Unmanned convenience stores become new normal

Seen is an unmanned E-mart 24 convenience store in Seongsu-dong, Seoul. / Courtesy of E-mart 24

Advanced technologies ready to replace part-time workers

By Park Jae-hyuk

A steep hike in the minimum wage next year and technological advancement are prompting local retailers to operate unmanned convenience stores.

According to industry officials, Monday, more retailers in Korea have begun running unmanned convenience stores by installing self-checkout machines which can replace part-time cashiers, most of whom receive the minimum wage.

E-mart 24, a convenience store chain of the local retail giant Shinsegae, has three unmanned stores in Seoul and one in Jeonju, North Jeolla Province.

Its stores at the Westin Chosun Seoul and the Jeonju National University of Education are fully operated around the clock without workers.

Another store in Seongsu-dong in Seoul operates without workers from 11 p.m. to 6 a.m. and one in Dongdaemun-gu does so from 1 a.m. to 6 a.m. During the daytime, employees man the stores.

To enter the unmanned E-mart 24 stores, customers identify themselves with a credit card. The identification is a measure for preventing theft and damage to the property.

After choosing the purchases, customers can pay by scanning their barcodes. If they have any problems, they can get in touch with E-mart 24 employees at the head office through microphones installed at the stores.

According to E-mart 24, products that pass their expiration dates are unavailable at the unmanned stores and deliverymen are directly in charge of perishable foods.

The company explained it converted ordinary stores into unmanned ones to help their owners reduce costs. It said it would eliminate 24-hour operation, royalties and penalties for breach of contract.

"We are just checking the efficiency of the stores for now," an E-mart 24 official said. "We have yet to decide whether to set up additional unmanned stores."

In May, E-mart 24's competitor 7-Eleven launched its first smart convenience store named 7-Eleven Signature at Lotte Word Tower in Seoul.

The store is equipped with the HandPay system, which identifies individuals by the pattern of their veins. If customers register their vein patterns on their Lotte Cards, they can purchase products at the store by identifying themselves with their hands.

Unlike E-mart 24's unmanned stores, which are accessible with any credit card, 7-Eleven Signature blocks entry to those who do not register their vein patterns in their Lotte Cards.

Instead, the store features 360-degree scanners at unmanned counters. When customers place their purchases on a conveyor belt at an unmanned counter, the scanner locates the barcodes.

Analysts expect the minimum wage hike next year will spur more retailers to turn to technology to cut costs. The nation's hourly minimum wage will be 7,530 won ($6.67) next year, up 16.4 percent from this year. It may reach 10,000 won in 2020, in line with the Moon Jae-in administration's labor-friendly policies.

"Amid the minimum wage increase, the trend of automation will spread fast," said Yoon Jung-seon, an analyst at KB Securities. "The self-checkout machines will allow sellers to cut costs and provide convenience for the customers."

GS Retail and BGF Retail have also begun adopting technologies.

The former, which operates GS25 convenience stores, signed a partnership agreement with KT in May, establishing futuristic stores. The latter is planning to introduce SK Telecom's NUGU artificial intelligence speakers in CU convenience stores nationwide next year.

A customer purchases products by verifying her identity with her hand at a 7-Eleven Signature store at Lotte World Tower in Seoul. / Yonhap

Lagging behind China, Japan

While Korean retailers have just begun operating unmanned convenience stores, those in China and Japan have already carried out aggressive investments in the new technology.

According to the Korea Trade-Investment Promotion Agency (KOTRA), more than 20 brands in China run unmanned convenience stores there.

This is because Chinese retail giants including Alibaba have begun actively investing in unmanned convenience stores, since the U.S. retail giant Amazon unveiled its unmanned Amazon Go store last December.

In June, Shanghai got the world's first 24-hour unmanned convenience store named BingoBox. BingoBox said it will open 5,000 unmanned convenience stores by the end of next year.

Wahaha Group, one of the largest food firms in China, is also set to open TakeGo automated convenience stores.

Japanese retailers are opening unmanned stores, which are more like vending machines.

Family Mart runs 2,100 unmanned convenience stores equipped with vending machines. 7-Eleven plans to open 500 vending machine-styled convenience stores in Japan by February 2019.

Lawson started running small unmanned stores equipped with self-checkout machines. It strives to open 1,000 unmanned stores by next February.

Japan's top five convenience store chains said they will install self-checkout machines in all of their stores by 2025.

However, many industry officials in Korea are still skeptical about the commercial viability of 24-hour unmanned stores. They said technologies will just help workers focus more on customer services, displays and cleaning. In the case of 7-Eleven Signature stores, employees are still in charge of displays and cleaning.

Some people mention additional costs, because every product will need radio frequency identification (RFID) tags for the complete automation. An RFID tag costs 100 won.