How are physical stores innovating retail in Asia?

INCREASINGLY more consumers are choosing to ditch the hustle and bustle of physical stores in favor of adding products to a virtual shopping cart at their own convenience.

With e-commerce sales estimated to reach US$1.4 trillion in the APAC region alone by 2020, physical retailers are having to up their game in order to compete.

While physical retail has been falling in the United States, in Asia there have been many retail innovations – ranging from payments and logistics to product display – aimed at maintaining the relevance of physical stores. Detailed below are a few examples of how stores are being innovated in China, South Korea, Japan and India.

Unmanned stores in China

Many store operators in China, such as Shanghai-based company BingoBox, are opening outlets across the country.

The 24-hour unmanned stores can be unlocked using a customer’s mobile QR code. Shoppers can then pick out their items and place them on a checkout, which scans and tallies up purchases. These items are then paid for via e-wallets such as Alipay and WeChat Pay.

As well as bringing ease and convenience to many consumers in China, these unmanned stores seek to improve slim profit margins in the retail business by reducing staff costs.

“If capital costs rise quickly, that puts greater pressure on low-margin businesses like convenience stores and supermarkets,” Andrew Song, an analyst at Guotai Junan Securities told South China Morning Post.

“In China, wages and manpower costs have been rising relatively quickly.”

As well as cutting down labor costs, the technology embedded in each store helps to fight against theft.

“Each item has an RFID tag and the system will be able to detect whether it has been paid for,” said BingoBox chief executive and founder Chen Zilin.

“Furthermore, CCTV cameras are monitoring the store 24/7. If you steal something from a traditional convenience store, you might be able to get away with it. But if anyone tries to do that in BingoBox stores, we will definitely find out and they will be banned from entering our stores in the future.”

Super-fast food delivery services

Companies such as Tencent-backed Meituan and Ele.me (backed by Tencent’s rival Alibaba) allow users to order their meal of choice using their smartphone, with arrival to their door in around 10 minutes.

Facial recognition payment

Ant Financial, one of China’s largest fintech companies, owned by e-commerce giant Alibaba, is testing a payment service called “smile to pay” powered by facial recognition. The company partnered with KFC in China last September.

South Korea’s 3D virtual shopping assistants

Physical stores in South Korea, such as iClothing, have installed 3D scanners where shoppers are able to scan their bodies to create a 3D avatar of themselves. With this, shoppers can virtually try on garments, skipping the need to go to the fitting room.

Japan’s smart vending machines

One of the latest innovations in Japan is the smart vending machine. Through taking a picture of the shoppers, the machine recommends a drink option to them based on their gender and age.

India’s e-wallets

Carrying cash is becoming increasingly unpopular with consumers, with many now using e-wallets as a preferred payment method.

While platforms such as Alipay and WeChat Pay dominate the e-wallet industry in China, mobile payment platforms in India are arguably more diverse. Among the major mobile payment services in India are Paytm, Oxigen, MobiKwik and PayUmoney.

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