Singapore Shoppers Welcome Automated C-Stores

SINGAPORE—Retail startup Octobox opened its first cashierless store in August at the National University of Singapore. Within three weeks, 3,000 students had registered their customer profiles, which includes a scan of their palm tagged to their mobile phone number, in order to shop there, reports Asia.Nikkei.com.

Unmanned stores appeal to retailers in Singapore, where labor is expensive and in short supply. Already, Octobox management plans to open up to four more cashier-free outlets in Singapore, using the same strategy of targeting small communities, such as popular gyms and private residential enclaves. Expansion into Malaysia, Taiwan and Indonesia also is planned.

"We are providing a convenience at very competitive, cheap prices, which can fulfill customers' wants," said Ng Kiat Seng, operations director at Octobox, noting that it costs around $108,000 to set up each store.

Other convenience store chains, such as Cheers, OMO Store and Pick and Go, also have introduced automated retail outlets. This boom has been helped with state funding for automated retail. Government agencies, such as Enterprise Singapore, a ministry of the Government of Singapore, may contribute up to 70% of the technology costs required to set up an unmanned store.

"There is a role for unmanned stores to play in certain product categories, in certain customer experiences," said Alan Yeo, director for retail and design at Enterprise Singapore. But don’t expect human employees to disappear completely. Certain sales categories, such as computer hardware, require qualified personnel to explain product features and answer questions.

Singapore retailers are being careful not to repeat the mistakes that led to the failure of unmanned stores in other countries. One example is China’s boom in unmanned stores that ended almost as quickly as it began after the stores struggled to move fresh groceries.

Toh Hong Aik, managing director of U-Venture Investment, owner of OMO, traveled to China to study that country's unmanned retailing. He found that the stores required multiple layers of verification before customers could finalize their purchases, which ironically made the convenience stores less convenient to use.

"The customer wants things to be fast," said Toh. "So that's why the first thing we tested [at the OMO Store] was to go without any verification steps." He added that the customer experience in automated retail environments is being closely watched, and adjustments are being made when necessary.

According to global technology analysis company ABI Research, full-scale automated retail stores worldwide are expected to grow from fewer than 500 this year to more than 44,000 by 2023. But for Singapore at least, unmanned stores may take a while longer to catch on.

"Such a business model is not viable yet, at least for the near term," said Su Lian Jye, principal analyst at ABI Research, adding that for the new format to catch on in Singapore, major retailers will have to get behind it.

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