Japan, home to over 55,000 convenience stores and 8,000 supermarkets catering to 127 million people, shapes the second largest retail market in the world. With $600 billion in supermarket revenue gathered, the city is the perfect testbed for autonomous checkouts which was where New Zealand start-up Imagr found its success. Alongside a recent $9.5 million pre-series A funding round led by Toshiba Tec, the cashierless shopping solution vendor has further signed on with H2O Retailing Corporation (parent group to Hankyu Department Stores and Oasis supermarkets), conducting a pilot at its 900sqm outlet before a full-scale roll-out across 152 of its chains. Imagr also hosts its own convenience store within its headquarters in Auckland, open to the public on Tuesdays and Thursdays, all the while preparing for its European expansion in the coming weeks.
The Driving Force
Japan has long been faced with labor shortage issues owing to its aging population. Compared to China where labor is cheap (and thus unmanned stores failing to take off), automated checkout solutions have been the answer to its problem. At one point, Japanese convenience chain Lawson had even developed a ‘super-temp’ scheme with shift listings available and open to anyone off the streets who had the free time to help out.
The Halo Cart
Unlike the standard Amazon Go models or the newly developed Dash and Caper carts, Imagr’s proprietary Halo smart carts come in the form of a trolley basket and a larger cart in the making. The carts feature a ring of camera and lights around the rim of the basket where the camera detects the item using computer vision and AI, automatically registering the item. While other retailers opt to use a plethora of hardware installments with cameras and sensors, Imagr only requires a charging station, desktop-sized server, and the Imaging Station. The company had managed to deploy and scale their solution at a distance during Covid-19 from New Zealand to Japan, all because of their light set-up.
Shoppers are to download an app beforehand whereby the staff is also equipped with an operations app to manage carts and track customer’s purchases. Typically, other retailer’s carts have an additional touchscreen installed along with a built-in scale but Imagr had opted without to create a more user-friendly experience and to lower the cost in the build. Each item added and removed from the cart during shopping carries the equivalent data size to that of an email, thus low latency from cart to shopper’s phone. Undoubtedly having a screen provides pros and cons where consumers may be hesitant to download a separate app but retailers can also utilize the screen as additional advertising space – though prompts privacy issues and the cost of additional hardware.
Unmanned stores also typically involve retrofitting the entire store and having to fully shut down to re-lay and set-up with huge processing capacity required to monitor and track every movement utilizing the cameras and sensors installed. Imagr’s plug-and-play solution however offers a white-label app and allows retailers to onboard within one week including the time to train over 20,000 SKU’s into the model set through the Imaging Station. Retailers are also fitted with a modular imaging station for staff to scan new products where once imaged centrally, are then pushed out to multiple locations simultaneously.
However, Imagr still needs to overcome the hurdles of Japan being a technology-laggard, contrary to popular beliefs. In 2019, cash accounted for 73.3% of the overall payment as reported by GlobalData – and it was only in the summer of last year when Japan’s 7-Eleven had only opened up to contactless payments. It is predicted that a quarter of the population will transition to using mobile payments by 2023, further accelerated by the government’s rebate incentives. While native payments are available in-app, consumers can choose to transfer their session to the POS system at the cashier point to pay with cash. “Our system doesn’t turn the customer into the checkout operator like other checkout systems. We’ve intentionally designed our system so that it does not require any change in customer shopping behavior, and is non-intimidating to adopt.” explains William Chomley, CEO of Imagr.
Where Covid-19 has accelerated many digital transformation plans and re-designed the new shopper journey, Imagr has taken into consideration of the more operable route to scale. “Our immediate focus is on markets where shopping behavior is more frequent.” shares Chomley, pointing towards APAC markets with smaller baskets but higher frequency shops.
The hindrance of unmanned stores has always linked back to the costs of set-up, though also believed to pay-off in the future eliminating labor costs in-store. Yet with recent developments and technology advancements, consumers have also become more privacy-aware while being guarded by the government’s protection. It is also heavily dependent on the market’s behavior where China has normalized the Big Brother act, but the West is still hesitant towards. With modular carts and computer vision to only detect products – not people – this may be the most viable way in creating the unmanned store of the future.