Domestic AI Convenience Stores Emerging... The Light and Shadow of Unmanned and Automated Payment Systems

'Swipe as You Pass' Amazing Shopping Experience
Labor Cost Reduction & Individual Store Competitiveness↑
Concerns Over Replacement of Human Labor... Potential for Political Discrimination

[Asia Economy Reporter Cha Min-young] The convenience store industry is experiencing a strong wave of digital transformation through the use of artificial intelligence (AI) technology. This is a result of the distribution industry's sense of crisis, which demands enhancing the competitiveness of offline stores amid competition with online retailers. Conversely, concerns arise regarding social anxiety due to AI technology replacing human labor and the potential for discrimination against low-income groups.

According to industry sources on the 26th, GS25 recently partnered with BC Card and Smartro to open a futuristic convenience store, 'GS25 Eulji Smart Store,' at the BC Card Eulji Twin Tower headquarters. Utilizing AI technology-based payment systems and QR code personal identification systems, they established a 'checkout-free' convenience store. This is a step forward from the industry's first 'unmanned convenience store' introduced in September 2018 in the Magok district of Gangseo-gu. A total of 34 smart cameras follow customers, analyzing their movement paths and purchasing behavior. Facial recognition technology is used to build the payment system, and about 300 weight sensors are installed in refrigerators and product displays to monitor inventory.

Emart24 also introduced a futuristic convenience store, 'Emart24 Gimpo DC Store,' at the data center in Janggi-dong, Gimpo, last year by collaborating with Shinsegae I&C, a Shinsegae Group affiliate, applying the 'Just Walk Out' technology. Customers can use the SSG Pay app to issue a QR code for store entry and then use it. Payment is completed simply by picking up items without a separate checkout process. About 30 cameras and sensors are installed on the ceiling to track customer movement. The shelves, displaying around 790 types of products, look similar to those in regular convenience stores but are embedded with sensors that automatically calculate the weight when customers pick up items to identify purchased products.

In 2017, Lotte Group opened the 'Seven Eleven Signature' store at Lotte World Tower in Jamsil. The core technology, Hand Pay, is a vein authentication payment service by Lotte Card. It identifies individuals by patterns such as vein thickness, clarity, and shape. Palm vein information is converted into encrypted random numbers registered with Lotte Card, allowing simple palm authentication for identity verification and payment. After registering Hand Pay information, customers enter the store through a 'Bio Recognition Speed Gate,' and when items are placed on the counter, the product barcodes are automatically recognized.

The benchmark for domestic unmanned convenience stores is the 'Amazon Go' unmanned convenience store, first introduced by the US retail giant Amazon in 2018. Founder Jeff Bezos described Amazon Go as 'the most advanced form of shopping technology in the world.' Amazon Go allows customers to leave immediately without waiting or checking out. Receipts are sent to Amazon accounts within about 3 to 5 minutes. Reviews from Amazon Go app users include comments such as 'Thanks to Amazon Go, I only stayed in the store for 36 seconds' and 'It needs to expand to more, smaller areas.'

Encouraged by positive responses, Amazon Go stores continue to expand. Since opening the first store in January 2018, as of January 2020, 25 stores operate in four cities: Chicago, New York, San Francisco, and Seattle. Two of these are undergoing remodeling. Additionally, one more store is planned to open in the Seattle area. According to Bloomberg, Amazon plans to increase Amazon Go stores to about 3,000 nationwide by 2021.

[Image source=Reuters Yonhap News]

The commercialization of unmanned convenience stores is expected to change future shopping habits. Once unmanned technology is commercialized, it is anticipated to reduce labor costs associated with store operations. This aligns with the trend of expanding contactless services and unmanned stores. However, concerns about AI replacing future labor also apply to unmanned convenience stores. Additionally, since cash and other credit cards cannot be used and only specific apps such as BC Card Paybook and SSG Pay are linked, issues regarding limited scalability need to be addressed.

The political inequality issues raised about Amazon Go also provide food for thought for the domestic distribution industry. Last year, the governments of San Francisco, Philadelphia, and New Jersey passed laws prohibiting offline stores from refusing cash payments. This is because the prerequisite for using payment applications is owning a smartphone. There is a potential for discrimination against low-income citizens without smartphones. Accordingly, San Francisco stores have supplemented unmanned payment with cash payment options. Additional staff are deployed to assist customers without the Amazon app in completing their purchases.