Is there bingo in China

The balancing act of the Chinese retail trade between Mao Zedong and high-tech

There used to be state-owned mom and pop shops in every neighborhood in China, where residents could buy essentials. These stores are now hard to find. The tech-savvy Chinese youth buy instead on the Internet or in stores that do not have any staff at all.

In China's metropolises it is becoming increasingly difficult to find remnants of the old Middle Kingdom. The country has developed rapidly in economic terms over the past four decades. At the same time, the face of its cities has changed. In the centers of the big cities more and more faceless skyscrapers soar into the sky, which look the same everywhere. However, sometimes it is still possible to discover ancient China. North of Tiananmen Square in Beijing is the alley Zhaofu in a hutong. Time has stood still in a corner shop named after the street. A portrait of the founder of the People's Republic, Mao Zedong, hangs on the wall. It is dark in the approximately 25 square meter room, the lightbulbs shine weakly, and some light penetrates through the entrance door. The walls haven't seen a new color for a long time. Products from bygone days can be seen on the yellowed advertising posters above the counter.

State-owned mom and pop shop

“The shop has been around since 1956. It used to be three times as big as it is today, ”says the operator Li Ruisheng, who has been officially retired since April of this year. However, he continues to work for the time being, he emphasizes. As the portrait of Mao on the wall suggests, private property has not yet found its way into this business, at least. It is a state owned company. A Chinese customer in her thirties feels transported back to her childhood. “There used to be at least one corner shop like this in every neighborhood,” she says. She cheers at the sight of the sweets. Memories are awakened.

The choice in Li's shop is small. Pickled vegetables are on the counter. On the shelves there are soy sauces, spices, rice, drinks, cigarettes and brandy. The customers come mainly because of the sesame sauce made by the state-owned corner shop. They are located behind the counter in large containers made of stone and metal. Weighing is still traditionally done with weights; most customers pay with cash. But over time, the operator has gone. "You can order my sauce on the Internet on Taobao," says Li and grins. His wife skeptically follows his behavior in the background. She asks the strange guest if he at least wants a cigarette. When he says no, her already bad mood gets even worse. When asked whether you are allowed to take photos in the shop, she replies in a harsh tone: "The pictures are also available on the Internet."

Cash is frowned upon

State-owned mom and pop shops with photographs of Mao Zedong on the walls and high-tech retail stores are just a few minutes' drive from each other in Beijing. In the west of the city, the operator of unmanned shops, the startup Bingobox, has set up a container. It is surrounded by renovated factory buildings, in which workers in state-owned companies are no longer screwing and hammering, but rather young, casually dressed Chinese sit in front of their laptops and go about their business. An average Bingobox container is 6 meters long, 2.60 meters wide and 2.80 meters high. There is no staff to be found there. Customers are left to fend for themselves when shopping.

In a first step, the new customer has to scan the QR code on the door, where QR stands for “quick reply”. It is then registered and the door opens. The selection of products in the container is manageable. There are various snacks, sweets, chilled drinks and yoghurts as well as instant noodles. Numerous cameras are attached to the ceilings to monitor the premises. The customers make their choice and then put the items in a box, where they are identified using artificial intelligence. However, the system has its weaknesses. It takes two attempts for the articles to be recognized. The price appears on the screen and customers pay with their smartphones. Cash is not accepted in the Bingobox containers. The operators do not have to fear theft. Thanks to facial recognition, the door only opens when the customer has paid for everything. On the other hand, there are problems with the storage of the products. Around two years ago it got too hot in a Bingobox container in Shanghai and the sweets melted.

Two young Chinese who buy drinks in the container during their lunch break are not completely enthusiastic about the unmanned shops. “The product recognition system is still too unstable. It takes several attempts before the articles are recognized, ”they emphasize. They are not afraid that unmanned retailers will one day rob many Chinese of their jobs. They pull out their smartphones, pay for their drinks, say goodbye and leave the container.

Unmanned stores deliver data

The future of unmanned shops in China is still uncertain, as the cautious and skeptical reaction of customers shows. However, time is of the essence for containers like Bingobox's. They are seen as the answer to demographic change. In China, the labor force is falling and the number of retirees will rise rapidly in the years to come. In addition, jobs in the retail trade are considered unattractive by the young and often disloyal to their employers. Unmanned shops like those of Bingobox can therefore continue to represent an alternative to traditional retail trade in the future.

From a business point of view, too, the unmanned shops offer incentives for the operators. The monthly operating costs of the bingo box container amount to just 2500 yuan, the equivalent of a little more than 360 francs. They are only a fraction of those shops that are open around the clock and where employers have to transfer a salary to at least three people. However, even unmanned businesses cannot do without workers. The shelves have to be replenished regularly and the premises cleaned. However, the costs remain within reasonable limits. Bingobox founder Chen Zilin says that ideally four people can operate forty containers. In addition, the rental costs for the containers are lower than for traditional retailers. And if the location does not prove to be attractive, they can be transported to a new location within a short period of time.

Such unmanned shops have an inestimable advantage for the operators: The customers supply vast amounts of data, from which conclusions can be drawn about their consumption behavior. It can be seen when which products are particularly in demand and which articles are not arriving at all. This knowledge in turn has an impact on storage and the range, which adapts to customer requirements. In addition, the operators can send their customers tailor-made advertising via smartphone and inform them about promotional prices because they are transparent to the operators with all the data they provide.

The government's fear of regulation

In China, unmanned shops are currently seen more as competition to vending machines. According to the market research institute Kantar, the number will increase nationwide from 150,000 four years ago to nearly 1.4 million next year. However, the prognoses for unmanned operations are also rosy. According to the consulting firm Askic, the number of users will increase from 5 to 85 million between 2017 and 2020. And Daxueconsulting's advisors predict that unmanned stores in China will turn over 3.3 billion yuan in the coming year; In 2017, sales were just 40 million yuan. The offers hit the nerve of a technology-loving youth who grew up ordering everything imaginable on the Internet at any time of the day or night.

Rapid sales growth of unmanned shops in China

Bingobox is just one example of the rapidly growing unmanned store market in China. Other operators are called F5 Future Store, Xingbianli or Tao Café - an attempt by the Internet company Alibaba to establish cafés without staff. The dynamism is proof of the Chinese business mentality. While in the West such new offers are often planned down to the smallest detail before they see the light of day, Chinese entrepreneurs think differently. They discover a niche in the market and try with great vehemence to fill it because they are afraid of being left behind by an even faster customer.

Often, the operator's offers are not yet fully refined at the beginning and the competition is fierce. The providers try to outdo each other with discount campaigns and thus win over customers. Investors have calculated that whoever survives this race will one day get a big piece of the pie. And the government is watching for now and will only be discussing a law in a few years' time. She does not want to nip new business ideas in the bud through regulation that is too early.