Will Automated Retail Stores Become A Reality In India?
These 'just walk out' stores leverage software integrations to enable cashier-less checkout
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Consumers today have raised the bar for all retail players. They opt for only those brands that sell quality products and offer a seamless experience. This has pushed brands, be it online, offline or brands with a hybrid model, to work towards offering an effortless customer journey.
Automated retail, a category of fully-automated retail kiosks, claims to offer just that. These retail stores leverage software integrations to enable cashier-less checkout. They allow customers to purchase products by scanning their barcodes.
Many leading brands in the United States and the United Kingdom are taking the automated retail route. For instance, Baskin Robbins launched its first automated store in South Korea early this month. South Korea also got its first Amazon Go store in 2018. The global retail automation market size was valued at $11.24 billion in 2018 and is projected to reach $23.58 billion by 2026.
There are around 30 Amazon Go stores the world over. These are a chain of stores in the US and UK, operated by Amazon. A consumer can purchase products and walk out without having to stand in the billing queue. Besides Amazon Go, which serves breakfast, lunch, and ready-made snacks, it also offers Amazon Go Grocery that offers household essentials and readymade dinners.
Contactless retail also helps brands increase sales by allowing sales executives to focus more on sales than on transactions. Automated retail stores combine the benefits of the traditional offline and online retail world.
Contactless Offline Retail In India
In the past, few brands in India tried the "just walk out' tech in India, but the trend didn't pick up later. A Kochi-based startup Watasale, launched a similar store at the city's Gold Souk Grande Mall to sell small products like soda and chips that customers can easily pick and carry.
Now, once again, some efforts are being made. Amazon has started installing app-linked vending machines stocked with everyday essentials and snacks in apartment complexes and Gobbly is among the few startups in the automated retail space.
"Automation is setting the pace across the packaged industry. The starting point is making every package smart via a QR code – something that we have done aggressively in all our packaged products. There is incremental innovation happening around retail automation and its progress is unstoppable," said Amuleek Singh Bijral, co-founder and CEO, Chai Point.
Chai Point's boxC platform offers a freshly brewed chai and coffee setup. Each boxC station comes with a portfolio of packaged Chai Point products that are used with water and hot milk such as tea, soup, among others. Further, it has also extended the boxC platform to include an automatic snack dispensing station that carries its Made for Chai range of packaged snacks. The entire boxC range is android OS based that offers a contactless dispensing system that works without installing any app and via a QR code got the boxC units menu onto a user's mobile browser.
Although vending machines for beverages are commonly found at offices and airports, automated stores or kiosks for groceries, snacks, and other essentials are still a far cry. However, the scope is large, say experts. "These app-linked vending machines are for the betterment of the consumers, though many might not get used to this way of shopping easily. At the same time, if one looks at the brighter side of this endeavor, they would realize the concept's non-dependency on human presence, making the entire process quite seamless," said Mitesh Shah, co-founder, Inflection Point Ventures.
He also added that it allows the consumers to visit the vending machines at a time of their choice and get themselves the required product, without having to consider if the shop would be closed for lunch hours or if the shopkeeper would be busy or unavailable.
Will Retail Automation Become A Norm Anytime Soon?
Since the pandemic hit us, we have seen the genesis of many new business models within the e-commerce space. Some of them, such as social commerce, direct-to-consumer, which didn't find many takers before the pandemic, are flourishing in the post-pandemic world. Will retail automation become a norm anytime soon?
"This space is definitely going to work today and in the near future. Consumers have become more adapted to technology and more receptive to experimenting with newer ideas. At a time when the use of AI/ML and sensors have been accentuated, this model should work better than it did in the past. People anyways prefer being socially distant from others in the post-COVID era and this model only helps them minimize physical proximity," added Shah.
Inflection Point Ventures has looked into this space and has invested in similar startups. "We believe in this concept and are sure that e-commerce startups and others in related segments will grow, owing to increased online penetration, demonetization and post-covid era where digitization is expanding rapidly. We are looking at similar startups and intend to invest in a lot more in the coming year where automation is the key," he added.
Given the skyrocketing internet penetration, the boom in the payments ecosystem, consumers being more open to different business models evolving with e-commerce, the chances are plenty. According to a report released by Daalchini Technologies, which offers automated kiosks and smart vending machines, 75 per cent of the direct to consumer (D2C) brands believe that intelligent retail allows them to acquire new customers with low investment as compared to modern trade outlets (65 per cent), general trade (52 per cent) and distribution aggregators (42 per cent).
"When I came back to India in 2013 and worked in a private equity firm, we would question whether Indians would buy clothes online. Today, there are monumental changes. I do all my transactions online. My parents are paying online and also going on Instagram feed and shopping for D2C brands. On a daily basis, we are seeing changes in the way consumers are consuming," said Arjun Vaidya, former CEO of Dr. Vaidya's and a venture investor with Verlinvest.
Vaidya and other experts opine that anything that enables commerce to become easy will have takers. They believe retail will have to get easier, with lesser touchpoints and if automated retail enables that, it will become more common going forward.