A growing trend in recent years, unstaffed convenience stores are becoming more common, particularly in Asia, in countries like China, Japan and Singapore – and pioneers of the concept include retail co-operatives.
In fact, NTUC FairPrice co-operative was the first retailer in Singapore to open an unstaffed store, at Nanyang Polytechnic (NYP) campus in 2017. Since then the co-op has opened two more unstaffed cashless convenience stores at the National University of Singapore (NUS) and at Our Tampines Hub store in Tampines. For the latter, NTUC partnered with Visa to develop an advanced artificial intelligence (AI) system that tracks customers’ actions, such as removing items from shelves.
In Europe, some of the projects were undertaken under the umbrella of Coop Norden, a Scandinavian retail chain co-owned by Coop Sweden, Coop Denmark and Coop Norway. The first Coop Norden unstaffed store was officially opened in central Oslo by Coop Norway in 2019, under its Coop Extra brand. The store functions normally during daytime but converts into an unmanned store at night, with transactions managed digitally. It uses state-of-the-art technology to prevent thefts and is equipped with cameras and automatic doors and customers needing to scan a QR code to be allowed in. Customers can shop using the self-checkout machines but pay via an app instead.
The concept was replicated by Coop Sweden in 2020 with the opening of two unstaffed stores in the city of Gävle. The stores are operated by its member Coop Mitt, a co-operative running more than 60 stores in Gästrikland, Hälsingland, Dalarna, Uppland and Västmanland. Customers can use the co-op’s new self-scanning application to scan and pay for goods using their mobile phones.
Similarly, in November 2021 Coop Denmark, which first piloted its grocery store concept Beep & Pay in 2017, tested a cashierless option in one of its convenience store to allow shoppers to use the store after closing hours. The Dagli´Brugsen store in Sengeløse was open outside normal opening hours to allow customers to shop for groceries using the new cashierless option.
Another retailer to experiment with the unstaffed convenience store format is Coop Czech, which recently opened the biggest unstaffed store in the country in Krumlov. This followed the successful opening of the first Coop Czech automatic store in March in the city of Strakonice. Krumlov customers shopping at the unstaffed store are be able to choose from a much wider range of goods, which includes more than 4,000 items.
Explaining the co-op’s motivation behind the investment, Lukáš Němčík, director of Development and Marketing of Coop Czech, said that customers are changing, and it is time for stores to start adapting more to their needs. “We want to test automatic operation in different formats and in different places. Our next automatic stores may appear next time, for example, in industrial areas, or even in the countryside.”
Just like Coop Denmark’s unstaffed store, the Coop Czech automatic stores will operate based on a hybrid model, with staff always available during standard opening hours. Customers can scan the goods at the cash register then pay by credit card or mobile phone app. To leave the store they have to re-scan the QR code from the application again. Equipped with cameras, the store is also connected to the central security desk, and the system is activated each time a customer enters the store.
The new Krumlov store, which is situated near the old town, aims to provide customers with a “flexible and fast shopping” experience. “Ensuring a longer opening time would be more expensive for the chain in terms of labour costs, but at the same time some customers do not have enough time to shop at standard opening hours, this is why automatic stores are the best solution,” said Němčík.
Customers using the automatic stores tend to go shopping until midnight and on weekends, and buy more alcohol, sweets, and other delicacies. As such, the new store will also offer a wider range of premium alcohol as well as a specialised wine section.
While it is still testing the waters with the new format, Coop Czech says the experience from the pilot store has so far been “extremely positive”. The co-op said it had not experienced any technical issues or cases of theft or vandalism.
However, research on the topic tends to suggest that some customers are reluctant to use unstaffed stores, with security being a key concern. As the 2021 study by Navodya Denuwara, Juha Maijala & Marko Hakovirta points out, “one problem that might arise is customers’ unwillingness to use an unmanned store because they view it as a glorified vending machine.”
The study found that 30% of Swedish residents who had not used unstaffed stores had no intention of doing so in the future. The respondents quoted the lack of service and social interactions along with a sense of insecurity as potential inhibitors. Another 2021 study by Wang et al found that female Taiwanese customers demonstrated higher levels of perceived risk towards the unmanned store in relation to the men.
Advantages of unstaffed stores mentioned in the study include “lower overhead costs after sales and cashier jobs are eliminated, the ability to collect consumer data through online checkout via a smartphone app, and more efficient retail management by localising product inventory and merchandising based on individual stores.”
Yet a key issue that retailers looking to explore the format should take into account is the fact that technology readiness influences the attitudes towards unmanned convenience stores – studies found that low levels of technology readiness increased the dissatisfaction with the unmanned convenience store.
Equally important aspects are data ethics and the fact that such stores could deplete jobs in the future. Co-operative members might be reluctant to encourage such changes on the grounds that they would lead to potential job losses. Yet, new roles may be created as well. Many of the store formats pioneered by co-ops continue to employ staff members, who focus on other tasks instead of acting as cashiers.
What is clear is that automation will continue to drive changes in the food retail sector. The global unstaffed convenience store market, valued at US$67.48m (£57m) in 2019, is expected to reach $1.64bn (£1.39bn) by 2027. Co-ops will have to navigate through the task of adopting new technology while putting members’ needs first and protecting jobs.