July 19, 2023
SEOUL – At first glance, South Korea appears to have the right mix for an unmanned retail revolution. The country is known for its swift embrace of technology, widespread adoption of cashless payments, well-developed urban centers and relatively low crime rate.
But owners of unmanned shops here say that running an automated store is not as glamorous as it may seem. While the cost and hassle of hiring and retaining human staff are eliminated, new issues arise, ranging from littering and shoplifting, to drunken customers vomiting and causing disruptions, to vandalism and large-scale theft, they say.
Reasons to go staff-free
For Choi Sung-hoon (not his real name), the decision to run an unmanned ice cream store in Sinchon, western Seoul, was primarily made for economic reasons.
“I would have to hire at least a few employees, even for a small shop like this, and the labor costs would be even bigger than the profit, according to my calculations,” said the 41-year-old, whose store sells pre-packaged ice cream products and ice pops.
“Sure, every now and then, some kids steal products, but even with that in mind, an unmanned store is still a better option.”
Part-time cashiers at small shops like Choi’s in Korea usually earn the legal minimum wage, which currently stands at 9,620 won ($7.60) per hour. That is 48.7 percent higher than 2017’s 6,470 won and more than double what it was in 2012.
While raising the minimum wage is a matter that ensures employees’ basic ability to maintain a minimum standard of living, small shop owners say each hike hurts their business.
Shop automation is seen as a strategic choice for businesses, particularly in sectors such as convenience stores, ice cream shops and cafes, to offset the impact of rising wages.
The 24-hour unmanned cafe franchise Day Long, which opened its first shop in May 2020, has grown to have 160 shops across the country in the last three years.
According to Chief Executive Lee Dong-geon, his self-checkout cafe requires minimal expense on personnel and maintenance. The rent for the venue accounts for more than half of the running costs, taking up between 51 and 55 percent of monthly sales.
Choi Hyun-chul, the owner of a 24-hour restaurant in Gangdong-gu, Seoul, currently manages a team of 12 staff. He said he dreams of someday manning his restaurant with robots and kiosks. Dealing with staff has been a primary source of stress, he said.
“There is always some kind of drama occurring among employees, which often ends up in someone quitting abruptly,” Choi said. “I often have to step in and take on the roles of cashier, server or whatever else is needed.”
Even on days when business is exceptionally good, he finds himself anxious about the possibility of someone quitting due to the workload, he added.
No staff, no trouble?
A lack of staff, however, can be a double-edged sword for business owners, as it means there is no one to look over their merchandise and mind the shop.
Last week, a man in his 30s was arrested for stealing 3 million won in goods from six unmanned stores in Daegu and Pohang, North Gyeongsang Province, in a 10-day spree.
Last year’s data from the National Police Agency revealed that a total of 6,344 cases of theft occurred at staff-free stores across the country between March 2021 and June 2022, which equates to 13 cases a day.
Most of the time, these are cases of petty theft committed by youngsters. Researchers at the Korean Institute of Criminology and Justice recently published a study which found that teens were the perpetrators in 57.3 percent of unmanned store-related criminal cases, while 16.6 percent were those in their 20s.
In only 0.9 percent of cases did store owners report a loss of 1 million won or above, with the amount less than 10,000 won in 38.2 percent of cases, and between 10,000 won and 100,000 won in 38 percent of cases.
Store owners tend not to report cases in which the perpetrator is a minor, an elderly person, or a foreign national, or if the amount stolen is relatively insignificant.
“Most times it’s just kids taking an ice cream product out of a freezer and leaving without paying — very minor cases that I can’t even report to the police,” Choi said.
Another owner of an unmanned store said the surveillance cameras installed in such shops do help, but can’t prevent all theft.
“There are cameras recording 24 hours a day. But you cannot monitor them in real-time or review the footage later to see who’s stealing,” he said.
Some shop owners opt to put up warning signs, and some go as far as to reveal the faces of suspected thieves. Controversy erupted last month when an unmanned store in Gwangju revealed the personal information of three elementary school students that were caught stealing snacks after failing to agree on the amount they should compensate the shop financially with their parents.
Theft is only part of the issue.
Last July, a young woman defecated inside an unmanned store in Gimpo, Gyeonggi Province. She later told police it was “an emergency.” In February last year, a man abandoned his dog at a self-checkout store in Busan.
Despite these problems, industry experts see the future of retail in unmanned shops, with related technologies rapidly advancing.
The theft issue, for example, can be addressed by a system that automatically charges an individual for any items that they take out of the shop, they said.
The country’s four major convenience stores — GS25, CU, 7-Eleven and E-Mart 24 — operate 3,530 unmanned stores as of the first half of 2023. This includes “hybrid” stores, which have staff during the daytime but not at night. In 2019, there were just 208 such shops.
A recent study by VideoMining Corporation, a US-based firm that tracks shopping behavior, shows self-checkout terminals growing to become the dominant grocery checkout format in the US. According to the study, self-checkouts accounted for 48 percent of all checkout registers by the end of 2022.