The rise of unmanned shops in South Korea

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SEOUL – At this year’s annual Seoul International Coffee Exhibition which took place earlier this month, automation and smart devices like drip coffee-making robots enjoyed the spotlight.

“From smart roasters to drip coffee making robots, there were various opportunities to get a taste of the ‘smart coffee’ experience,” an official said at the event.

These are the latest sign of automation and a demographic shift in South Korea, where cashless shops are popping up on the streets. In recent years, retailers small and large have adopted self-checkout systems, also known as kiosks, or even completely unmanned to save on labor costs and keep stores open late into the night.

Nearly 1,700 “hybrid” stores, which rotate between having staff in history and not being manned, are currently in operation across the four major local chain stores: CU, GS25, 7-Eleven and E-Mart 24. With over 47,000 stores in the country, the figure may not be as staggering for now. But the number of hybrid stores has increased rapidly in recent months, according to E-Mart 24.

“After announcing the decision to expand hybrid stores in July, we have implemented the system. Almost 80% of our stores are not open 24 hours a day,” said an E-Mart 24 representative.

With more than 5,700 locations in total, the grocery chain, operated by Shinsegae Group, has seen the number of hybrid stores jump from around 150 earlier this year to around 700 at the end of October.

Meal kit stores or banchans – stores dedicated to selling ready meals and side dishes – have also received the automation treatment.

“Our main focus is on married women between the ages of 30 and 40 who work and are part of dual-income couples,” said a representative from Omealdang, a chain of unmanned meal kit stores.

Without the need to hire shopkeepers, these stores are open 24 hours a day all year round.

“Ready meals are produced in factories and supplied (to stores) directly and are put on display and sold without having to be cooked in the store, which has been well received by the owners of the meal kit shops,” the rep added.

It was early 2018 when Amazon first unveiled its cashless Amazon Go to the public. Since then, South Korean companies have also quickly adopted a similar concept in businesses ranging from ice cream shops to unattended cafes and coin-operated laundry services.

According to Shinhan Card, one of the country’s leading card issuers, the volume of credit card transactions in unmanned cafes recorded a 50% increase year-over-year between August 2019 and January 2020, leaving franchise cafes and cafes behind. Cheap coffees that saw a 5 percent and 24 percent jump over the same period respectively.

The number of self-service laundries at six large companies also grew from 3,086 in 2016 to 4,252 in 2020, an increase of 37.8 percent, according to a report from the Korea Consumer Agency. Revenues also grew from 49.8 billion won ($ 42.1 million) in 2016 to 112.9 billion won in 2020.

The rise in numbers comes as the share of single-person households in the country also grew from 27.2 percent in 2015 to 30.2 percent in 2019, according to Statistics Korea. The figure rose to 31.7% in 2020, which means that nearly 6 out of 10 households are one or two-person households.

Lee Young-ae, a professor in the Department of Consumer Sciences at the National University of Incheon, said that “price competitiveness,” “curiosity about something new” and “the ability to shop quickly” have made stores unattended. attractive to consumers.

But for unmanned stores to last long-term, they will have to address issues such as security, the professor said.

“It might seem like a lot of people are using these services because they didn’t exist before. But in the long run, customers may feel tired or confused if they don’t get the information or services they need (in unattended stores). “

Professor Lee Jung-hee of Chung-Ang University College of Business & Economy says the demand for unmanned stores will continue to grow.

“We have already experienced the contactless era. And because they (business owners) face issues like labor costs and labor management, unmanned stores are an alternative. I expect the demand for similar business models to continue to grow, “said Professor Lee.

Unmanned stores often cater to potential store owners with their low upfront costs in the face of rising labor costs.

A study by the Korea Economic Research Institute last year argued that many low-paying jobs were canceled when the country’s minimum wage was raised by 16.4% in 2018, while those in employment enjoyed higher pay. high.

In a survey conducted by the Korea Federation of Micro Enterprise earlier this month, about 87 percent of small business owners said they would struggle to pay the minimum wage if it increased for the next year.

In an effort to help small business owners, the government announced the “smart supermarket” plan earlier this year, equipping hundreds of supermarkets with entrance verification systems and self-checkout kiosks, as well as security devices. .

“This is a trend that cannot be stopped by the government. It could also create jobs in new fields such as solutions companies that focus on unattended stores, including kiosks and other automation systems. As a result, low-skilled jobs are likely to disappear.

“Rather than focusing on this specific trend, the government needs to come up with a comprehensive plan to tackle the problem of disappearing jobs (like cashiers),” said the professor.

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