The next big thing in Chinese retail? Unmanned stores
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The next big thing in Chinese retail? Unmanned stores

China’s a first mover when it comes to automation. Years of a one-child policy have left it with a demographic time bomb not unlike those of western countries – the solution? Robot workers. Prodigious economic growth has made it a competitive world power. How to further its ambitions? By conquering artificial intelligence. As a result of these trends, China is “all good” when it comes to automation. But automation in China is also being driven by a third force: convenience. And, with the unveiling of “unmanned stores” it’s set to take retail in the country by storm.

China’s big Ecommerce players have had a great month

graph 0706 china

SOURCE: Yahoo Finance

In January of this year, fierce rivals Tencent and Alibaba (two of China’s “Big Three” along with search engine Baidu) opened automated stores. In May, Beijing-based online retailer JD.com opened its largest personnel-free shop to date – 246 square meters. JD, which opened China’s first unmanned store in December last year, has big plans for this expansion and hopes to run “hundreds of thousands” of these stores all round the country.

Ambition and aging are once more drivers of automation. Alicia Garcia Herrero, French investment bank Natixis’s chief economist for Asia Pacific, explains: “Future labor shortage due to aging is the first factor. A second is a push to move up the ladder. ‘Shop assistant’ is not a highly qualified job.”

But China is also a realm that embraces new technology on an almost unparalleled level. More than 35% of China’s 724 million mobile phone users “often” made payments on that medium, according to the Xinhua News Agency. Josh Gartner, JD’s vice president of Communications and Corporate Affairs, thinks this makes China a particularly fertile ground in which to plant the unmanned store:

“It is likely to catch on more quickly because Chinese consumers are more open to newer forms of technology. “In general shoppers in China are more flexible about trying new and innovative options.” He also added that JD has a mobile sales percentage of 80% - a proportion matched by “few if any Ecommerce players in the U.S. or Europe.”

With Amazon showing a similar technology in the west, automated retail locations may well become ubiquitous far sooner than we imagine. But if anywhere is leading the charge – it’s China.

Disclosure

Dominion holds Tencent, Alibaba, Baidu, and JD.com in its Global Trends Ecommerce Fund.


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