available.
A Customer-Centric Journey that Satisfies Rational and Emotional Drivers
The average customer journey is highly predicated on convenience and reliability.
The journey begins when a customer first desires a good. They then consider the vast number of convenience store alternatives within an accessible proximity. Because BingoBox stores are located in busy areas, Chinese consumers may pass by a location during their daily commute. When the consumer enters a BingoBox, they scan the barcode on the door with their phone. Inside the store, consumers choose their items for purchase, self-scan each item’s barcode, and pay through their phone using WeChat Pay or Alipay. As the customer leaves, a camera checks that only paid-for products are exiting the store. Through facial recognition, these in-store cameras also check for unregistered users who are not allowed on the premises. In the case of any unforeseen inquiries, a human customer support contact line is available via video link.
At Level5, we know that both rational and emotional attributes have an approximately equal role in a customer’s decision-making process. Some of these rational and emotional attributes serve as key drivers for the consumer, so it is critical for companies to identify, understand, and meet those particular attributes during the customer journey. BingoBox provides rational benefits such as a speedy purchase and a wide array of everyday items. On the emotional side, the consumer feels independent and tech-savvy because they are able to complete their purchase without assistance, or potentially fulfilled as their purchase is extremely convenient and relaxed. BingoBox has built brand loyalty by identifying and meeting customers’ rational and emotional drivers.
Advantages of BingoBox
- Reduced operational costs: costs lowered by 80%
- Fewer staff needed: only 1-2 workers are needed to replenish goods for 5-7 stores
- Short replenish time: store checking, and daily maintenance can be done in 20 minutes
- High store security: security system features CCTV and facial recognition for customers
- High mobility
- Customer service is 24/7: consumers just need to press a button for help
Today, consumers in urban China are busy, so they don’t want to waste time waiting in line and dealing with cashiers. They want a convenient purchase experience, and unattended retail is built around the promise of convenience. To this end, BingoBox allows for a quick customer journey with a limited but high-quality selection of goods.
Not All Customers Are Alike
However, while many customers want a convenient experience, Canadian retailers may be making a large assumption if they equate convenience with cashierless service. In fact, removing the cashier from the average Canadian customer’s journey may actually be adding more friction and inconvenience to the experience. Market research shows that many North Americans still prefer cashiers to self-checkouts, and these consumers feel they are being forced to use self-checkouts at retail stores across Canada and the United States.
Major Canadian retailers should be acutely aware of their customers’ wants and needs. For example, Walmart has stopped its Scan & Go program, which allowed customers to self-scan and pay for items without checkout lanes, cashiers, or registers. This option experienced low customer participation, as it was actually creating unintended friction in their journey. According to a CBC article, consumers thought the scanner technology was frustrating and the entire process was cumbersome.
These pain points could have been caused by a variety of reasons, including pressure to adapt quickly to growing trends in the marketplace, a desire to cut costs, or a strategy that may not have been well-communicated to all employees and customer groups. Regardless of the cause, the result was a misalignment between the initiative and consumer preferences. Because most retailers will eventually add some form of automation to their physical retail stores, it is vital that they understand and consider consumers’ wants and needs when deciding how to introduce or expand automation.
Analysis
This discussion is meant to emphasize the importance of customer drivers. As a retailer, it is critical to keep your customers’ wants top of mind, rather than simply reacting to market trends. While the retail industry is heading in the direction of automation and AI, it is important that retailers proceed at a pace that fits their customers’ wants. If a retailer only focuses on reducing costs without considering the needs of its customers, attempts to implement unattended retail will likely fail.
One retailer that has succeeded with unattended retail is Amazon Go. Amazon has plans to expand to 3,000 Go stores by 2021. These stores will allow customers to simply walk out with their goods, while BingoBox requires them to scan in order to purchase. It is important to note that both companies considered consumer preferences when deciding how to work automation into their customer journeys. Given the widespread use of mobile payment platforms like WeChat Pay and Alipay in China, Chinese consumers are likely more comfortable scanning items on their own and paying through their phones. While both BingoBox and Amazon Go have proven successful in each of their geographies, it is not fair to assume one unattended retail format would be equally successful in the other.
The need to match services with customers’ priorities makes customer research all the more important. Research serves as a voice for customers and helps companies identify key emotional and rational drivers, decrease uncertainty in the market, and ultimately make better business decisions. BingoBox and Amazon Go succeeded in implementing automation within their processes, while Walmart might have to rethink its approach to align it with customers’ preferences.
Below are some tips for retailers to consider as they consider how to implement automation and AI:
- Rethink the way work gets done in a digital age
- Consider consumer preferences
- Start small and expand slowly
- Communicate with your consumer regularly
- Educate all internal and external stakeholders about the changes
- Partner with automation experts and host work sessions with executives, employees, and even customers to learn the process
- Monitor the technologies closely and update according to customer preferences
References:
https://www.techinasia.com/china-version-amazon-go-bingobox-funding
https://www.kioskmarketplace.com/articles/move-over-amazon-go-chinas-bingobox-is-on-the-move/
https://www.pymnts.com/news/payments-innovation/2019/worldnet-unattended-retail-vending-machines/
https://www.globalpaymentsinc.com/en-us/blog/2019/03/06/unattended-retail-future
https://www.fbicgroup.com/sites/default/files/New_Retail_in_Action_BingoBox.pdf
https://technode.com/2017/09/28/bingobox-unveils-new-ai-tech-for-its-unmanned-stores/
https://www.cbc.ca/news/business/self-checkout-cashiers-retail-jobs-technology-1.5020299
https://www.cbc.ca/news/business/self-checkout-shoppers-drug-mart-zehrs-loblaw-1.5067618
https://advantage-marketline-com.proxy1.lib.uwo.ca/News/walmart-concept-scraps-cashiers
https://adage.com/article/news/reality-consumers-control/100744
https://www.cbc.ca/news/business/walmart-canada-self-checkout-scan-and-go-amazon-go-1.4899698
https://www.businessinsider.com/walmart-abandons-scan-and-go-cashierless-checkout-2018-5
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