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Retailing

Shops with no staff but plenty of technology open in Hong Kong amid smart city push, drawing mixed reviews from customers

First shoppers to try innovative model describe failed self-checkout, joy over no hard selling and a longing for intimacy

PUBLISHED : Sunday, 09 September, 2018, 12:02pm
UPDATED : Sunday, 09 September, 2018, 9:17pm

Li Lai-ngun, 65, was eager to embark on a new shopping experience at one of Hong Kong’s first shops without staff.

The housewife picked out a T-shirt at the 4,000 sq ft pop-up shop a day after AlipayHK launched it in the Olympian City mall.

But technology failed her.

After more than five minutes of trying to pay via self-checkout, she was told that her two credit cards did not work. Unable to determine what had gone wrong, Li put the item back on the shelf.

 

“At my age, I don’t think I need technology like this,” she said. “It’s not very complicated to use, but I want to feel secure when buying things.”

She noted she was unfamiliar with the app AlipayHK, which has signed up 1.5 million users in the city. The company is a unit of Ant Financial Services Group, an affiliate of Alibaba Group Holding, which owns the South China Morning Post.

The kick-off for “AlipayHK Next Store” and the also staff-less Okashi Land pop-up snack store in Mong Kok on Wednesday pioneered the grab-and-go unstaffed shop concept in Hong Kong. Local officials are racing to create a smart city, drawing on a HK$50 billion (US$6.37 billion) fund to boost the industry.

Customers can enter the shops by scanning a QR code with their mobile phone. With the aid of radio frequency identification technology installed in the self-checkout system, they can settle payments with just a few taps and another scan. 

The innovative model is taking off in mainland China and the United States, reshaping their retailing landscapes.

Locally listed Four Seas Group, which owns Okashi Land, is testing the local market with EasyGo, a Guangzhou-based start-up that operates more than 100 unstaffed convenience stores on the mainland.

Paying with your smartphone still not catching on in Hong Kong

EasyGo founder Lin Lechang said he hoped to use Hong Kong as a starting point and expand to Southeast Asia in the future.

Jennifer Tan, chief executive of AliPayHK, said the company’s new store was the largest of its kind in Hong Kong.

Tan said AliPayHK was a technology company, rather than a retailer, and the store was more about providing an experience than selling products.

“We want to be a pioneer and demonstrate how technology can help with retail sales,” Tan said. “We hope the business sector and the customers can have a different shopping experience [in our store].”

But whether the idea of stores without staff can evolve in the city remains an open question, as some consumers such as Li have stated a preference for shopping with human help.

Jordan Lau See-wai, who works in the food and beverage sector, described the experience as “fresh and fun” but believed that paying with a cashier’s help was faster.

 

“It’s better to have staff at the shop,” Lau said. “There’s a feeling of intimacy.”

The 24-year-old, who spent HK$40 at the snack store with WeChat Pay, Alipay’s rival, said paying with machines or an e-wallet was “relatively slow” because some customers were still not accustomed to the electronic payment platform.

He believed the shopping process would be faster in the future after a machine upgrade.

 

Venus Wong, 12, enjoyed shopping at the same pop-up shop. The schoolgirl recalled feeling pressure in the presence of sales staff, and claimed the self-checkout process was faster.

Her mother, who only identified herself as Mrs Wong, echoed the sentiment, saying she disliked staff hard-selling her.

“When I go shopping, I don’t like people tailing after me,” Mrs Wong said.

She added it would be better if the store could accept other e-payment applications Hongkongers commonly use.

To avoid shoplifting, AlipayHK Next Store and Okashi Land installed CCTV in stores.

 

Mariana Kou Chung-yin, an equity research analyst with investment group CLSA, expressed optimism about the future of unstaffed shops in Hong Kong.

Kou believed the model would become popular in the city in one or two years, adding that shops selling middle-end or low-end goods could soon use it. She described Hong Kong consumers as adaptable.

Large companies may eventually grow bigger while the small shops could find it hard to survive
Mariana Kou, CLSA analyst

The analyst explained that local salaries were relatively high and the model could help companies save on labour costs, which are one of the biggest expenses when setting up a shop.

“An investment in one system at the initial stage might be significant, but the system could be used for all outlets,” she said.

According to government data, nearly 271,000 workers were employed by the city’s retail industry in March, and there were 8,110 job vacancies.

Kou suggested the cost savings might mean lower prices for consumers.

But she added it would be easier for large chains to deploy the technology and that small businesses might not be able to afford it.

“If they don’t adopt it, but the large chain stores use the technology and sell cheaper goods over time, then the large companies may eventually grow bigger while the small shops could find it hard to survive.”

Additional reporting by Su Xinqi